Special Report: RP’s economic system is based on Filipinos’ democratic ideals (An interview with President Aquino)
BusinessWorld: What are your priorities (in the social services sector, in the economic sector, political) for the year? What are the bases for these priorities? Do we have any country or economic system models which we would like to emulate?
THIS YEAR, for the Aquino administration, is another year of challenge, not so much in the political realm as it is in economic dimension. President Aquino herself has stressed that the political currents will no longer be her predominant concern. Rather, the emphasis will be on meeting the targets set by her economic planners and in exceeding the levels of growth attained in the past year.
“No more excuses,” she has told her lieutenants assigned to work the government machinery.
Aside from meeting the various targets they have set for their respective departments, the mandate from Malacañang is clear: “The growth met in the past year must now be felt by the people.”
The goals are clear, but how to meet them is another story.
For instance, with so much of the country’s income set aside for servicing the Philippines’ huge foreign debt, how much can be retained for social services, for the Comprehensive Agrarian Reform Program (CARP), for jobs generation and more credit resources made available via affordable terms to small and medium-sized entrepreneurs?
Will Government be finally effective in falling the “hydraheaded monster” that is graft and corruption and, thus, be able to save much-needed resources to fund its mass low-income housing program and countryside development projects, among other priority concerns?
In her own words, as detailed in the following exclusive interview,
President Aquino: We have set our socioeconomic priorities for 1989 in terms of an annual growth rate of 6.5%, the creation of at least a million jobs, singledigit inflation level and adequate international reserves. Achieving these will bring us closer to our goal of reducing the poverty incidence to 45% of Filipino families by the end of the next 1,000 days.
We have set these priorities taking into account the ultimate goal of uplifting the poor, the need to sustain the momentum of economic activities resulting in the growth achieved in the past three years, the larger than expected external financing requirements, and the revenue shortfalls in 1988.
The economic system that we have is patterned after our democratic ideals, responsive to the strengths and weaknesses of our society and our people, and best suited to our goals of economic growth, employment generation, income equity, and poverty reduction.
Our development efforts will be undertaken within the framework of the Philippine Development Plan for 1987-1992, which clearly defines the priorities and goals and which was evolved with extensive people participation. In the pursuit of these efforts, we do not try to emulate any one country or economic system. There is no perfect system. No two countries are exactly similar in history, culture, state of political development, etc. What we should do is learn as much as possible from the successes as well as the failure of other countries and economic systems.
In the political sector, we will focus on social justice and human rights, competence and responsibility in governance, the autonomous regions, and the needs of foreign policy.
BusinessWorld: May we know what measures will be taken to ensure the attainment of your priority goals and objectives?
Mrs. Aquino: Close monitoring of performance improves the chances for success. This is why I have ordered quarterly and even monthly performance reports from the different sectors. All these will be made public and will permit us to take immediate action whenever needed.
Equally important, however, is a stronger commitment to the pursuit of policies needed to attain the desired objectives of sustainable growth, employment generation and poverty alleviation within acceptable inflation rates and external constraints.
BusinessWorld: The past year has been a period of growth for the country. How does Government intend to maintain growth this year?
Mrs. Aquino: We have brought back private initiative in achieving economic growth and we shall continue to follow this through. The Government shall continue to recognize the primacy of the private sector as the engine of growth and progress.
In this regard, the Government shall focus its efforts in areas supportive of private sector activities. The privatization of government activities that are better left to the private sector shall be continued. Development and improvement of infrastructures, particularly in the countryside, shall be undertaken to link farms with markets.
The rural areas shall be revitalized and harnessed as the core of small- and medium-scale entrepreneurship and productive employment. The CARP shall be a critical program that will help spur these activities. The greater part, however, shall lie on the partnership of the private sector with Government in bringing fresh investments to the countryside and spinning off growth from these areas. The key is the sharing of the responsibility in maintaining the growth and progress of our nation.
BusinessWorld: What were the areas of concern which you think Government might have concentrated on but failed to achieve its goals in? How do you hope to correct these this year?
Mrs. Aquino: We need to work harder on tax collection. Our performance for the past year was below target. As of November 1988, actual collection was P58.8 billion as against the targeted P64.6 billion, or a shortfall of about P5.9 billion. In the same vein, the campaign against smuggling needs to be strengthened.
I have directed the Bureau of Internal Revenue to submit to the Department of Justice a list of outstanding tax evaders for prosecution. I have also ordered that appropriate charges be filed against smugglers.
We cannot allow these saboteurs to imperil the economic successes we have attained.
BusinessWorld: Were there any policy concerns which in the past year were not articulated well or given enough substantial attention? Do you intend, for instance, to have a more clear-cut policy in terms of foreign debt? Are we for debt reduction?
Mrs. Aquino: Our policy on external debt is clear. I have said time and time again that growth is our first priority, not the external debt, for without growth, we will end up with more unemployment and more poverty. And we certainly cannot service our debt.
At the same time, however, we have been adopting a non- confrontational approach. We will negotiate and negotiate hard with our foreign creditors.
But, if we can help it, we do not wish the growth we have achieved to be endangered by taking unilateral decisions which could disturb not only the flow of official aid funds and long-term credits but also the investment and business climate.
BusinessWorld: Does Government’s debt negotiating panel understand exactly how you would want them to translate, in concrete terms, your pronouncements on the country’s huge external debt? How near or far are we from getting better terms, the terms that you would want to get, from our creditors?
Mrs. Aquino: I have given clear instructions to our negotiating panel that the terms under which new agreements are to be entered into must be in pursuit of our growth strategy, while honoring our foreign debts. In fact, the very reason why we continue to negotiate with the IMF (International Monetary Fund) and subsequently with the Paris Club and our commercial creditors is to ensure that there will be a continuous flow of funds to finance our development program. Managing our debt problem also involves debt rescheduling or restructuring, and other measures to reduce the outflow of foreign exchange. If we can defer debt payments or minimize current outflows, then we can channel our funds for the country’s more urgent needs of growth and essential services.
It is important to keep in mind that more of the creditor countries are now accepting that the global debt problem is an intractable one and cannot be solved entirely through traditional approaches. We welcome this change in attitude. I am confident that the agreements to be negotiated with our commercial creditors will allow for both debt relief and new restructuring.
BusinessWorld: May we have an update of the multibilliondollar Philippine Aid Plan? In this regard, what do you expect to take place this year? Is Government, the country, ready for this year? Is Government, the country, ready for the plan?
Mrs. Aquino: The Philippine Aid Plan (PAP) is envisioned to be a multi-country program of economic assistance. I have been told that we could expect about 15 countries and 12 multilateral financial institutions to participate in the Plan.
To facilitate the finalization of the Plan, I have created a Presidential Task Force on the PAP with representatives from the executive and legislative branches and the private sector. The Task Force is mandated to coordinate activities and provide guidance of the Plan. So far, consultations with the legislature and various sectors are being pursued in the preparation of the policy framework for the PAP, including the utilization of assistance. More sectoral and regional consultations shall be held (this month).
Also, the Task Force has been doing the groundwork for the Preparatory Committee meeting on the PAP to be held in Manila and the Pledging Session to be held possibly in Tokyo by midyear (this year). The Preparatory Committee meeting is designed to resolve issues on the modalities and magnitude of assistance. The Pledging Session, on the other hand, is intended to formalize the commitments of governments and multilateral institutions. We are exerting all efforts to effectively manage and avail of the benefits of the Plan.
The Government is, therefore, ready for the Plan. We have, through the Project Facilitation Committee, initiated measures to tighten up the process of project implementation to increase our overall absorptive capacity. These measures include, among others, close monitoring of major foreign assisted projects, conduct problem solving sessions with project managers whose projects are having slippages, and providing them