A good read. His main point, better crisis now than much much worse later.
The Philippines' crisis is a one-off situation, brought about by government debt, and does not threaten a return of the Asian crisis, which was mostly caused by private debt. While the rest of Asia has been on a recovery path since 1997 and 1998, Philippine finances have been gradually deteriorating. This may not be obvious given that growth of gross domestic product has been running at a respectable rate, by Philippine standards, of 4.5 percent. And the Philippines' current account is, unusually, in surplus.
The crisis is summed up in a single figure: accumulated public sector debt estimated at 130 percent of GDP. Of this, two-thirds is government debt - half in foreign currency - and the rest that of state-owned, quasi-commercial entities. A portion dates from the 1980s, but the Marcos era is now an outworn excuse. Despite constant promises to improve tax collection and raise prices for utilities, the annual total public sector deficit is stuck at 6 percent of GDP.
That's the problem --- debt in foreign currency: deflate the peso and it will cost more. And ??? !!! crazy governments have used the policy of borrowing as a tool to extend income and yearly budget problems. !!! Dicretionary Financing has it's limits. Bad Accounting!
Interestingly, I celebrated this year as I am completely debt-free, and have been wonderfully positive in my personal books. If you add the National Debt though as a liability, then there would not have been any cause for me to celebrate, after all, I would have been 6-feet deep underground if I have to pay my share of this country's debt which is in foreign currency. In fact it would be equal to me as a corporate slave four-fold --- meaning to say, my grand children will still have to pay for it and render service in man-hours only to repay their share.
Bad Bad Bad.
posted by Jdavies @ 9/01/2004,
Jdavies lives in Quezon City, Philippines and has been blogging since 2002. A brand manager in a leading technology company and a freelance new media/web strategy consultant, he has refocused his blogging from personal, political & sociological observations, to marketing-related efforts and Internet trends that are relevant to his career and branding advocacies.
About This Blog
This blog is a depot of thoughts and observations on marketing trends which remain personally relevant to the Author as far as his marketing career is concerned. Having evolved from the personal blog of Jdavies, much of the earlier work contained herein are laced with personal speculation, political views, and similar advocacies. These posts are being kept for posterity's sake and for no other reason. No effort is being made to claim that the author will not contradict himself from his previous positions or that such advocacies are absolute.
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