PREGUNTAVER

Spybiz reports that the Philippine government has actively been buying US currency in order to prevent the decline of the dollar. This is being done in order to protect the dollar earning exporters who are bound to "lose heavily". I agree with the article's rebuttal that the falling value of the US dollar will result to lower commodity prices, since a big number of household products in the country are imported. It is not very wise for manufacturers to pay for raw materials "at sight". Besides, most regular importers pay their suppliers at a future date, normally, after having converted the raw materials into finished products. Therefore, the importers are not bound to lose that much (if they lose at all) from forex drops, come payment time. The only "crash" will take place on the profit portion of the export price. Let's give the consumers some breathing space, especially this christmas. " Let the market Dictate !" - Adam Smith Related ...

A strong proponent (M.Friedman) of the minimal role of government lists National Defense, administering Peace and Order & Social Justice and the provision of Public Infrastructures (Roads) as the only functions of the administration. I know of some economists who even advocate the outsourcing of National Defense and Public Safety. At this point, this blog will not dive into the midst of the debate but rather illustrate a creative way in providing a Public Safety service.

Many thanks to the CAT for the heads up. ========== "That government governs best which governs least ." As an economist, this author pays tribute to Milton Friedman , a Nobel Laureate (1976) and one of the greatest minds of this century. Very much a free market economist, he advocated the minimum role of governments (in the economy) and greater reliance in individual responsibility. He passed away in San Francisco at the age of 94.

A study of 24 sectors within the services, agricultural, and non-agricultural industries showed that the country is largely unprepared to compete in the global market..

Despite being a newcomer in the global BPO industry, the Philippines have steadily increased its foothold as a top outsourcing destination. Rest of Asia ready to grab BPO jobs from India, RP--study INQ7.net, Agence France-Presse Last updated 08:44pm (Mla time) 11/05/2006 THE PHILIPPINES and India have to boost their overall competitiveness, as Asian countries gear up to get their share of the global offshore outsourcing pie, a recent global study showed. These top two outsourcing destinations will eventually compete with China, and other Asia Pacific countries that have similarly positioned themselves as outsourcing destinations, the latest Offshore City Competitiveness Report of market research firm neoIT showed. The study noted that companies have "moved beyond India" and the Philippines into not so well-known cities in the world since companies want to create a "global footprint." China and Eastern European countries are starting ...

The Philippine Daily Inquirer reports today, that the Philippine government is set to borrow $250 Million from the WB. If the commitment fees paid, as of the year 2002, was invested in mutual funds that gained an average of 40% per year (PhilEquity), it would have been close to saving the Filipino from this particular loan. Now, if all the other commitment fees paid on 2003~ present will be taken into consideration... Let us take note that the US $ is going through a devaluation. However, it is very well capable of rapid recovery and increase (by leaps and bounds). If that happens, the interest payments for the $250M loan, as well as future Peso devaluations can easily defeat the gains made this year. While not meaning to sound so angry about the whole thing (I am not), let us remember that the present minimum wage is Php275 and the exchange rate is PhP49=US$1.00. If we will simply distribute $250 Million to the populace, it would be enough to feed 123,737 Filipino families,...

And the economists are not at all worried... "THE country’s macroeconomic foundations are once again under International Monetary Fund scrutiny starting this week and all the way through next, but no one is worried. In fact, the Bangko Sentral ng Pilipinas expects the two-week visit to be its last under the IMF’s post-program monitoring scheme. The PPM, a three-year precautionary program designed to wean Manila away gradually from IMF tutelage, ends on April next year."

The newspapers are saying something which most Filipinos already know. The other day, I asked an economist for information regarding the total amount of commitment fees that the Philippine government has paid its lenders. I was told that the thick 2007 national budget only has one page alloted to foreign debts. No mention was ever given regarding commitment fees.... RP budget system lacks transparency THERE is not much accountability and transparency on the Philippine government’s budget process which, with the limited accessibility, holds back stakeholder participation in the efficient allocation and use of public funds, a new study from the US-based Center on Budget and Policy Priorities (CBPP) on Wednesday revealed. in addition.... “The level of transparency is strongly influenced by the willingness of the government to be accountable to citizens…transparency is possible in both developed and developing countries,” Datinguinoo commented. Furthermore.. Datinguinoo, meanwhile,...

John Maynard Keynes , one of the most prominent figures in modern economics, has this to say; "Another definition is Economics is what Economists do. John Maynard Keynes described what he thought economists do in Essays in Biography in 1933. An economist, he wrote, must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher-in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms off the general, and touch abstract and concrete in the same flight of thought. He must study the present in light of the past for purposes of the future. No part of man's nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician."

It has been mentioned that in the annual budget, national governments compute for the level of expenditures (farm to market roads, hospitals, schools, etc..) that will be needed to finance a growing population. To be able to finance the planned spending, ways on how to raise the needed money (taxes, tariffs, etc.), are included and put into action. In instances when the projected income fails to equal the needed amount, governments have naturally resorted to borrowing (both domestic and foreign loans). ON FOREIGN LOANS In the past, the Philippine government borrowed a lot from institutions such as the IMF, WB & ADB, as well as ODA (Official Development Assistance) loans. To date, debt servicing remains a big slice in the country’s national budget. Despite this, the country has a poor record in the actual usage of such loans due to delays in the implementation of the programs (which the loans were earmarked for). This naturally contributed to the failure of some sectors (i...

Economics is generally defined as the study of the optimal allocation of scarce resources, in order to satisfy the unlimited human wants. Among other matters, it deals with issues such as production, distribution and consumption, in order to maximize the people’s satisfaction. In a small scale (Microeconomics), the discipline covers the individual, household and companies. A household concern will be the distribution of the family income in an attempt to satisfy the needs and wants of the family. A typical household concern is whether to prioritize the repair of a potentially damaged roof, the purchase of new electronic appliances or pay for the down payment of a new car. In a larger scale, the field covers organizational activities such as the strategic planning and operations, when companies plan and implement policies that will minimize cost and maximize the employees’ compensation package as well as shareholder profits. Examples include the implementation of managemen...

The German constitutional court rejected attempts to force the federal government to pay Berlin's debts. I will discuss the economic significance of this in one of my next posts.