MANILA, Philippines - A legacy of debt, scandal and weakened democratic institutions—that’s what President Arroyo is bequeathing to President-elect Benigno “Noynoy” Aquino III, at least according to 2 analysts who spoke to ABS-CBN NEWS.

The same experts said this legacy could prevent the next administration from delivering services he promised during the campaign period.

University of the Philippines Professors Benjamin Diokno from the school of economics and Clarita Carlos of Political Science both painted a negative picture of the kind of country the incumbent would leave to her duly elected successor.

Diokno describes the current economy as one where “there are more poor people, more unemployed and underemployed, heavily indebted, poor tax effort, and poor educational system.”
 
Poor quality of life, scandals
 
Diokno also notes that the Filipino is now “a more divided people.” He adds, “It’s hard to look for positive. I can’t think of any positive.” He also noted that important political institutions were “weakened” during Arroyo’s watch. “Political parties…bureaucracy were weakened, Congress, Supreme Court… These are really important institutions.”

He also added that the corruption index “deteriorated” during the Arroyo administration. “The corruption index has deteriorated. Rule of law deteriorated over time and those are views not by Filipinos but foreigners who do business in the Philippines.”

Carlos, for her part, says, “If we go by immediate recall, I think it’s the fact that her administration, as long as 9 years would be very scandal-ridden. Now we don’t know if it was artifact of reporting or it was also an artifact of graveness of cases.”

To be fair, Carlos pointed out that a lot was also accomplished by the Arroyo administration. She said, however, that the fact that many of the projects were “clouded by scandals…diminished the worth of things she did.”
 
Financial crisis, population policy
 
The quality of life of people “deteriorated,” Carlos said, although she also added that “for the most part, it deteriorated fed by external factors.”

These external factors, she said, include “the increasing price of gasoline recession which hit the western world and of course the financial crisis which, though it didn’t hit us way others did, it had reverberations in economy and number of poor people didn’t change.”

Carlos also cited Arroyo’s failed population policy, which, according to her, contributed to the further deterioration of the quality of life.

“Maybe one thing that stood out was population management,” she said. “Arroyo was afraid to go against church maybe she miscalculated (the Catholic Church) as a strong force. Whatever economic growth we had went to nothing. You can’t keep up with 2 million [additional] Pinoys every year.”

In a recent exclusive interview with ABS-CBN News, the President talked of the economy as one of the things she was proudest of in her 9-year stay in power.
 
Economic stability
 
“When I became president I set out to focus on the economy and I believe I put economy at the primacy of the country and that includes the need for education. And it’s important we focus and work hard to keep [our] sights on [the] future and the focus on the economy is there and I think it should remain there,” Arroyo said.

She added, “I feel gratified and it only dramatizes [that], indeed, the primacy of economics is very strong in life of [the] nation.”

Arroyo also said, “This 7.3% is the climax of what we did to put economy first and the sacrifice we made.  I’d like to be remembered as the one that stabilized the economy.”

Arroyo was referring to the 7.3% growth in the gross domestic product [GDP] in the 1st quarter of 2010.

Diokno, on the other hand, said the incoming administration would be coming into power in the same way the 1st Aquino administration did in 1986.

Debt burden
 
“That’s the point. President Noy will be faced with a lot of problems. He has to address poverty. He has to address the poor educational system. He has to make up for neglect for infrastructure he’ll be faced with tight constraints,” Diokno said. “It’s like Aquino taking over from Marcos.”

Diokno cites that like his mother, the president-elect, will take over from an administration that leaves behind a big national debt.

This means servicing would probably take up most of the nation’s scant resources. “Right now, when Mrs. Arroyo took power in 2001, our public debt is just the national government’s. Public debt was P2.2 trillion,” Diokno pointed out.

Now, Diokno says, “We have pubic debt of P4.5 trillion and still don’t know real picture.”

Diokno said this implies that Aquino will have to spend more money for debt servicing right now. “Interest rates [are] low not because of GMA but [because it’s a] worldwide situation. When things normalize, I think this government will be faced with [a] serious debt service problem.”

“With debt at P4.5 trillion, every 1 percentage point increase in interest rates would translate to P45 billion pesos [in additional debt servicing]. Right now, for example, average interest rate is 4%,” Diokno added.
He also said, “If things normalize, it goes to 5%, that’s translates into P4 billion. If it goes up to 6 that’s a lot of money you can use for social services.”

Social services, industry
 
Diokno says the economy was set back by a decade because of the outgoing administration’s policies. “I have a description for what happened. I think we lost a decade-- 9.5 years.”

“If you talk to people you ask them if they’re better now than 10 years ago. Majority would say no. you just add the votes that went to Noy and Estrada that’s more than half of Filipino voters.”

One case in point, according to Diokno, is the agriculture sector, which he said should be the focus of any administration since it employs 40% of the labor force.

“She hasn’t done a lot. In fact most of corruption took place in that sector. Now we’re the number 1 importer of rice. She had almost 10 years to change the agriculture sector and she’s a big failure in agriculture.”

The manufacturing sector is also much smaller, Diokno said. “We’ve lost a lot of industries in this country.”

Diokno thinks that as far as the economy was concerned, the outgoing administration had a wrong set of priorities. “I think [this was] partly because she was more interested in managing news than economy. Notice like her [advertisements of] legacy accomplishments. That’s waste of money using taxpayer’s money to advertise.”

Realistic deficit target
 
Diokno says because of the Arroyo administration’s spending, the incoming Aquino administration may not even be able to achieve the ideal situation of having a balanced national budget--where government doesn’t spend beyond its means.

It would also mean the Aquino administration would have little to spend on crucial services such as education, health and public infrastructure.

“Aquino would have the equivalent of 12% of GDP—maybe between P80 to 90 billion. You’d expect to be increasing. It wouldn’t be smart for the Aquino administration to shoot for balanced budget halfway to 2013. That’s the original plan of the DOF (department of finance). That’s too tight given the amount of under spending like education health and public infrastructure.”  

A more realistic target for the Aquino administration would be a deficit of 1-2% by 2016 because of the debt overrun. “If you have a balanced budget by 2016, you cut deep into the budget that means you won’t spend a lot for public infrastructure.”

Still, Carlos says, history may prove to be kinder to the Arroyo administration in the long run. “Always in hindsight, you’re kinder. You’re harsher when you do quick evaluation but, that said, we leave comprehensive evaluation to scholars who, at a later time, will measure what [Arroyo’s] 9-year administration had accomplished.” – ABSCBN News