The plot to buy the 2007 elections
HIGH GROUND By William M. Esposo 2006-09-14
TONS of moolah was needed to finance the elaborate operation that secured the 2004 elections for Madame Gloria Macapagal-Arroyo. The Philhealth Card and the Fertilizer Fund are just the most well known of these modes of political patronage.

This early, the opposition is citing the apparent reinvention of funding sources for tilting the balance in favor of the Arroyo regime in the 2007 elections. A recent change in the regime's microfinance policy could provide the administration the opportunity to distribute funds and influence voter's preference.

Last August 8, Madame Gloria Macapagal-Arroyo signed Executive Order (EO) 558, which effectively repealed EO 138 (signed by President Joseph E. Estrada in 1999). EO 558 restored government non-financial agencies (GNFAs) and government-owned or -controlled corporations (GOCCs) intrusion and capability to dispense direct credit services. EO 138 of Estrada limited such activities to government financial institutions (GFIs).

EO 138 is acknowledged to have promoted the development of the microfinance industry. Many institutions, including banks, cooperatives, and non-government institutions, lend P150, 000 and below this amount to small entrepreneurs to encourage startup businesses. This program, in turn, boosts economic growth.

The program, which restricts direct state lending and encourages financing through the private sector, earned the government international awards and recognition for its microfinance program. No less than the United Nations recognized the Philippines in 2005 for having one of the best microfinance programs in the world. In fact, other countries have adopted the Philippine model.

So, why can't Gloria Macapagal-Arroyo leave well enough alone? Why does she have to fix what ain't broke? Is it because this success was the result of an Estrada EO and she cannot stand his being credited for that? If that is the case, then her EO 558 can be classified as sheer pettiness.

Considering that the right direction for government to take is to pass on to the private sector that which the private sector can undertake with the least interference from government -- this decision does not make sense at all. More so when one considers that it has been the government's policy to invite and encourage private sector participation. What makes it worse is that EO 558 tampers with a successful formula while it brings us back to a failed financial operation.

Not only that, but the Philippine government's financial position is not exactly in the pink of health. We have a terrible budget deficit, a fiscal crisis. This regime imposed a 12 percent value-added tax on all citizens just so that the economy will remain afloat.

With our education and health priorities in dire need of funds, how can Madame Gloria Macapagal-Arroyo justify intervening in microfinance where government has a dismal track record and where the present setup of private sector participation has been doing extremely well?


I am no Joseph Estrada fan. In fact, I supported a rival of his in the 1998 presidential election and I was part of the clamor for his ouster. But it seems that he had the wisdom to follow the advice of whoever suggested to him to issue EO 138, which shifted the burden of microfinance to the private sector. For that, he deserves credit.

The government was stopped from engaging in microfinance activities because of its dismal track record of collecting on the loans. The losses were estimated to be P40 billion. It is not just a question of pressing for repayments on the part of government but studies have indicated that people are not inclined to repay loans if these are acquired from the government.

That is not surprising when one considers the patronage system that characterizes our political reality. Under a patronage system, people are conditioned to think that the politicians owe them this service. I would not be surprised if many of them would also think that this is money that their political leaders steal from the people, a mindset that serves as a sort of justification for not repaying loans secured from the government.

Those who still harbor illusions that Madame Gloria Macapagal-Arroyo should be left alone, should be supported, should be allowed to deliver the country to a better economic condition should take a good hard look at what this EO 558 proves.

To me, this is the height of villainy. It cannot be otherwise to anyone who cares about the country. With EO 558, Macapagal Arroyo not only engages the government on a failed area of financial activity during a period of financial difficulty but she undermines as well one of the few bright spots in the economic activities of the country.

Make no mistake about it -- the 2007 elections, especially after the ominous results of the Pulse Asia survey showing the opposition enjoying a big lead in the Senate race, portends the end of the Arroyo regime. From the looks of it, not only will the opposition have a firm control of the Senate after the 2007 elections. It will also likely gain more seats in the House of Representatives.

The prevailing public mood that promotes the opposition lead in the Senate race will also have its toll in congressional district elections. Already the Catholic bishops are poised to lead a campaign against the congressmen who suppressed the impeachment case.

The backlash may not result in the opposition capturing control of the House but it will most probably deliver the needed number to elevate an impeachment case to the Senate. Remember that the opposition needs only 58 signatures to elevate an impeachment case to the Senate.

Now these restored government credit facilities if extended to key political players like "barangay" [village or neighborhood district] officials and identified influential district leaders will be a potent tool in countering the strong negative public sentiment against the Arroyo regime. These are election campaign 'wholesalers' who can deliver large chunks of votes to the regime.

EO 558 may only be the tip of the iceberg. We all know that Madame Gloria Macapagal-Arroyo does not stop at anything if it is her political survival that is on the line.

You may email William M. Esposo at:

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A great disservice to P-Noy

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