Central Committee

December 26, 1991

The domestic conditions are fluid, volatile and favorable for waging the new democratic revolution, especially through a protracted people's war. These are definitely and patently more favorable than the external conditions. In the case of the latter, we need to see through the apparent successes of imperialism and neocolonialism and see the essential further worsening of the crisis of the world capitalist system. The Socioeconomic Crisis Is Worsening

Since the reestablishment of the Party or from the regime of Marcos to Aquino, the basic characteristics of the Philippine social economy as backward, agrarian, preindustrial and semifeudal have deepened and have become ever more devastating to the people. The economic system is afflicted by a chronic crisis that keeps on worsening and ceaselessly lays the ground for the armed revolution of the people.

The economy is controlled by such local exploiting classes as the comprador big bourgeoisie and the landlord class and is an appendage of the world capitalist system. It is an economy whose principal means of production is agriculture, that is without basic industries and that is dependent on imported equipment, components and fuel for the production of agricultural and manufactured goods for local consumption and of raw materials for export.

The economy exports raw materials in the main in order to earn the foreign exchange for purchasing from abroad a wide range of essential producer and consumer goods as well as luxuries for the upper classes. Such low value-added exports as garments, semiconductors and toys bring a marginal amount of foreign exchange income. The export of labor power has earned far more foreign exchange than any single export commodity. But this has diminished since the contraction of the labor market in the Middle East.

The economy is not only in a state of recession but is in a state of depression if the real figures can be established. Even the official statistics declare that the gross national product has continuously gone down since the last quarter of 1990. The fall in GNP up to the last quarter of 1991 is considerable. And the statisticians of the IMF and the Philippine government are trying to manipulate the figures to produce a year-end GNP growth rate of 0.5 percent or one-half percent.

At any rate, the Aquino regime has completely failed to fulfill its promise of making the economy recover to the level of 1981, notwithstanding budgetary expenditures of nearly P/ 1.3 trillion, more than P/ 100 billion additional domestic public borrowing (83 percent of which is in short-term treasury bills) and increased foreign borrowing which is up by several more billions of dollars up to the end of the regime in June 1992.

The IMF is applying on the Philippine government a "stabilization" or austerity program to cut down deficit spending, impose a levy of five percent even on essential producer and consumer imports and ensure that foreign debt-servicing enjoys the highest priority. The austerity measures have resulted in the sharp reduction of local production, the breakdown of public services and the deterioration of the standard of living.

The balance of trade deficit continues to rise. At yearend 1991, the trade deficit was expected to go beyond the level of US$ 4.0 billion out of an estimated total foreign trade of US$ 20 billion, despite the attempts to discourage imports. The terms of trade for Philippine exports have ceaselessly deteriorated in general. The Philippine economy has to keep on begging for more loans in order to maintain itself at lower levels of operation or at one lower level of austerity after another.

The accumulated foreign debt of US$29 billion by itself has become a crushing burden. This official figure is misleading because rescheduled debts are taken out of public accounting. At any rate, foreign commercial banks continue to reduce their lending. Thus, the Philippine government continues to beg for and incur debts on a bilateral basis and from the multilateral financial agencies. The debt service reached the level of US$ 5.6 billion or 76 per cent of export income last year.

The budgetary deficits have increased from year to year. Local public borrowing has been resorted to cover these and has gone beyond the level of P/300 billion. The bulk of public spending is for the servicing of foreign and local public debt and for the military and police establishment, including the paramilitary forces. Foreign debt service accounts for more than 40 per cent of the budget and the military and police establishment, easily more than 15 per cent, in a more accurate accounting.

The military budget is made to appear small by the segregation of the amounts for "civil" though total-war related offices, programs and projects of the national defense, interior and other departments; the Philippine National Police and paramilitary forces; the National Intelligence Coordinating Agency, intelligence funds under various departments; military schools, etc. In addition to what the military takes from the Philippine government budget, it gets from the U.S. what is equivalent to 63 per cent of its total requirements for operations and equipment.

Government spending is largely nonproductive and characterized by corruption at various levels of the bureaucracy. Funds are dwindling for such basic social services as public health, education, housing and the maintenance of the infrastructure. Social relief and rehabilitation of victims of the long series of frequent major calamities (earthquakes, volcanic eruption, typhoons, floods and drought) have been grossly inadequate and further reduced by corrupt practices.

Aquino's term is coming to an end. There has been a general economic decline from 1986 to 1991. The current regime is notorious for not having a single industrial project, for retrogressing in land reform legislation and spending billions of pesos for the maintenance of a department of agrarian reform but only a few millions for token expropriation of land for redistribution and for allowing the deterioration of infrastructure and public services.

Seventy percent of the population or 7.4 million of the 10.5 million families (average of six persons each) in the country fall below the poverty line of P/ 4997 (US$ 185). Some 30 percent or 4.5 million families live below the P/2283 (US$ 84.50) food threshold. Eighty percent or one million families in the national capital region (Metro Manila) live below the poverty line.

There is massive accumulated unemployment, approaching 50 per cent of the total labor force of 27.5 million. As of the third quarter of 1991, the official unemployment rate is 17 per cent (4.5 million) and the official underemployment rate, 30 per cent (9.0 million). Those classified as underemployed are in fact unemployed. And among those considered employed, a sizable percentage do not have full and regular employment. There are false criteria that official statisticians go by in their random surveys.

There is hyperinflation in the country although the officially admitted rate is only 19 per cent as of the third quarter of 1991. It is cutting down the real income of the people even as wages are being pressed down. There is now an extremely wide gap between the rate of increase in the legislated wage rates and the official rates of increase in the prices of basic commodities. The official rate of inflation is understated by a manipulation of the basket of basic goods.

Essential producer and consumer goods are in short supply. Staples are in short supply and are being imported. The cost of fuel is ever rising and being passed on to the ordinary consumers and riding public. The price of oil is domestically kept above the level of the world price in order to assure the multinational firms of a hefty profit. Basic social services have broken down and are being priced far beyond the ability of the masses to pay.

Taxes are being increased to satisfy the IMF demand to cut down deficit spending. Interest rates have gone up to more than 23 per cent. Local entrepreneurs are discouraged from production by the high costs, including the levy on imported producer goods, and by the inflow of foreign commodities under the regime's policy of import liberalization.

With the ever deteriorating economic conditions, there is widespread and deepgoing social unrest. The legal democratic mass movement and the armed revolutionary movement can and must arouse, organize and mobilize the discontented masses.

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