Managing an economy has become more and more a contradiction in terms nowadays. As illustrated by an old saying, "When (one country) sneezes, (other countries) catch a flu," economies are getting linked to one another in ways that make it difficult for smaller, Third World countries like the Philippines, to predict and control their respective economies.
It remains the government's job, however, to make sure that the burgeoning population do not become more and more vulnerable to the changes in the world economy.
The Philippines is highly-populated country. According to census data (NEDA, 2002), the Filipinos numbered about 76,499,000 in 2000. This phenomenal growth from a mere 20 million around 1950s has been a tremendous concern for government planners. Unemployment in April 2002 stood at 13.9% (NSCB, 2002).
Census of Population
Source: National Economic and Development
Common knowledge holds that almost half of the country's population is below the poverty level. There is however, another indicator used for gauging the country's condition. The 2000 Philippine Human Development Report (PHDR 2000) found that in terms of human development, the Philippines is faring relatively well despite the stagnant economy. The Human Development Index (HDI) - measuring life expectancy, functional literacy and income, among other things - has become a popular index for those who wish to understand whether having high or low economic growth rates are equivalent to having better or worse choices and standards of living. Read former Economic Planning Secretary Solita Collas Monsod's article [A More Differentiated Look at Poverty] discussing the following findings:
|among the Philippines' 77 provinces, 64 are considered to be in the medium human development category|
|between 1997 and 2000, 43 provinces showed improvements in their HDIs|
|several provinces rank at least 10 slots higher in human development than in income|
|in 66 of 77 provinces, human poverty is less, and in many cases, much less, than income poverty (as measured by poverty incidence)|
|16 provinces whose human poverty rank is better than their income poverty rank by at least 20 rungs|
Photos: Office of the Press Secretary (2001)
A team of agencies, headed by the Office of the President, takes charge of economic planning and management in the country. Following are the major economic agencies:
|Development Budget Coordination Committee (DBCC) - Prepares macro-economic assumptions; Composed of the Secretary of Budget and Management, as chairman; the Director-General of the NEDA Secretariat, as co-chairman; and the Executive Secretary, Secretary of Finance and the Governor of the Central Bank of the Philippines, as members. The DBCC recommends to the President the level of annual government expenditures and the ceiling of government spending for economic and social development, national defense, and government debt service;|
|National Economic and Development Authority (NEDA) - Formulates the country's socio-economic plans (Philippine Medium-Term and Annual Development Plans); Headed by the President as Chairperson of the NEDA Board, with the Secretary of Socio-Economic Planning, concurrently NEDA Director-General, as Vice-Chairperson. All Cabinet members, as well as the Central Bank Governor, are members of the NEDA Board|
|Department of Budget and Management (DBM) - Formulates the annual national budget and medium-term expenditure plan; Administers a national accounting system for fiscal management and control|
|Department of Finance (DOF) - Supervises revenue generation and operations of government, including all local government units; Reviews and manages all public sector debts|
Forecasts for 2002
Following is the NEDA's Growth Forecasts for Fiscal Year 2002:
"The governments forecast of real GDP growth in 2002 is 4.0 4.5 percent. The realization of this forecast rests on continued macroeconomic stability. The government remains committed to its fiscal deficit reduction program. For 2002, the fiscal deficit is targeted to decline to P130 billion which is equivalent to 3.1% of GNP, from P147 billion in 2001 which is equivalent to 3.8 percent of GNP.
Likewise, as the US economy recovers and the Eurozone economies strengthen, which is anticipated by many analysts, the prospects are bright that this GDP growth forecast will be realized. Rising consumer and business confidence in the country will also permit GDP growth to gain strength.
Debt and the Budget
According to the Philippine Constitution, the biggest chunk of the public budget should go into Education. However, this has been technically ignored. The Philippine budget, for the last three decades, has been largely devoted to paying off the country's huge foreign and domestic debts and their interests. As of 2001, according to the Bangko Sentral ng Pilipinas, the country owes some $52,355 million in total external debt (see - http://www.bsp.gov.ph/Statistics/spei/tab6.htm).
For year 2001, the external debt's ratio to the country's GNP is 64.61%. It is 68.35% to the GDP.
See the current Philippine Government budget by agency, fund, and program: R.A. No. 9162 GENERAL APPROPRIATIONS ACT, FY 2002 at - http://www.dbm.gov.ph/dbm_publications/gaa_2002/d1/gaa2002.htm
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