End of euphoria in Manila.

(From The Korea Herald)

By Amando Doronila The Philippine Daily Inquirer Asia News Network The inauguration of a new government this week marks the beginning of bad news and puts an abrupt end to euphoria. President Gloria Macapagal-Arroyo has defined the theme of her new presidency as "austerity and simplicity." Days ahead of the inauguration, National Power Corp. burst the euphoria with the announcement that power rates would increase more than double to avert a severe electricity crisis, dumping right away on the lap of the new government the burden of providing safety nets to cushion its impact on the poor.

Harsh reminders immediately confronted the new government that it has little time to spare in attacking the fiscal deficit and public debt. The Asian Development Bank has joined the Bangko Sentral ng Pilipinas (the Philippine central bank) in the Greek chorus calling on the administration to undertake a crash program to raise revenues. The ADB said the ratio of revenue to gross domestic product, which was 14.4 percent last year, would slip to 14.1 percent this year, with the prospect of the government resorting to more debts to close the gap. BSP Governor Rafael Buenaventura emphasized the urgency of drastic reforms to raise revenue, spur economic growth and encourage larger investment flows.

Ahead of Macapagal-Arroyo's proclamation by Congress, a paper prepared by the New York-based Council on Foreign Relations presented a grim scenario that was echoed by the warnings of Buenaventura and the ADB. The paper underlined one issue that was hardly confronted by the president and most of the presidential candidates - the population explosion - as well as the sluggish economic growth. In the 1980s, when some Southeast Asian economies had double-digit growth rates, the Philippines' annual GDP growth averaged 1.6 percent.

"At present, 46 percent of the population of 80 million lives on two dollars per day or less," the CFR paper said. "High population growth, currently 2.36 percent per year, affects economic progress. Per capita growth in the Philippines was 86 percent between 1975 and 2001." On the deficit, the paper said the government aimed to balance the budget by 2009, but it points out that most analysts believe the government "will not reach the 2009 target unless it accelerates the annual rate of reduction. More to the point, economists increasingly fear that even a ...