Or GMA’s circle of advisers most probably do remember but don’t care about the implications of their action, emboldened perhaps by the failure of the opposition to pin down the President for alleged sins that she and her family have done or are doing.
They managed to convince the president into signing last month Executive Order 588, a brief one-page memo repealing EO 138 of the ousted President Joseph Estrada signed in 1999.
Estrada, a college dropout who was forced out of office by the country’s second popular revolt for allegations he received bribes from illegal gambling lords, had the mind to prohibit the government, particularly the executive branch, from pursuing the Masagana 99 route, one of the biggest and costliest dole outs initiated by the Marcos regime.
EO 138 barred government agencies and corporations from engaging in direct lending programs that entailed subsidies. Instead, it directed state-owned financial institutions to extend financial facilities to microfinance institutions, cooperatives, rural banks and other non-government groups so that these entities in turn would be able to provide commercially viable lending services to small borrowers.
The Foundation for Economic Freedom, a group of economists opposing Arroyo’s EO, say that nearly 200 banks are engaged in microfinance today from just 55 before Estrada’s order took effect.
From newspaper accounts, it appears that Arroyo signed EO 588 without consulting the Department of Finance, the agency that had been working its butt off trying to figure out the best way to raise more taxes and stop government debts from swelling.
Sources say that up to now, the finance ministry and its colleagues in fiscal management haven’t been invited to be part of ongoing meetings to formulate the framework of the president’s newest program, which awfully stinks like the Marcos initiative almost three decades ago.
Masagana 99, for those of us old enough to remember, was launched in the 70s supposedly to help farmers boost production to 99 sacks of rice at 50 kilograms each for every hectare. Bulk of the loans was never paid.
Undeterred by the failure of Masagana 99, Marcos started another similar livelihood program called the Kilusang Kabuhayan at Kaunlaran in the 80s. As expected, that too bled the government coffers dry.
A government study showed the state lost P40 billion in principal and interests on these two slogans that helped the late dictator stay in power for two decades. Dole outs have been proven an effective tool to win the support of the voting masses.
In the first place, these direct lending facilities will offer interest rates below prevailing market levels which, admits Arthur Yap, who heads the Presidential Management Staff, is the main thrust of the new EO. Administration officials believe that by allowing state-owned corporations, financial institutions, and local government units to lend funds below market rates, the economy would be jump-started and people would be plucked out of poverty.
For instance, the Bangko Sentral ng Pilipinas, in a website discussion on its microfinance program, said previous direct lending program like the Masagana 99 failed because money that the government lent was perceived as a dole out, something that borrowers thought they need not pay because it came from the state that was being run by politicians and not by a bank managed by businessmen.
Foreign multilateral agencies like the International Monetary Fund and the World Bank repeatedly say that government-directed credit doesn’t achieve economic growth because it misallocates resources, reduces return on capital and in the end, dampens the economy rather than coax growth.
World Bank had warned that these types of loans often go to unprofitable projects that make repayment a problem. Worse, some borrowers refuse to pay up since they think the state had intentionally allocated the money they borrowed for their personal needs.
Apart from wreaking havoc on the budget plans, EO 588 also undermines the fledgling but seemingly successful microfinance platform that the private sector has started. Banks and other institutions have made available loans of up to P150,000 to small borrowers since the 1999 EO of Estrada.
With private profit-oriented groups operating the program, strict loan monitoring had kept repayment rate at more than 95 percent, which is better than the pace of repayment among corporate borrowers who have defaulted on billions of peso loans.
The microfinance industry, on the other hand, now has close to P4 billion worth of outstanding loans to micro-borrowers nationwide. If government entities are allowed to lend to this same industry at subsidized rates, commercially operating lenders will be eased out, thus setting back the program that would have truly helped the country’s poor to escape poverty.
Remember Marcos and his dole out and subsidy tactics?
In signing the agreement, both parties gave full support to the effort to further promote and develop collegiate basketball through an annual competition that will bring together the top teams of various leagues all over the country.
This yearly search for the country’s best collegiate team aims to elevate the level of competition and broaden the competitive exposure of collegiate players who may in future be the stars of Philippine professional basketball.
Being champion of a league of tertiary level schools is already an achievement, but to be crowned as the Philippine Collegiate Champion is something else. Not to forget that with it goes with scholarship funding and athletic facilities worth P500,000 that should go a long way in assisting the sports program of the winning school.
Now that the NCAA wars are over, and the UAAP hostilities are due to wind down within the week, other equally ranked collegiate teams are just waiting for the battle to start. Using a knock out series (losers go home!) format, other qualifying college and university teams from Metro Manila, the Visayas and Mindanao are just waiting to battle it out and grab the title of Philippine Collegiate Champion 2006. Watch the action on Solar Sports.
Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com or at reygamboa@linkedge.biz. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz