Square pegs in round holes
No doubt Gloria Arroyo is in a panic over the deteriorating fiscal situation.The first time around, she had at least an excuse and even support from various economists from the University of the Philippines, all of whom pointed to the fiscal crisis that needed fixing, through an expanded value-added tax (e-VAT) slapped on the nation. It was painful, they said, but necessary.
But it now looks like she has absolutely no more excuses to lean on.
But whenever Gloria hangs dangerously at the end of a cliff, Romulo Neri and Angelo Reyes come to the rescue.
Neri and Reyes, now Energy secretary and short-term former Natural Resources secretary and former Interior and Local Government secretary and once Defense secretary until the junior officers called for his resignation, are the two longest-serving mainstays of Gloria’s Cabinet.
Both appear to have won Gloria’s ultimate trust for staying with her when the political platform on which Mrs. Arroyo stands precariously was about to flip.
Reyes, who was detained President Joseph Estrada’s untrustworthy military chief of staff, was among the key figures in the coup d’etat that was made to look like a popular revolt that installed Gloria in power.
Neri held out against the so-called Hyatt 10 — eight Cabinet members mainly economic officials and two bureau heads — who resigned at the height of the “Hello Garci” controversy that backed up allegations Gloria cheated to steal the vote in the 2004 elections.
The Hyatt 10 asked Gloria to resign and Neri and Reyes were her key defenders and went live on television to pledge allegiance to Mrs. Arroyo at the height of the political turmoil.
Neri was rewarded with a guaranteed slot in the Cabinet moving from the Budget secretary then back to the National Economic Development Authority then apparently temporarily to the trouble-laden Commission on Higher Education (Ched).
Thus no matter how both appear as square pegs in round holes in the positions that they are recycled into, Gloria would be tapping the two for a rescue, which is quite ironic, considering that they are not quite the bright boys they want to make themselves to be.
Both, after all, are unremarkably unremarkable as Cabinet secretaries.
Gloria is in a new crisis, or to be exact, an old crisis that was temporarily swept under the rug, involving the budget.
Two main planks of Gloria fiscal reform packages, the Electric Power Industry Reform Act and the e-VAT law, were not delivering what was expected.
The reform in the power industry was stumped by the failure to sell much of the power assets putting in disarray the reform timetable. A power spot market was opened without complying with a requirement for at least 70 percent of the generating assets, or power plants, to be sold to have a truly competitive market.
The electricity now being traded at the spot market is subject to manipulations since the government remains the dominant seller of electricity.
Electricity prices are on the upswing instead of being reduced, which was the reason for its being in the spot market.
The slow pace in the sale of the power assets was mainly the result of poor investment confidence in Gloria. Investors are turned off by the image of the country under Gloria as being the most corrupt in the world.
Gloria sent in Reyes to fix the energy mess.
The e-VAT should have resolved the perennial fiscal shortfall since the sales tax, which everybody — poor or rich — pays, was raised from a rate of 10 percent to 12 percent while at the same time, its coverage expanded to include those previously exempted such as electricity and oil products.
At the same time, the corporate tax was increased to 35 percent from 30 percent.
What Gloria got was progressively falling tax collections that was obviously the result of low efficiency among the collecting agencies, meaning that corruption remains high and could have grown still higher because of the bigger amounts involved with the e-VAT.
In comes Neri with a mission from Gloria--and to the Ched, of all agencies!
Reyes and Neri, Gloria’s troubleshooters who make an even bigger mess.
Gloria creates the trouble and the two willingly pick up the mess and mess it up some more.
Such blind faith.
