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Wednesday, December 11th, 2019

Philippine National Bank : Structural adjustments

by November 18, 2016 General

THIS is what President Duterte and his economic team must look into: structural adjustments, a set of economic policies created and imposed by narrow-minded neoclassicists of the World Bank and the International Monetary Fund (WB-IMF) on debtor-countries in order to access more concessional loans. These policies usually come in exchange for trade deregulation, privatization, tax reforms, deficit spending and floating rate exchange, among others.They are what the late Harvard-trained Filipino economist-lawyer Alejandro Lichauco described as policies imposed by the WB-IMF neocolonialists who have dehumanized Filipinos. ‘They are evils capable of planning the mass murder of peoples. They planned the mass enslavement of Africans and American Indians,’ he said.The late President Corazon Cojuangco Aquino, her son Benigno and the three other presidents between them have failed in their time to examine these WB-IMF prescriptions for the Philippines, which were mostly prepared by neoclassicists whose macroeconomic fallacies largely resulted in economic hardship.For instance, they swallowed hook, line and sinker these elitist prescriptions that consequently caused the country to sink deeper in debt and further widened the gap between the poor and the rich. The country’s debts, both foreign and domestic, now stands at more than P6 trillion.Related to these policies is the March 2009 revealing report of distinguished American economist Joseph E. Stiglitz, a recipient of the Nobel Memorial Prize in Economic Sciences in 2001 and the John Bates Clark Medal in 1979, and 17 other UN economic experts that the policies of the WB-IMF and other financial institutions had pushed the very policies of deregulations and financial and capital market liberalization that led to the economic crisis in the US and its spread around the world.Indeed, the past administrations cannot escape responsibility for their failure to shape the future because they controlled the currency, contracted debts, shaped the national budget and decided the economic priorities with their hot shot technocrats, mostly IMF-WB disciples.Congress (the Senate and the House) cannot also escape responsibility for the country’s economic debacle, particularly on the issue of debt servicing, for deliberately abdicating its power over public funds in two specific instances.In fact, it is in this area of public responsibility and accountability that betrayal of public trust appeared to have been flagrantly committed by most of the country’s politicians over the past 30 years.Under the 1987 Aquino Constitution, Congress is the only government branch empowered to authorize and appropriate funds, two distinct congressional functions but inextricably linked with each other, to service debts and spur economic growth.The Constitution is very clear on this in Section 24, Article VI, which explicitly says: ‘All appropriation, revenue or tariff bills, bills authorizing increase of public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.’This happened because Congress failed to amend or repeal Presidential Decree (PD) 1177, the Marcos budget law, that automatically services the country’s foreign and domestic debts on the sole discretion of the finance secretary and the governor of the Central Bank.It also failed to abrogate the Cory Aquino-issued Proclamation 50 and 50-A that dovetailed PD 1177 and authorized President Aquino, without interference from Congress, to assume all the foreign and domestic liabilities incurred by the Marcos regime and unjustly dumped them on the shoulders of the Filipino people.Proclamation 50 and 50-A, signed respectively by President Aquino on December 15, 1986 and June 8, 1987, legitimized her economic policy of privatization, which mandated the rehabilitation of debt-ridden government financial institutions (GFIs), such as the Central Bank, Philippine National Bank and Development Bank of the Philippines.According to the Freedom from Debt Coalition, the idea of rehabilitating the GFIs was the brainchild of then-Finance Secretary Jaime Ongpin and Central Bank Governor Jose ‘Jobo’ Fernandez (both deceased, the former committed suicide and the latter died of cancer), who reasoned that ‘it will not be a good picture for the government if the GFIs were closed due to unpaid debts.’In other words, they were more concerned of the country’s image abroad than the country’s poverty-stricken people.Later, Sen. Franklin M. Drilon, who was then the secretary of justice in Mrs. Aquino’s time, upheld the proclamations when some lawmakers questioned their use, stating that the ‘law vests upon the Chief Executive the discretion whether or not to undertake such assumption [of debts]’even in a situation where the ‘value of assets transferred is less than the amount of liabilities assumed.’Curiously, Drilon issued this legal opinion after the Aquino Constitution took effect in 1987, explicitly mandating Congress to assume full control over the disposition of budgetary liabilities.Congress should have asserted on this mandate and called the attention of the Executive department or brought the issue to the Supreme Court for resolution or decision.But because of this inaction or culpable violation of the Constitution, the country has always been in a serious financial crisis, and thus remains until today the economic laggard of the five original members of the Association of Southeast Asian Nations: the Philippines, Singapore, Thailand, Malaysia and Indonesia.(c) 2016 Business Mirror Provided by SyndiGate Media Inc. (, source Middle East & North African Newspapers