The Philippines has long been the basket-case of Southeast. Since the Asia crisis ten years ago, it has hardly managed to recoup much of the lost ground. With political instability, economic mismanagement and an epidemic of corruption, incompetence and stupidity it has sunk further into the quagmire of international insignificance.

The Pesos recent strength is not as President (illegal) Arroyo mouths off due to the strong economy but to the US Dollar weakness and to the remittance sent over by the nearly seven million Filipinos working overseas. Without their contribution the country would have died years ago.

Last year Arroyo pushed through the added Vat bill which raised the 10% VAT collections to 12%. This was heralded as the solution to the shortfall in tax collections. But this year even with this added Vat collection, the budget will fall short again. It is the measure of an inept President and incompetent Senate and Congress and bureaucracy that this situation has befallen the Philippines. Arroyo for all her so-called economic knowledge seems not to have understood ‘Basic Accounting for Dummies’. i.e. the lower the taxes, the less incentive people have for cheating, more business is done and actual tax collections go up. But since Arroyo heads a government where 75 cents in every Peso is put into someone’s personal pocket and not into the government coffers what else can one expect.

With billions going into the pork barrel for Senators and Congressmen more financial stress is placed upon an already shaky and overstretched economy. Add to this the exploding population (mainly at the lower end of the economic class) it is a recipe for disaster which will lead to a major melt down.

It has been the trend of every Filipino government since way back when to gloss over, sugar up, and add cream to an extremely bad economic situation, never addressing the underlying problems because to take strong affirmative action on birth control, corruption would alienate one or more the power groups past Presidents or Arroyo at this time need to stay in power and ransack the economy for their (her) personal enrichment.

The DBS bank in Singapore reports that the Philippines is on track to grow 6.9% this year and estimated to grow 6.6% next year (2008).The DBS did note that the Philippines government’s continued sale of national assets would help bring this year’s budget into balance but would damage it long term because the Philippine has not addressed the corruption within the tax collection system.

But Arroyo is only concerned with getting through the next year and if it looks like she knows what she is doing it will keep the opposition and others on her side in check. Arroyo has been under attack since she took office and has survived by giving in on certain issues to diffident power groups. This game she is playing will eventually backfire on her but moreover it will harm greatly the Philippines.

The most disturbing fact is that the opposition which has had several opportunities to remove her has not done so because of in-house fighting. As soon as they smell the chance they start arguing over who gets what and how it is going to be split up and the cohesiveness then falls apart and Arroyo survives to fight another day.

With the sales of these entire national assets one can say with great certainty that most of that money will not find its way into the national coffers. There will be middlemen who will get commissions, and they will in turn split that with various government officials.

The recent guilty verdict on former President Estrada highlights the manner in which Arroyo has handles herself. Ask yourself this question: “Isn’t strange that the Estrada conviction was handed out after the election and not before?”