Monday, August 25, 2004 Arroyo stands pat on fiscal crisis remark
MANILA -- President Arroyo was just telling the truth when she said the country is in the midst of a fiscal crisis, said her spokesman, adding the Philippines is not planning to default on its debts.
Presidential spokesman Ignacio Bunye said Arroyo just "called a spade a spade" when she declared at the PNP leadership turnover ceremony Monday that people have to face the fact "squarely" that the country is already "in the midst of a fiscal crisis."
Arroyo's admission and her directive to the Development Budget Coordinating Council (DBCC) to study the proposal of Albay Rep. Jose Maria Salceda to declare a state of fiscal crisis caused a drop in the peso value and in the stock market and threatened to lead to a two percent hike in interest rates.
At the Senate, Sen. Rodolfo Biazon proposed the granting of emergency powers to the Arroyo to deal with the financial crisis but his suggestion was opposed by some of his colleagues in the Upper Chamber.
Bunye said Arroyo only wanted to impress on the people the seriousness of the country's fiscal situation.
"Awareness of the truth is the first step towards action. Telling the people the truth was intended to instill greater responsibility for these obligations, not to signal default, which will never happen," he said.
He said despite the initial drop in stock trading and in the value of the peso and the increase in interest rates, the financial sector would learn to appreciate the decision of Arroyo and the determination of the government to solve the problem.
Arroyo's economic managers moved to repair the damage, particularly on debt payments.
Trade Secretary Cesar Purisima, who is also Arroyo's economic spokesman, said the financial sector simply "overreacted" to the declaration and that they would eventually come around. He said the declaration is "more rhetorical rather than technical."
Planning Secretary Romulo Neri echoed Purisima's statement, stressing that the declaration was a mere wake-up call for everyone to work together to solve the serious fiscal problem.
Budget Secretary Emilia Boncodin, DBCC chair, said the country would not suffer the same fate as Argentina because its case is entirely different from the Philippines.
Boncodin said Argentina was unable to pay its debts while the Philippines never once thought of running from its financial commitment. She added that the government is not bankrupt as some sectors might think after the declaration of the financial crisis.
She said there are even more international creditors offering to help the Philippines but the government has turned them down to avoid bloating the deficit.
She said Arroyo would soon issue executive orders reminding everyone to continue with their austerity measures and providing for a voluntary retirement program.
Bunye said as part of the austerity program, Malacaņang no longer served snacks during the meeting of the Legislative-Executive Development Advisory Council (Ledac) and during a function that Arroyo attended regarding her China trip in September 2 to 4.
They only served coffee and tea.
Boncodin said the President will also push Congress to pass a "fiscal responsibility bill" that requires lawmakers to identify sources of funding for bills.
Boncodin said the proposal to reduce the Internal Revenue Allotments (IRAs) of local government units (LGUs) would not take place immediately because Malacaņang still has to hold dialogs with the LGUs which are expected to raise a howl against the move.
Biazon said he would initiate a Senate resolution granting emergency powers to Arroyo to address the fiscal crisis.
He clarified that the emergency powers would be clearly defined.
"I will support the possibility of the suspension of the operation of certain laws to arm President Arroyo in addressing this fiscal crisis emergency," he added.
Biazon cited the granting of emergency powers to former President Fidel Ramos when he had to address the energy problem in 1992.
Some senators opposed Biazon's proposal.
Senators Aquilino Pimentel Jr. and Joker Arroyo said that there are other ways to solve the fiscal problem.
"I don't think this is the best remedy. We have to be careful in granting such powers," Pimentel said.
Sen. Manuel Villar, for his part, said the public and private sectors must take sacrifices to solve the fiscal crisis.
Villar added that both sectors should be willing to take the bitter pill in cutting pork barrel and IRA and pay sin and franchise taxes to help the country solve the fiscal crisis.
Senate Majority Leader Francis Pangilinan, meanwhile, called on his colleagues to hold an economic summit meant to address the looming fiscal crisis.
"The primary objective of the conference it to set aside political differences and to focus on a bi-partisan effort to stave off and avert a crisis through strategic planning by the legislature," Pangilinan said. (JMR/JPM)
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9 senators: Cut our pork by half