By Al Labita
AFTER nearly a decade of a benign uptick, the country’s inflation rate – the cost of buying goods and services — is threatening to disrupt the economy’s growth trajectory. Currently pegged at a year-to-date 3.5 percent, the rate is poised to dangerously breach the central bank’s five percent band limit as prices of basic commodities showed signs of an upward trend. Blame the inflation’s looming downsides on the wave of disastrous events unleashing cost-push pressures on an economy susceptible to price distortions.
By and large, the Moro separatist attacks in Zamboanga city, the destructive 7.2 quake in Bohol and the mind-boggling storm surge in Eastern Visayas had conspired and dented the economy. Admittedly, the fortuitous incidents triggered waves of price elasticity with a seemingly upward bias. Most likely, inflation will soar to five percent by end this year as monetary authorities had earlier projected.
BSP Under Pressure
That forecast, however, was anchored on pre-crisis scenarios or at a time the economy was robust. But with the economy under siege by inflationary pressures, monetary authorities are likely to clamp down on money supply – technically referred to as M3 – to rein in any sudden gyration of inflation. This ensues once inflation rate breaks through the five percent threshold level which is very likely, taking into account the new challenges on the ground.
Intervention measures, which can be damaging to the economy in the long run, can range from a hike in interest rates to tightening of overnight lending and borrowing policies. For those in the corporate sector, an economy’s downward spiral could hurt profits and limit stock price appreciation. A regime of high Inflation rate also robs companies of market value since they are forced to raise prices of the goods they sell to recoup investment costs. While they can pass on the costs to the consumers, the goods they sell are in the final reckoning become worthless each day.
Poverty and Prosperity
Given the economy’s new twists and turns, Bangko Sentral is likely feeling the pressures to revise upward its inflation expectation to factor in a creeping surge in prices. A single percentage rise in inflation can spell a difference between poverty and prosperity.
Lately, inflation – the bane of any economy – was acting up anew as supply bottlenecks erupted in calamity-stricken areas, creating an artificial shortage of basic commodities.
What exacerbated the situation was the massive destruction of farm-to-market roads constricting the extent of the delivery system to where the commodities are critically needed. Based on Department of Agriculture (DA) data, food production areas bore the brunt of super typhoon Yolanda with damages piling up to nearly P7 billion. Rice fields and fisheries stocks accounted for the biggest losses at P2.23 billion and P1.16 billion, respectively.
Toll on Aggie
Yolanda also took its toll on high-value crops such as coconut, mangoes, cassava, bananas and vegetables. Overall, the DA estimated that the calamity dislocated 214,522 metric tons of goods from 134,085 hectares of farmland. The figures exclude devastated agricultural infrastructure, facilities and equipment for irrigation systems in Eastern Visayas, a key food production basket. Leyte province alone chalked up P2.22 billion in losses, about half of which represents ruined palay.
Amid a grim picture in the agriculture sector, the government’s think tank, the National Economic Development Authority (Neda), is less upbeat about the economy’s growth prospects. In a statement, it predicted that growth of local output – or Gross Domestic Product (GDP) – in this year’s last quarter could be trimmed by 0.3 to 0.8 of a percentage point to 4.1 percent.
Hardly significant, the reduction would nonetheless bring down the government’s GDP target of attaining 6-7 percent GDP growth target by end this year, quite ambitious for an economy weakened by a string of disasters, both man-made and natural. Such bleak outlook, Neda says, could linger through 2014 because of the reduced production capacity in typhoon-affected areas.
Opportunity and Risk
What bears watching is the extent of the government’s fiscal spending to mount a multi-billion peso rehabilitation program which can be potentially inflationary. Officials boast that with improved tax revenues, the government has more than enough fiscal space to go on a splurge. Initial estimates placed the rehab cost at P10 billion to defray the costs of repair of infrastructure and other facilities.
In effect, the government has no choice but to part with its revenues which otherwise could have been wasted in the pockets of the notoriously corrupt and the inept. The choice is simple: reconstruct and resuscitate a disaster-ravaged economy or risk prevalence of abject poverty.
- The one word that will convince conservatives that inflation is actually low (theweek.com)
- ‘Yolanda,’ Yule spending to hike inflation (businessmirror.com.ph)
- Is a Money Market Savings Account an Effective Hedge against Inflation? (ally.com)
- How do they calculate inflation? (mercedescoleman.wordpress.com)
- Retail inflation jumps to 9-month high in November (thehindu.com)
- Mexico Rate Cut Unlikely as Growth Picks Up, Central Banker Says (bloomberg.com)
- Indian Future expected Inflation rate (greatlaker.wordpress.com)
- Go On Turkey, Once More For Clarity (blogs.wsj.com)
- Retail inflation shoots up to 11.24% in November (thehindu.com)
- 2014 inflation revised upward, may hit 4.5% (businessmirror.com.ph)
by Atty. Sarah Jane Suguitan
DAYS before typhoon Haiyan (Yolanda in local news) made landfall, the entire Philippines was already alerted by local and international weather stations. We knew ahead of time that Haiyan will take many lives, ruin many buildings, flood many roads, uproot many trees and place many of our kababayans on square one. Square one is where everything and everyone has to start from scratch. Square one is the land before airports, houses, and cell sites were built. Square one is where all you have is the landscape and thousands of survivors. Square one where Haiyan left many of us. The question is, how do we rebuild? What’s the plan?
I asked this question to our authorities, and once again, the central government has stonewalled on its answer. Silence. Hesitation. Unpreparedness. What authorities are proud of are the relief operations. I do not mean to trivialize relief operations, but, when they are not coupled by any rehabilitation efforts, relief operations transform victims into beggars. If all the authorities plan on doing is to conduct relief operations, we will soon have squatters all over the affected islands of Bohol, Cebu and Leyte.
Since the central government is low on vision and planning, let’s light the path for them (and pray that they may have the humility to listen instead of walking out).
Simultaneous with relief operations, let’s restore power, water and phone lines by creative means. We can fly in alternative energy sources and place call centers (as in, an area with functioning phones offering free calls). All communication lines must be restored and kept open not only for the victims, but also for those conducting rehabilitation missions.
Employ thousands of unemployed nurses, utility men and underemployed professionals from all over the country and deploy them to the disaster-hit areas to conduct search-and-rescue missions. Let’s not ask for volunteers. Let’s employ the unemployed who can devote their full time, attention and expertise to searching for and rescuing all the living and the dead.
Construct shelters that are livable. Existing structures are suspect (and may have circumvented the standards under our building codes). Local shelters are merely big basketball courts turned refugee camps. Imagine yourself and your family fleeing to these basketball courts with only your clothes on while waiting for the storm to subside. There’s no potable water and comfort rooms to relieve yourself. You eat in doled-out paper plates on the floor. You are given uncooked rice (bigas), canned sardines and noodles in their plastic wrapper.(Apparently, victims are expected to flee with their gas tanks and stoves.)
How are you supposed to cook these food given by the social welfare office? If you can’t imagine yourself in such a situation, neither can the victims. So instead of those raw junk food, we should construct or install portable kitchens, mess halls and toilets in evacuation centers. What’s the use of raw food if you have no means to cook? What’s the use of cooked food if you have to eat it with your bare hands while sitting on the floor? And what’s the use of eating if you have no place to pee or poop? Conditions are dire in these evacuation centers. Let’s make them livable, not the substandard things that are like the DPWH-made roads and bridges. I mean, livable!
Foreign aid as well as local donations must be trackable. It must be assumed that donating to local government units do not trickle down to the end-users (victims) and instead, end up in our leaders’ private bank accounts.
In the medium term (if not, ASAP), we will need to rebuild. With tens of thousands whose lives are on hold, low-cost housing, temporary schools, stores and banking systems will be naturally formed. If the government continues to fail in providing basic services, the private sector will take over. Unfortunately for the poor, they will not be able to afford that, and that is the consequence of voting poorly.
Follow the author on twitter @coffeeright.
- US Aircraft Carrier Group Begins Relief Operations in Philippines (voanews.com)
- Bangon Ormoc | A 24 Hour Relief Operation for Yolanda Victims (heroesofyolanda.wordpress.com)
- Why I won’t be criticising the Philippine relief effort after Typhoon Haiyan – I’ve been there (blogs.telegraph.co.uk)
- Haiyan disaster relief volunteer trip, (loveyouwrongtime.wordpress.com)
- How you can help Typhoon Haiyan survivors (worldnews.nbcnews.com)
- Aid Groups Struggle To Reach Survivors Of Typhoon Haiyan (npr.org)
- US Marines scale back typhoon relief operations (stripes.com)
- 116 bunkhouses to house first 3,000 Haiyan families (rappler.com)
- typhoon haiyan/yolanda relief operation (ferventgenerationchurch.wordpress.com)
- Haiyan/Yolanda: US lends air, sea assets for relief operations in Visayas (crofsblogs.typepad.com)
by Ramon Orosa
SOMETHING is happening in this nation that is not easy to understand or interpret. Most people are wondering what’s next. Others are also wondering how PNOY sees and/or interprets what is happening. Most of the opinions are not so salutary.
When the protests began about the PDAF and began to reach a crescendo, the evident uncertainty of the Palace was discomforting. First was the kneejerk response of opposing the protest and defending PDAF. Then the position changed to being somewhere in the middle until the day of the protest when a declaration of support for the protest was made obviously to pre-empt the MPM protest march at Luneta.
Obviously, the responses suggested that the assessment was that the protests would somehow go away and that it should not be taken seriously. This was a mistake because what was hurt was PNOY’s own integrity. For someone who had planted on the masthead of his administration the “Matuwid na Daan”, his vacillation about truly pursuing the corruption exposed by the Commission on Audit report was disheartening to many people.
This revelation of such extensive malfeasance in the highest levels of the Legislative bodies and the Executive Departments, after the impeachment through somewhat dubious methods of the Chief Justice, sent tsunami-like waves over the whole nation. The ones who impeached Corona were guilty of even greater corruption! Proof once and for all that, with few exceptions, corrupt and dishonorable persons in just about every part of government are totally undeserving of any honor and have tainted so severely their positions. No delicadeza and they are still clinging to their posts, shameless if anything.
Remedial action was undertaken to try and pacify the protesters by inviting the somewhat motley leaders to a conference with the DBM head Butch Aquino and DSWD Sec. Soliman and a few others. It did not result in any real changes as was proven subsequently.
The people’s demands were essentially two. First, abolish the PDAF in both houses of Congress, meaning take away from them the power to initiate and control projects, their function being legislating. They are welcome to make suggestions, but cannot initiate projects on their own initiative. That work should be undertaken by the line departments and agencies with no overt or discreet interference.
Of course what resulted in the budgetary process was to simply change the collar around the pork but the initiative still rests with the individual legislator. In other words, sheer cosmetics, not substantive.
The second portion of the protesters demands was to charge everyone involved in the corruption, regardless of party affiliation. The report of the Commission on Audit indicated that over 200 legislators were somehow involved in the matter, some already out of Congress, many others still in. Well, up to now the charges have not been filed and it seems only three are being seriously considered at this time. The sad part is that legislators on both sides of the aisle are involved but PNoy is being true to his pursuit of only those that may represent a danger to him or else those that are in the opposition. So the protesters have given PNoy until sometime early December to file all the charges and otherwise prove that he is just like the other politicians and cannot stand on his declared slogan. He has been found seriously wanting. He may have a heart for the poor but all calculated for political gain.
I am not betting that with the exception of a very few samples, the others will be indicted at all. Again, it will be at the expense of PNoy’s integrity and commitment to doing the right thing! I suspect though that in formulating that slogan the ones who crafted his political postures never anticipated that all these revelations of corruption would ever be so public.
Next followed the Zamboanga incident and there are those that saw what happened as suspiciously orchestrated. Followed by PNoy’s physically staying in Zamboanga for a week, utterly neglecting all the other national concerns. Some interpret this as a somewhat escapist activity. Next came the earthquake in Bohol and so now PNoy is camping out in the area. This leaves a lot of people wondering that though the moves might have had some PR value, it did expose PNoy to accusations of limited capacity to undertake the stresses of office and face the very serious issues that need to be faced. So much for the people being the boss. Turns out to be sheer political blather.
These developments though smack of a very cynical sort of perception management considering the damage done to PNoy’s image by his waffling on the PDAF issue; protesters incidentally wanted the elimination of discretionary spending to be applied to what is tantamount to his own pork, a large percentage of the national budget at about 600 Billion of a 2 trillion budget, approved by a compliant Congress in 15 minutes as the media have reported.
Well, maybe not totally, but certainly much , much less than the current amount; the idea being let the amounts be allocated directly to the line departments who must give good account of how they spend it.
And so, PNoy’s principal slogans lie in tatters.
Well, I think it was naively undertaken and has proven virtually impossible to truly pursue. But it does raise issues about what is next. If the protests continue or if PNoy truly pursues the issue of corruption in the PDAF, he will have to deal as well with the claimed corruption in Malampaya funds, the Agriculture scam and a whole lot of others that have come to light.
Then, there is the corruption in many LGU units all the way down to the Barangay level. As I have commented before, we will probably need to enlarge our jails and holding places or else create a bonanza for hospitals as the favorite holding area of those who have some influence in this nation.
But this is not really the danger. If PNoy is pushed hard to the wall, what direction will he then take? We need the seers to come out and tell us what they see coming up next because I do not see the pressures abating.
- Save The Philippines (opinyon2010.wordpress.com)
- WORM’S EYEVIEW: Charade, Anyone? (mindanews.com)
- PNoy rating dip not remarkable (manilastandardtoday.com)
- Editorial : MVP for President (opinyon2010.wordpress.com)
- PNOY, PDAF, DAP and other things (meandmyficklemind.wordpress.com)
- Give P’Noy the benefit of the doubt (leytesamardaily.net)
- PNoy sets prov’l blitz to counter anti-DAP (manilastandardtoday.com)
- Taming the Estradas 2 (opinyon2010.wordpress.com)
- Philhealth, BSP got P29-b of PNoy’s special ‘pork’ (manilastandardtoday.com)
- Catastrophe, Corruption and Compassion (jessfernando1.wordpress.com)