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Stimulus Package Mere Recycling, Misleading – Solons

Posted by lenolea on February 7, 2009

Members of the House Committee on Economic Affairs grilled National Economic Development Agency (NEDA) Director General Ralph Recto over the P330-billion economic stimulus package at a hearing, February 4. The stimulus package, which is much touted by the Arroyo administration, turned out to be a mere repackaging of old programs. Bayan Muna Rep. Teddy Casiño called it a “simulation package”.


Members of the House Committee on Economic Affairs grilled National Economic Development Agency (NEDA) Director General Ralph Recto over the P330-billion ($6,316,321,374 at the current exchange rate of $1=P47.496) economic stimulus package at a hearing, February 4. The stimulus package, which is much touted by the Arroyo administration, turned out to be a mere repackaging of old programs.

Dennis Arroyo, NEDA National Planning and Policy Staff (NPSS) director, presented the Arroyo administration’s so-called ‘economic resiliency plan’ during the said hearing.

While acknowledging the vulnerability of certain sectors to the global economic crisis, NEDA’s Arroyo maintained that the Philippine economy is resilient.

NEDA’s Arroyo presented the components of the P330-billion ($6,316,321,374) stimulus fund – P160- billion ($3,368,704,733) for the incremental budget; P40 billion ($842,176,183) for corporate and individual tax breaks; P100 billion ($2,105,440,458) for government-owned and controlled corporations (GOCCs), government financial institutions (GFIs) and private sector and P30 billion ($631,632,137) for temporary additional benefits to Government Service Insurance System (GSIS)/Social Security System (SSS)/ PhilHealth members.


However, Representatives from the opposition were not convinced.

Cagayan de Oro Representative Rufus Rodriguez retorted, “The P160 billion is the increase from the 2008 to the 2009 national budget. The P40 billion tax relief …this we approved in the middle of 2008. It’s hardly part of the stimulus package.”

Rodriguez asked NEDA Chief Ralph Recto, “[This is like] recycling what we’ve approved. Isn’t this misleading?”

Unable to answer the question, Recto replied, “The full benefits will be felt in 2009.”

When Bayan Muna Representative Teodoro Casiño Jr. asked if there is a concrete response from the Arroyo government to address the global economic crisis, Recto replied that there was none, “If you’re looking for a supplemental stimulus budget, di kaya ng Pilipinas ‘yan. (The Philippines cannot afford that.)”

Recto admitted that they are financially conservative. He said the Arroyo administration must always consider the credit-worthiness of the country.

SSS officials attending the hearing were asked about the P12.5 billion ($263,180,057) commitment announced by SSS Chair Romulo Neri.

Under the NEDA plan, the P50 billion ($1,052,720,229) from social security institutions could be tapped for the following projects: LRT Line 1 Extension, MRT 3 Capacity Expansion, LRT Line 2 East Extension to Masinag, and LRT Line 1 South Extension Project.

SSS Senior Vice President for Investments Edgar Solilapsi said the SSS Board has not yet passed a resolution regarding Neri’s proposal.

This angered Rodriguez, “It is premature to announce the package.”

Recto said, “It is a plan, not a package.”

Rodriguez asked Recto which commercial banks have pledged commitment for government infrastructure projects. Recto said all the top banks are interested but admitted that no commitments have been made.

“The package that has been announced has no firm backing,” Rodriguez said.

Casiño said, “It does not stimulate anything. Maybe we should not call this a stimulation package. Maybe we should call it a simulation package.”

Asked about the additional benefits for SSS members that are included in the package, SSS Assistant Vice President Rizaldo Capulong said, “The SSS has not committed to any additional benefits.”

Capulong said they just received instructions a day before the hearing to consider the provision of additional benefits.

Safeguards vs corruption?

Casiño asked Recto what safeguards have been instituted against corruption. “We don’t want another NBN-ZTE deal.”

The $329 million National Broadband Network (NBN) deal with Chinese firm ZTE was cancelled after generating controversies.

Recto replied, “There are better ways of doing it. We are going through that process.”

Gabriela Representative Liza Maza sought for a review of projects. “Some infrastructure projects, after evaluation, were found not to be needs-based but supplier-driven.”

“We need to re-examine these projects,” said Maza. She said multilateral agencies World Bank (WB) and Asian Development Bank (ADB) decided not to pursue some of the projects due to corruption.

Urgent reforms

Jose Enrique Africa, research head of independent think-tank IBON Foundation said, “Measured against the scale of the problem, the government’s measures for supposedly dealing with the crisis are sorely lacking.

He said that the 2009 budget is far from being the “pump-priming” budget it is claimed to be. He said it is the smallest since 1990.

Africa said the principle should be, “Pinakamabilis na ginhawa sa pinakamaraming tao.” (The most immediate relief for the most number of people.)

He shunned dole outs and subsidies. The Arroyo government plans to double the budget for conditional cash transfers, continue to implement accelerated hunger-mitigation program, add a P1 billion ($21,054,404) contribution to the PhilHealth indigent program, provide more student loans, among others.

Africa said subsidies do not create jobs and such programs are prone to corruption.

Africa recommended an increase in social services spending. He said real capita spending for social services should be restored to the 1997 levels. This would mean an additional P205 billion ($4,316,152,939) for education and P36 billion ($757,958,564) for health.

Africa said, “Sadly, this government is obsessed with pleasing foreign creditors.” He noted that a huge chunk of the national budget goes to debt servicing.

Africa also said that the 12-percent value-added tax (VAT) on food and oil must be scrapped. He said that two-thirds of the poor’s expenditures goes to food.

Africa asserted the economy does not have sound fundamentals. Unless radical economic policies are implemented, job creation will always be a problem, he said.

He said that agrarian reform and national industrialization are the solutions to the worsening economic crisis.

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