But such publicity stunts are no longer enough to distract a pessimistic public. A November nationwide survey by Pulse Asia, a well-known polling firm, shows that among Filipinos the “sense of optimism for the coming year is at a near record low,” with people surveyed saying their leading personal concerns include staying healthy, keeping their jobs and having enough food to eat every day. Arroyo’s administration isn’t giving them much reason for hope: budget deficits are ballooning just when terror attacks in the region have crippled the country’s critical tourism industry. To make matters worse, two weeks ago Australia and Canada temporarily closed their embassies, citing credible threats that are sure to keep the tourists away even longer.
The crisis now threatens Arroyo herself. The president has been dogged by allegations of corruption against some within her political inner circle. Few presidents could keep in the public’s good graces in such a political environment, and she is no exception, with her approval ratings dropping nine points to 45 percent in last month’s poll. Experts say things will probably get worse before–or if–they get better. “She has to deliver a clear message, make the public understand the difficulties and prove she’s in control,” says Felipe Miranda, the research director for Pulse Asia. “Next year will be her Rubicon.”
The Philippines’ enormous budget deficit–projected to top $4.15 billion this year–has cast a shadow over Arroyo’s government almost from day one. A major portion of the national budget has been spent paying off past debts or has been poured into money-losing ventures like the National Power Corporation. Arroyo is now saying that the privatization of the national utility could yield the country $3 billion, which would be a welcome infusion of cash for a government that blew through its deficit targets three times this year. “We’re like a family piling up debt in order to pay for daily expenses,” says businessman Arthur Aguilar.
The more permanent breakdown that plagues the government is its poor revenue collection. The Philippines has one of the lowest tax-collection rates in East Asia, attributed to corruption on the part of both collectors and taxpayers. Although the new tax commissioner, Guillermo Parayno, is a no-nonsense official who likes to talk tough, it’s not clear he’ll be any more effective than his predecessors. And the opposition is ever ready to pin blame on Arroyo’s administration. Says opposition Sen. Edgardo Angara: “It’s an executive failure. That’s quite a pity because [Arroyo] prides herself on being an economist.”
Those aren’t the only numbers stymieing the national economy. Travel warnings issued by Western governments have battered tourism, which has plummeted since the Bali blasts in October. “We’re down in long-haul, high-yield travelers from the United States and Europe,” says former tourism secretary Narzalina Lim. One travel agency says it lost more than $40,000 the week of the bombing because of cancellations. The threat of new terrorist attacks has also strained the budget of an already cash-strapped government: the Armed Forces has just requested an additional $5.3 million to beef up its presence. And foreign investors are reconsidering Manila’s place in their portfolios. Foreign direct investment is expected to total just $300 million this year, a sharp drop from $1.9 billion in 2001. Just about the only number on the rise in the Philippines is its population growth, which at 2.36 percent is among the highest in Southeast Asia, making any national economic growth almost negligible. Yet Arroyo, who relies on the Roman Catholic Church for electoral support, has no plan for population control and continues to oppose the promotion of contraceptives.
In a speech delivered last week, Arroyo called on her fellow Filipinos to give her the time she needs to fix the ship of state, saying, “Trust me. You will see what serious government can do as opposed to what a merely popular government just promises.” But her promises aren’t worth what they once were, especially since her cabinet was rocked by allegations of corruption last month. Congressman Mark Jimenez, a crony of former president Joseph Estrada’s, accused Arroyo’s Justice Secretary Hernando Perez of extorting $2 million. The congressman says he was told to pay up or face the same charges of graft that have been brought against Estrada. While Perez denies the charge, Jimenez promises that the money trail will lead to the cabinet official. “It is damaging her,” says Angara. “If she wants to save herself and her administration, she must do something dramatic.”
Arroyo’s predicament is a testament to how vulnerable the Philippines–or other Southeast Asian states, for that matter–can be to the economic fallout of terrorism. Any further loss of confidence in her leadership could result in permanent paralysis for her government. As the second Philippine president brought to power by popular revolt, she should know better than most the importance of addressing the people’s concerns. She’d be well advised to tackle the country’s economic challenges quick and the brewing scandals even quicker. Otherwise, her political career may end up sleeping with the fishes.
