A full-blown economic storm

The perfect economic storm is now upon us.

As our political leaders as recently as this week continued to get caught up in the whirlwind of controversy surrounding the former president Gloria Arroyo, a storm of a different kind had been brewing on the horizon.

A few weeks ago, I had warned that the country was sailing right into this tempest almost unaware as its political class seemed more enamored by internal rather than international events. Finally, the stiff economic headwinds that I had been speaking of have finally turned into a fierce global contagion emanating from the US and Western Europe and spreading into Australasia.

The US is already half-way into a lost decade. Recent economic figures point to a prolonged slow recovery, and the likelihood of another recession now imminent. Western Europe is gripped with the bailout woes of the PIIGS economies with Italy now looking more likely to default. A bailout would require Germany and France, two of the largest economies, to undertake austerity measures of their own.

Even after Democrats and Republicans signed a deal to lift the debt ceiling, credit ratings agencies downgraded their outlook for the country as fixing their fiscal house in the long run seemed unlikely given the highly contentious nature of the package required for this almost ceremonial task. The tsunami has now hit Asian markets with East Asia and Australia taking a battering today.

China which has its own version of the sub-prime mortgage crisis developing with town and village councils saddled with loans resulting from its stimulus program could now find its growth slowing to below sustainable levels. And of course, the uprisings in MENA are continuing to raise the price of oil.

The Philippine government which was responsible for restraining growth in the fourth quarter of 2010 and the first quarter of 2011 with its self-imposed fiscal contraction will now wish that it had done more in those periods to foster growth to protect it from the global economic slowdown that now seems apparent.

What is at stake here are the remittances from overseas and the exports of goods (electronics, cars and machinery) and services (tourism and business processing) that have propped up our economy. With demand collapsing in the global economy, don’t expect these flows to materially rise in the coming years.

Secondly, the flow of investments or hot money would in a period of uncertainty normally seek safe havens. Unfortunately, the traditional safe haven of US treasury may no longer be as reliable as before. This could lead to significant depreciation of the greenback which will hit our competitiveness in global markets even more.

Thirdly, the PPPs which the government was hoping to augment its meager 2.5% of GDP spend on infrastructure (5% is the benchmark) could be threatened as investment funds now re-calibrate their tolerance for risk. The emerging market of Asia would be an alternative to the ailing Western economies, but that is no guarantee. With global demand easing, the need for foreign investments to expand production capacity diminishes.

Finally, what is to become of the government’s 7-8% growth target (minimum of 5%) on average for the next five years? It is more likely that global events will weigh down on the prospects for this. The government will have to work harder now to maintain fiscal and economic stability.

GMA replacing officials en masse

GMA replacing officials en masse
By Paolo Romero and Pia Lee-Brago
The Philippine Star

MANILA, Philippines – After getting the green light from the Supreme Court (SC) to appoint the next chief justice, President Arroyo has apparently gone on an appointing spree, naming an ambassador, several officials of government agencies, and replacing the entire boards of two cultural institutions with barely three months left in her term and despite the constitutional ban on midnight appointments.

In what some quarters are calling a pre-election “massacre,” the entire boards as well as the heads of the National Museum and the National Historical Institute (NHI), both agencies under the Office of the President, were changed, with most of them not even knowing they had been replaced.

The President also appointed business tycoon Alfonso Yuchengco, 86, as ambassador to Germany, with current Ambassador Delia Domingo-Albert learning about it only when she went to Malacañang last Friday to receive an award from a women’s business group.

Sources said Mrs. Arroyo told Albert, a career diplomat and former secretary of foreign affairs, that she had appointed Yuchengco as the new envoy to Germany when Abert sought confirmation of rumors she had heard. Albert is set to retire from the foreign service in June.

“We have learned of Yuchengco’s appointment but we have not received official copy of his appointment. Ambassador Albert stays so far,” a ranking official of the Department of Foreign Affairs (DFA) told The STAR.

The same official pointed out Mrs. Arroyo clearly violated the ban on appointments during the election period.

Article VII Sec. 15 of the Constitution says, “Two months before the next presidential elections and up to the end of his term, a President or Acting President shall not make appointments, except temporary appointments to executive positions when continued vacancies therein will prejudice public service or endanger public safety.”

Retired journalist Larry Henares assumed the chairmanship of the National Museum, replacing businessman Antonio Cojuangco, who was not told that he had been replaced. The new National Museum board reportedly met at the Palace yesterday afternoon and elected Malacañang Museum director Jeremy Barns as the new museum director, replacing Cora Alvina.

The other members of the board were not identified, but Senate and House representatives to the museum board, Sen. Manuel Roxas II and Marikina Rep. Del de Guzman, were reportedly not informed of or invited to the board meeting.

The board members and executive director of the NHI were also reportedly replaced, but the names of the new appointees were not revealed. It was not clear whether NHI chairman Ambeth Ocampo was also replaced.

Last December, Mrs. Arroyo appointed Cebu Rep. Antonio Cuenco and businessman Francisco Benedicto as ambassadors to Italy and China, respectively.

The appointments raised a howl among career officials who pointed out that Cuenco and Benedicto would only serve as envoys for less than six months, co-terminus with the remaining term of office of President Arroyo until June 30.

The Union of Foreign Service Officers (Unifors) also reminded the President that Benedicto is already 65 years old, and his appointment would violate Section 23 of the Foreign Service Act.

Mrs. Arroyo also appointed Assistant Secretary Rommel Garcia, deputy director for operations, to replace Clarence Paul Oaminal as vice chairman of the Dangerous Drug Board (DDB).

Oaminal, for his part, said he was surprised by the appointment but stressed he is not contesting his sudden removal on the orders of the President.

“I know that if the late (Press) Secretary (Cerge) Remonde were alive today, I would not have been replaced the way it was done,” Oaminal lamented.

He said he was so busy going after illegal drugs and drug lords, “I forgot to watch my back.”

Oaminal said he could not explain why he was suddenly replaced. He also learned that upon receiving the letter from Galvante, his removal from DBB was retroactive to March 5, which he said, was before the election ban on appointments that started March 10.

Mrs. Arroyo yesterday also appointed retired Court of Appeals Associate Justice Perlita Tria-Tirona to head the newly formed independent committee that will review all major tax evasion and smuggling cases dismissed by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC).

Other members of the Review Committee that were appointed include Kapisanan ng mga Brodkaster ng Pilipinas (KBP) vice chairman Butch Canoy, Publishers’ Association of the Philippines Inc. president Juan Dayang, Federation of Filipino-Chinese Chambers of Commerce and Industry Inc. president Alfonso Uygongco, and Philippine Exporters Confederation Inc. representative Oscar Barrera.

Mrs. Arroyo has also promoted Land Transportation Office (LTO) chief Arturo Lomibao as Undersecretary in the Department of Transportation and Communications (DOTC).

Executive Secretary Leandro Mendoza said on Wednesday that Land Transportation Franchising and Regulatory Board (LTFRB) chairman Alberto Suansing was appointed to replace Lomibao at the LTO.

LTO insiders said they were expecting the turnover of office between Lomibao and Suansing to be held yesterday.

Lomibao, however, appeared and immediately presided over a meeting of top officials of the agency.

Lomibao was said to have been able to prevail on the President to reverse the appointment but there were no officials who could confirm the report.

It was not yet clear who would replace Suansing at the LTFRB.

Earlier, former presidential political affairs adviser Gabriel Claudio was named chairman of the Metropolitan Waterworks and Sewerage System, replacing Oscar Garcia, who still retains his board seat.

The President also appointed retired Sandiganbayan justice Raoul Victorino as chief presidential legal counsel, replacing Natividad Dizon, who had held the post for only two weeks. Dizon was moved to the Board of Pardons and Parole.

Another short-lived appointment was that of Rogelio Peyuan, who was replaced as director general of the Technical Education and Skills Authority (TESDA) only a few days after he assumed office. He was moved to the Office of the Press Secretary. Former TESDA deputy director general for operations Pastor Guiao took over as director general.

Another controversial issue involved Undersecretary Ariston de los Reyes, who was relieved as Defense undersecretary, allegedly because his appointment as presidential assistant had lapsed.

Other appointments include veteran broadcast journalist Mario Garcia as member of the board of the Subic Bay Metropolitan Authority (SBMA) and Civil Service Commission head Francisco Duque III as member of the board of the Pag-IBIG Fund, although there was no vacancy in the Pag-IBIG board. With Jerry Botial