On the eve of PNoy’s first State of the Nation Address to Congress, the true nature of the government’s fiscal position has emerged. Half-way into the year, the government has already incurred more than 60% of its programmed spending and 2/3 of its already upscaled annual deficit.
I have also blogged about a number of “miscues and false starts” early in his term, which could threaten his rule of law and good governance credentials. On top of this, a severe water shortage appears imminent.
On the brighter side, external monitors from the IMF have revised upwards their growth estimates for the country as part of an update to the World Economic Outlook.
This opens up a few decision points for the new government. On Monday, look for possible policy statements and announcements by the 15th president of the republic with regard to the following:
- Stimulus or austerity: what will be his stance on continuing the stimulus initiated by the Arroyo government to combat the effects of the downturn? Around the globe, a shift towards austerity is occurring as debt markets strain to cope with increased borrowing by other countries still combatting recession and by corporates taking advantage of the recovery as it gathers pace. Will PNoy accelerate the withdrawal of stimulus in the next two years in a bid to satisfy bond markets (as his mother did) or will he maintain or even expand the current level of spending on social services and infrastructure as he promised during the campaign?
- Rule of law or impunity: as we have begun to see, applying the mantra “rule of law” can be very tricky. What one regards as correcting an injustice can be construed as meddling in the affairs of co-equal branches of government by others. Case in point is the review ordered by PNoy himself of the charges filed against a senator whose vote is needed by party-mates to gain control of the upper chamber of Congress. This as well as the continuing perpetration of extra-judicial killings will be a test for PNoy. With respect to the latter, he needs to maintain credibility as commander in chief on the one hand while at the same time boost morale and support from within the military who complain of being underfunded and undermanned in fighting several long-standing insurgencies.
- Coach or Czar: the way he responds to the impending water shortage will reveal a lot about his personal style of leadership. Will he be a managerialist like his predecessor, taking the title of Czar or will he defer to the duly authorised agencies to coordinate a response? The inability to supply one of life’s basic necessities leads to plummeting public confidence in the government of the day as demonstrated by the power and rice crises of early and late-1990s. This is an area where PNoy’s executive capacity will be severely tested. Water, food and power security are issues intertwined with government’s capacity for long-range planning, regulation and conservation as the market for these resources suffer the vagaries of war and environmental disaster. The way he handles the problem could define his first years in office.
- Signals or substance: Will the speech be littered with more “gimmicks” like the anti-siren or wang-wang campaign or will it contain more substantive bits of policy in it? It is easy to get caught up with token signals and lose directional focus on outcomes. The anti-tax evader/smuggler drive takes matters up a notch by making an example of the “big fish”. The deeper he wades into his anti-corruption campaign the more difficult it will be for PNoy to traverse from rhetoric to action as it requires improving bureaucratic quality. Building capacity while keeping the budget under control will be a recurring theme in his administration. Will he be all “bells and whistles” or will he take a more targeted and considered approach in beefing up the resources of key government agencies?
- Pork or Fork: To be fair, PNoy did not run on ending the practice of pork barreling or congressional earmarks. Voices from within his own party have urged him however to reconsider this. Will it be a continuation of pork as we know it, or will we witness a “fork in the road” where PNoy takes the “road less traveled”? Having been a member of both chambers of congress, the president will most likely keep pork in its diet but perhaps insist on making it “lean” by instituting transparency measures in its disposition and allow the public to monitor related projects. A freedom of information act would help enormously in this regard.