FOREIGN CREDITORS OR THE PEOPLE? ARROYO’S DILEMMA GROWS BY THE DAY

MEDIA RELEASE
IBON Foundation, Inc.,
3/F SCC Bldg 4427 Interior Old Sta Mesa, Manila, Philippines
Tel. (632) 713-2729, 713-2737 E-mail: media@ibon.orgJuly 14, 2005

The Finance Department’s knee-jerk reaction to the recent outlook downgrade imposed on the country by Fitch and Standard and Poor’s exposed the serious dilemma that President Arroyo and her economic managers face, according to independent think-tank IBON Foundation.

To assure foreign creditors that the government is determined to pursue fiscal reforms, assistant Finance Secretary Gil Beltran said that they may revive the proposal to impose a tax on text messaging. But the political situation does not allow for such ‘bitter pills’ as the demand for Arroyo’s resignation intensifies by the day.

Economic mismanagement plus the political crisis have brought Arroyo to a tight spot. With an economic program that heavily relies on foreign debt and capital, Arroyo pursued fiscal reforms designed by the International Monetary Fund (IMF), ignored calls for a substantial wage hike, allowed oil pump prices to soar, etc.

Arroyo now wants to slow down with these policies, and may even entertain to reverse them, amid mass protests for her ouster, but this would displease foreign creditors and investors.

This dilemma shows that the Arroyo administration is no longer viable. She has long lost public support due to her anti-people policies and mismanagement of the economic and fiscal crises. Now indicators show that she is also losing the trust of foreign creditors and investors due to her handling of the political crisis.

The President may weather the present storm but it will never last as long the contradictions between her economic policies and the Filipino people’s interest remain. (end)