Assesment of Pres. Aquino's 2nd SONA

     Every nation consists of people divided in groups. And in a particular group, there will be one who will act as the leader, a leader who will lead his people into a straight path, a way to success. Let us take for example, President Benigno “Pnoy” Aquino III, current president of the Republic of the Philippines, who had just delivered his second State of the Nation Address (SONA).

    In a SONA, the president states his/her achievements from the past year and probably his/her future plan for the betterment of his/her country and the people within it.

Before the SONA of the president, many questions arose. Some of them were: 

Did the president do what he had said on his inauguration and on his first SONA? 

Did he fulfil all his promises? 

What are the things he had done for us, his bosses, for our goodness? 

Was he able to address all the needs of the needy? 

What are his plans for our future benefit? 

Was he the right one who will lead us to the straight path?

     From the above questions, achievements of the president were being asked. But what did the president really achieve? In his SONA, he mentioned some of his achievements. One of these is the minimization or elimination of the usage of wang-wang which is according to him had come to symbolize abuse of authority.

Another is that, a number of Filipinos who experience hunger has come down.  

The stock market had reached seven record highs in the past year. 

Our once low credit ratings have now been upgraded by Moody’s, Standard and Poors, Fitch, and Japan Credit Ratings Agency—in recognition of our prudent use of funds and creative financial management.  

The confidence of investors toward the DOE has been revived, making 140 companies to participate in the exploration and strengthening of our oil and natural gas resources.

     According to him, to end the wang-wang culture in government he employed the zero-based budgeting to review programs. And through this, he was able to end many wasteful programs such as the ill-advised plan to dredge Laguna Lake. They were also uncovered a food-for-school program with no proper targeting of beneficiaries, and other initiatives that were funded without apparent results. All of these were discontinued, and the funds rechanneled to more effective programs. 

     They are eliminating the patronage politics that had been prevalent in DPWH, and replacing it with a culture in which merit prevails. And to do this, all projects must have work programs; they will require those involved in projects to submit well thought out plans for consideration, so that each project complements the other. They have also instituted an honest and transparent bidding process to provide equal opportunity to interested contractors. They had irrigated an additional 11,611 hectares of fields, not to mention the near 212,000 hectares of land they were able to rehabilitate. The result: a 15.6 percent increase in rice production. They were able to award 4,000 Certificates of Entitlement to Lot Allocation. They had lessened the percentage of unemployment rate, which was at 8%in April 2010 and 7.2% in April 2011.

    Of the two million families registered with the Pantawid Pamilyang Pilipino Program, 1.6 million are already receiving their conditional cash transfers.

     Many laws had been passed; some of these are the laws regarding GOCC Governance, ARMM Synchronization, Lifeline Electricity Rates Extension, Joint Congressional Power Commission Extension, Children and Infants’ Mandatory Immunization, and Women Night Workers.

     And for the future the government have envision two things about the rice importation: first, an end to over-importation that only serves to benefit the selfish few. Second: we want rice self-sufficiency—that the rice served on every Filipino’s dinner table is planted here, harvested here, and purchased here. 

     And for our security, our very first Hamilton Class Cutter is on its way to our shores. We may acquire more vessels in the future—these, in addition to helicopters and patrol crafts, and the weapons that the AFP, PNP, and DOJ will buy in bulk to get a significant discount. This goes to show how far we can go with good governance; we can buy equipment at good prices, without having to place envelopes in anyone’s pockets. The government do not wish to increase tensions with anyone, but we must let the world know that we are ready to protect what is ours.

     The NHA is already preparing the sites for housing projects in Visayas and Mindanao, with an expanded list of beneficiaries that will also include employees of the Bureau of Jail Management and Penology and of the Bureau of Fire Protection.

     He is also optimistic that he will reach our target of 1.3 million additional beneficiaries this year in Pantawid Pamilyang Pilipino Program. With a compliance rate of 92%, millions of mothers are already getting regular check-ups at public health centres, millions of babies are being vaccinated against common diseases, and millions of school-aged children are now going to school.

     They aim to give due compensation to the victims of Martial Law; to grant our house help the salaries and benefits that they deserve; and to improve the system that awards pensions to our retired soldiers. they likewise support the expansion of the scope of scholarships granted by DOST to outstanding yet underprivileged students; the advancement of universal quality healthcare; the responsible management of the environment; and the formation of facilities that will ensure the safety of our citizens during times of great need and calamity. 

This has always been the plan:

     To level the playing field; to stop the abuse of authority; and to ensure that the benefits of growth are available to the greatest number. We have put to an end the culture of entitlement, to wang-wang: along our roads, in government, in our society as a whole. This will bring confidence that will attract business; this will also ensure that the people’s money is put in its rightful place: Funding for infrastructure that will secure the sustained growth of the economy, which will then give rise to jobs, and public service that guarantees that no one will be left behind. More opportunities for livelihood will be opened by tourism; the strengthening of our agriculture sector will ensure that every Filipino will have food on his table. We will invest on those who were once neglected. All this will create a cycle wherein all available jobs are filled, and where businesses flourish through the empowerment of their consumers.

An Estimate for the Advancement: RP’s National Budget for 2011

     “We will protect the welfare of our people and look after the interest of the majority” as our President Benigno Simeon Aquino III said in his State of the Nation Address (SONA).

     From his SONA, our President considered dubbing the 2011 National Budget as “Reform Budget” because it is his quest for genuine change in spending and allocation policies. It also reflects his commitment to lift the nation from poverty through honest and effective governance. "The call of our times is for reform: to make this possible, we are submitting a budget and corresponding resources to the programs and policies that make real the changes we need to revitalize our economy, while leaving no sector behind."

      For this “Reform Budget” to be possible, President Noynoy has approved a budget of P 1.645 trillion. But where will the government get this big amount of money? 

    Indeed this amount is too big to raise. But if everyone will cooperate, nothing is impossible.

We all know that the government derives its revenues from taxes, which will then be used for different projects. Also, our national budget comes from the taxes they collect. And to raise P 1.645 trillion, our government need not to impose additional taxes on people. What they need to do is to collect taxes efficiently. But with the presence of corruption, these collections are not enough. Based on the estimate of Transparency International, it consumes 20 percent of the country’s budget. These are funds that could have been used to build quality classrooms and hospitals, good roads and bridges, or provide more livelihood programs.

    
       We all knew that only BIR (Bureau of Internal Revenue) and BoC (Bureau of Customs) were the only agencies that contribute to our total revenue. Well, there are other revenue earners that are expected to contribute some P150 billion or about 11% of our revenue target for 2011. This will come from fee-collecting agencies, Bureau of the Treasury and the privatization proceeds.

    




       The 2011 National Budget is meant to benefit the poor and vulnerable Filipinos. The resources will be allocated to address their needs. The government will focus on giving them jobs that will empower them, not just to put food on their table but to provide them with opportunities to rise above poverty.

     
     Consistent with their bias for the poor, the social services sector will be their top priority. It will get a significant portion of the budget, some P560.8 billion or 34.1% of the total.The economic services sector comes next with P361.1 billion, 22.0 percent of the total budget. It is followed by our debt burden, with P372.1 billion (22.6 percent); general public services, with P273.5 billion (16.6 percent); and defense, with P77.5 billion (4.7 percent).

    The ten departments receiving the biggest share of the 2011 budget are the same as in this year’s budget. There are changes, however, in their program composition and ranking.

AGENCY	BUDGET	Percentile
1. DepEd	P207.3 billion (including the Educational Facilities Fund) (18.4% increase from previous year)	12.6%
2. DPWH	P110.6 billion	6.7%
3. DND	P104.7 billion (81.1% increase from previous year)	6.36%
4. DILG	P88.2 billion (increase of 32.6%)	5.36%
5. DA	P41.7 billion (decrease of 8.5%)	2.53%
6. DSWD	P34.3 billion (increase of 122%)	2.08%
7. DOH	P33.3 billion (increase of 13.6%)	2.02%
8. DOTC	P32.3 billion (an increase by 87.8%)	1.96%
9. DAR	P16.7 billion	1.02%
10.DOJ	P14.3 billion	0.87%

        It is not all about the government,  
we,

the civil society

the media

the academe

public servants

and private individuals

also have the responsibility to track government expenditures.

     The government believe that the responsibility to check where the funds go and how these are spent should not be left to the COA alone. We are all tasked with looking after the public welfare, and this includes prudence and accountability in the allocation and spending of public funds.

    Through the reform budget, the government hopes to prioritize the needs of the marginalized segments of our society, to restore the people’s trust in government through good governance and other initiatives, to accelerate growth via public-private partnerships, and to promote a sound environment for future generations – today.

    If the government will be able to implement the “Reform Budget”, allocating the right amount to different sectors and using this budget in a way that that the citizen of the country will benefit especially the vulnerable and the poor, both the citizens of this country and the potential investors will trust in the administration, thus investing their money in our economy. It will provide job opportunities to many citizens enabling them to support their own basic needs. If this continuously happens, our economy will grow and  our GDP and GNP will increase.

   Also if the 10 departments who received the biggest share in the 2011 budget will be able to use the money allocated to them wisely, a huge percentage of the public will benefit. If the government will be able to give jobs to the unemployed, many Filipinos will not suffer from hunger. It is not all about having a job but also about having good education because indeed education is the key to reducing poverty.  If everyone will be able to study, there will be lesser illiterates in the future, our next generation. Every Filipino around the world will be globally competitive.

"Katuwang ang 2011 badyet, sama-sama nating lakbayin ang landas tungo sa paggugol na matuwid!"

                                                              -President Benigno S. Aquino    

SOURCES:

http://www.thepoc.net/breaking-news/breaking-stories/9293-aquino-approves-p1645t-2011-budget.html

http://www.gov.ph/2010/08/24/president-aquinos-2011-budget-message/

http://overacupofcoffee.com/?p=136

  

Rate me! Rate me! So I can borrow money!

     Credit rating agencies are becoming more and more popular nowadays. We hear a lot about them. But do we really recognize their purpose? What makes them so powerful and essential in the economy of a country? Could their absence or presence affect a country’s performance? 

     Some credit rating agencies abroad give credit rating and grant loans to the Philippine government. An example of which is the World Bank. In the Philippines, different banks do that also. Different firms get evaluated and they are given credit ratings. 

     What do we mean by credit rating agency? Credit Rating Agencies worked for so many years on designing a simple and readily understandable system that would allow any investor to invest in international securities with which they were not directly familiar. 

        Firms are given credit ratings based on their financial statements, profit, liquidity, etc. The higher the rating, the more privileges the firm receives. One of the benefits is lower interest rate. 

Roles of Credit Rating Agencies

• Eliminates information asymmetry
• Provides quality assurance to unsophisticated investors about inherently complex financial products
• Increase the efficiency of the markets
• Lessen the cost for both borrowers and lenders
• Determines the interest rate and price ascribed to a particular tranche
• Provides information for regulatory purposes

"The Big Three"

    There are many agencies that assign credit ratings for different types of users like issuers, investors, broker-dealers, investment banks and governments. But there are those who rise above the rest and they are referred to as “The Big Three”. The big three consist of Standard & Poor (S&P), Moody’s and Fitch Group. Standard & Poor and Moody’s are based in the United States while Fitch has two headquarters – New York City and London controlled by the France-based Fimalac SA. The market share of the big three is 95% - Moody’s and Standard & Poor’s have a market share of 40% each and Fitch’s market share was around 14% to 15%.

 

The Philippine Rating Services Corporation

   In the Philippines, there is only one domestic credit rating agency accredited by the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas known as The Philippine Rating Services Corporation (PhilRatings). There are eligibility criteria that PhilRatings should pass before its accreditation like an established rating methodology, a pool of experienced analysts and that the CRA has an established record of independence, objectivity and transparency. Philratings was accredited by SEC after its compliance with the requirements under SRC Rule 12.  It implements a national credit rating system for the betterment of the Philippine capital market. 

       From everything that we have researched and read, we have concluded that these credit rating agencies are of big help to our capital market. Without them, the borrowers will have difficulty borrowing money and they will have to pay high interest due to high interest rates. Without them, lenders will not be certain of the firm where they will lend their money to. They, then, lessen the cost for both the borrowers and lenders. With their presence, too, there is order and organization in the market. There is enough information about the borrowing firm that is available to the lending firm.

·   

Finding Fun in the FUNdamentals of Macroeconomics

     Another school year in our lives as students. A brand new semester, but still with the same Economics subject. Just seeing the subject code YMACRO in our registration forms makes us bored. Well I guess that's it. Macroeconomics is by itself boring to students. Yes, to us students. But a lot of professionals, especially in the field of business find this discipline very much interesting and fun. So our group decided to find some ways for us to understand and eventually learn to love Macroeconomics. 

     Supply, Demand, Prices, Products, Inflation, Recession, Unemployment, Input, Output and Income are just some of the words often associated with Macroeconomics. But what do they really mean? Definitely associated but HOW?

FROM

to

ECONOMICS is evident.

From schools

to streets 

to households 

to business firms

ECONOMICS is present.

But what is macroeconomics?

Why do we need to know what it is?

Is it important in our daily lives?

     YES, macroeconomics is a vital part of our everyday lives. We encounter it everyday, we see someone looking for a job, someone who buys and sells goods, someone who renders services to earn some profit and someone who produces products. But these are just parts of a larger economy known as MACROECONOMICS, which is the study of the economy as a whole. It considers the larger picture or the sum of all these events.

     For us to understand why changes in interest rates cause changes in real Gross Domestic Product, we need to know how lower interest rates influence decisions, such as the decision of how much to save. Once we understand how an individual will change their behavior we will then understand the large scale relationships in an economy.

     As we study macroeconomics we'll try to analyze the goals of macroeconomics which is to increase output, decrease the number of unemployed and to decrease inflation. 

     Aggregate output is greatly assosiated with GDP (Gross Domestic Product) and GNP (Gross National Product). Both GDP and GNP are concerned with the total market value of all final goods and services within a given period by factors of production. The difference lies in the inclusion of the products and services being produced. If the product is produced within the country this product is included in computing the GDP and if this product or the business is owned by a country's citizen it is included in the GNP, regardless of where this output is produced. But computing these data is not enough. We need to compare the GNP to our base year to know if there is really an increase in our output.

     

    Many people look for jobs but only the lucky ones get hired. Some of these people are employed in jobs that don't match their skills and professions. This is what we call underemployment or mismatching of jobs. And still, some fail to find suitable jobs for them, thus becoming unemployed. From this scenario then, unemployment arises.

    Increase in the price of NFA rice from P18/kilo to P30/kilo, of pork from P100/kilo to P160/kilo, of sugar from P30/kilo to P55/kilo, of gasoline from P35/L to P42/L and of the minimum fare from P7 to P8. 

   These are just some of the goods and services that have been continuously increasing with regards to their prices. This phenomenon is known as inflation which is the increase in the overall price level of output. 



     Is the Economic Circular Flow the same as the circular flow in our body? They are somehow similar but the difference is that blood is flowing in our veins while income and expenditures are flowing in our economy. Individuals who work for businesses, rent their property, manage and own their busineses are activities that generate income known as flows of payments from businesses to households. Then households spend their income on consuming goods, paying taxes to the government and on acquiring assets like stock certificates and bank CDs that flow through the financial sector and are then used to buy investments. All of these are expenditures. The flow of all income and expenditures are equal. Someone's expenditures on products become  someone else's income and someone's income turns either into spending or savings which may be invested to generate dividends - another form of income. With all these happenings, the flow continues and is never ending.

 Aggregate Supply and Aggregate Demand  tell about the total supply and total  demand in the whole economy. Aggregate Demand is the demand for all products and Aggregate Supply is the supply of all products.      

We need to study these so that we would know how much product to supply to avoid severe shortage or surplus in the goods and services available in the market. In an economy, there should be a consumer and a producer because not all products can be provided by an individual. There should be interdependence. As they say, "no man is an island".

     And that concludes our simple explanation of the fundamentals of macroeconomics. Well we guess the subject isn’t boring at all. Even with all these confusing topics, it can still be interesting. We have made the discussion creative through pictures so as not to bore future readers. 

MACROECONOMICS is FUN!