Under the Macapagal-Arroyo regime:
The national economy continues to decline

Basahin ang artikulong ito sa Pilipino

The national economy continues to be in the depths of crisis under the Macapagal-Arroyo regime. Even the limited relief brought about by EDSA 2 could not conceal the intensifying economic crisis and its cruel impact on the Filipino people. This belies the reactionary propaganda that our �economic fundamentals� are sound, and the Macapagal-Arroyo regime�s propaganda that the cause of the economy�s continuing downturn is the �loss of confi dence� of foreign investors due to anomalies committed by the past regime.

The country�s economy has long been mired in crisis. It has not been able to recover from the blow of the 1997 financial crisis. Faithful implementation of the neoliberal policies of liberalization, deregulation, denationalization and privatization by past regimes has wrought unprecedented destruction on the national economy and poverty and deprivation on the Filipino people.

Despite this, the Macapagal-Arroyo regime has not outlined a new economic program. Macapagal-Arroyo has already declared that she would continue Estrada�s �pro-poor� economic program. At a time when the peoples of the world are vehemently condemning neoliberal policies, the new regime is staunchly standing by �globalization� and �free trade� in accordance with US imperialism�s dictates. This stance is no different from Gloria Macapagal-Arroyo�s staunch advancement and advocation of legislation favoring such policies before she became president.

Macapagal-Arroyo had just assumed the presidency when the International Monetary Fund and World Bank issued an �assessment� and a number of �recommendations� to the new regime. The two institutions ordered the immediate regulation of the huge national defi cit through new taxes, further liberalization of the public sector, especially the energy and health sectors, and the liberalization of the banking sector.

The Macapagal-Arroyo regime is scrambling to implement these dictates in exchange for a $300-million loan from the World Bank. It has already announced a policy of austerity to trim down the budget defi cit. It is also fasttracking the long-delayed privatization of the Philippine National Bank and the National Power Corporation.

General indicators of crisis

The country�s gross national product and gross domestic product are estimated to grow only by a maximum of 3% in 2001. This is the lowest growth target in the entire Southeast Asian region. The target was forcibly lowered from 4.5%-5.5% due to the slowdown of the US economy, the further decline of Japan�s economy and the expected downturn in the export of electronic components.

Electronic exports are the country�s main re-export and their biggest market is the US. This 2001, total imports to the US from the Philippines fell by 13.6%, resulting in a 7.5% decrease in the country�s electronic components exports.

The balance of payments defi cit already amounts to $267 million (P13.35 trillion). This means that last year, capital outfl ow through trade, remittances, bank transactions, direct and portfolio investments exceeded capital infl ow. Pro-imperialist agencies continue to warn against investing in the Philippines. In the fi rst quarter of 2001, up to $466.7 million in portfolio investments left the country compared to the $464.7 million that came in (resulting in a $1.7-million defi cit). The amount that fl owed in is a mere one-third of the $339.4 million that entered the country in the fi rst quarter of 2000.

Indicating the worsening economic slowdown is the decline of Philippine foreign trade. In the fi rst quarter of 2001, foreign trade dropped 7.2% compared to last year. There has been a trade surplus but only because import values declined more (11.7%) than export values (3.3%). This is the fi rst time that both import and export values decreased. This indicates the drying up of old inventories which pushed up export values in past years despite the continued decline of imports since 1998.

Since the decline in the country�s imports, many industries dependent on imported materials have carried out widespread retrenchment of workers to defl ect high costs of production. Others eventually closed shop. In the face of the persistent fall of this year�s foreign trade, more workers are sure to be retrenched and more factories shut down.

At the same time, the country�s local production and net sales fell by 2.4%. The biggest decline was in the production of food, electrical machinery and garments. Production costs rose by 7.8% and sales costs by 10.4%.

In February 2001, the infl ation rate went up to 6.7% from 3.9% within a year. Among those which registered the biggest price increases are LPG, kerosene, electricity and water bills. Prices of medicine and health services also continued to rise. A peso in 1994 is now worth a mere 63 centavos.

The peso-dollar exchange rate remains unstable. The peso�s value hovers at around P50 compared to the dollar despite efforts by the Bangko Sentral ng Pilipinas to curb currency speculation and attract new capital through relatively lower interest rates.

The reactionary government is bankrupt. The country�s foreign debt has gone up to $52 billion (P2.6 trillion) and the national budget defi cit is expected to reach P200 billion this year.

Impact on the people

The Macapagal-Arroyo regime has admitted that unemployment rates rose to 11.4% from 9.4% last year (affecting 24% of the entire labor force). In reality, 50% of the entire labor force are either out of work or underemployed. This is due to widespread layoffs, the absence of new jobs and labor fl exibilization.

Liberalization has exacerbated poverty in the countryside. The dislocation of farmers continues due to rampant land-use conversion and dumping of cheap agricultural products from other countries. Prices of local agricultural products are falling due to the overimportation of cheap agricultural products. This, even as farmers� expenses for imported pesticides and seeds are rising. Recently, already low prices of local palay fell further due to the overimportation of rice (more

than 500,000 metric tons). The Macapagal-Arroyo regime approved the importation despite sufficient local production to fulfi ll the minimum access volume mandated by the General Agreement on Tariffs and Trade. Also, due to importation, there is an oversupply of garlic, chicken and other food items.

Contrary to Macapagal-Arroyo�s promise, layoffs in the public sector continue due to the privatization of public corporations and institutions. More than 300 companies are likewise set to retrench 100,000 workers in the second quarter of the year because of rising costs of production and declining sales. Most affected are workers in the electronics sector. Private companies in public utilities have likewise threatened to lay off workers if the Macapagal-Arroyo regime does not grant their demand for an increase in the price of their services.

The minimum wage is still pegged at P250, even as more than P418 (P501 in Metro Manila) a day is needed for a family of six to live decently. Up to now, demands for a P125-increase in workers� wages and a P2,500-hike in government employees� salaries remain unheeded. The Macapagal-Arroyo is even planning to cut already low wages and salaries by increasing obligatory contributions to the SSS and GSIS by up to 12%.

So long as the Macapagal-Arroyo regime remains subservient to the dictates of its imperialist masters in implementing the policy of liberalization, deregulation and privatization, the economic crisis is sure to worsen. To give foreign capitalists and the ruling class some breathing space, the regime is surely going to pass on the burden of crisis to the people.

Thus, the waging of economic struggles to alleviate the poverty and deprivation the masses of the people and defend their livelihood and rights has become more urgent. There is need to intensify the struggle against widespread layoffs, contractualization and casualization that attack workers� jobs and rights. There is likewise a need to strengthen the struggle against privatization in the public sector. The demand for an increase in workers� wages and government employees� salaries is more justifi ed than ever.

In the countryside, there is need to continue strengthening the struggle against widespread land-use conversion and liberalization in agriculture. Moreover, there is need to continue to struggle for genuine land reform to enable farmers to improve their livelihood.

April 2001
English Edition

	Editorial: Under the Macapagal-Arroyo regime: Prepare for bigger battles, achieve greater victories!!
	Under the Macapagal-Arroyo regime: The national economy continues to decline
	Under the Macapagal-Arroyo regime: Conflict and compromise within the ruling class
	Under the Macapagal-Arroyo regime: Estrada�s arrest is warmly welcomed by the people Statement by Gregorio "Ka Roger" Rosal National Spokesperson Communist Party of the Philippines April 26, 2001
	Under the Macapagal-Arroyo regime: The fascist state continues on a rampage
	Central Cordillera Agricultural Program: Exploitation under the guise of "development aid"
	Maj. Noel Buan: NPA frees prisoner of war
	News of struggle