| Photo by Niels Steeman on Unsplash
May saw the Philippine government’s fiscal position swing back to a deficit due to increased state spending during the period, as recently reported by the Bureau of the Treasury (BTr). The national government’s budget balance stood at a deficit of P174.9 billion last month, from a surplus of P42.7 billion in April. Year-on-year, May’s budget gap widened by 43.10% from the P122.2-billion fiscal shortfall in the same month last year.
According to the Treasury, the higher deficit resulted from an acceleration in government spending, pushing disbursement growth for May to 22.24%, as against revenue expansion of 14.59%.
On another front, the Financial Action Task Force’s (FATF) “grey list” of countries under increased monitoring to improve anti-money laundering and counter-terrorism financing (AML/CFT) measures still included the Philippines. The FATF identifies countries or jurisdictions with weak measures to combat AML/CFT under “black” and “grey” lists. It issues its lists three times a year.
Those on the “black list” are countries identified with “serious strategic deficiencies to counter money laundering, terrorist financing, and financing of proliferation.” Meanwhile, when the FATF places a nation on the “grey list” or under increased monitoring, it means that the country is committed to resolving the identified strategic deficiencies within agreed-upon timeframes and is subject to increased monitoring.
The government has imposed a deadline to exit the grey list by the start of 2024 since the country did not meet the January 2023 deadline.
The POGOs (Philippine Offshore Gaming Operators) are making the Philippine government look like a bunch of GAGOs. It is a widely held assertion that POGOs have led the charge in money laundering in the country.
The AMLC said the Philippines will continue to work on implementing its action plan to address remaining deficiencies, which includes demonstrating that supervisors are using AML/CTF controls to mitigate risks associated with casino junkets; implementing cross-border measures across main air/seaports, including detection of false declaration of currency and resulting confiscations; and demonstrating an increase in the prosecutions of terrorism financing cases.
These two separate reports seem disconnected but are attached at the hip. While PAGCOR has estimated that POGOs contribute around Php20B to the Treasury annually, it remains unknown how much is not being paid in taxes when recent events have demonstrated the inefficiencies in law enforcement as far as the POGOs are concerned.
“The Presidential Anti-Organized Crime Commission (PAOCC) is among the first to imply POGO-politics – POGOs financially supporting political candidates – elected candidates who would see the building of POGO operations right behind their own municipal halls – land that would have been better used for public purposes.”
For perspective, no sane head of household will ever spend 10% of his income every month. That’s just basic economics. There will be dire consequences, like it or not. Government financial wizards have other ideas. Next year, the Philippine budget is pegged at P6.352, according to the Department of Budget Management – reflecting a 10% increase. The 4Ps program will significantly increase amid allegations that beneficiary lists are often driven by political favoritism to influence election outcomes. Budget planners seem bereft of basic algorithms to prevent such practices. For example, do local GDPs drive implementation to the sitio level of every barangay, or is the data not available? Any social program should not be driven by ‘pork barrel’ style disbursement.
The next budget will only reflect the deficit spending of May into 2025. Given the realities of the crisis in the West Philippine Sea, military expenditure will probably exceed current spending. It will lead to ‘forced’ austerity imposed by negotiated multilateral bailouts. We’ve seen this scenario play out before, yet economic planners seem driven by the political agenda of another new society that seems to translate to new debt instead. Given the equation, spend now to curry votes. If, in the process, a financial crisis ensues, followed by predictable political upheavals and chaos, a justification arises to impose authoritarian rule, then it becomes a win-win proposition for the incumbents.
While the AMLC is laser-focused on the offshoring of capital by the usual suspects, who include drug lords and human traffickers, the opposing traffic of incoming laundered money of ill-gotten unexplained wealth gets zero attention. When the national ID initiative became a joke, the rise of the POGOs became inevitable. A valid national ID should have been designed as a national social security number similar to the one in the U.S., which tracks all financial transactions. Even gambling winnings are reportable. The Presidential Anti-Organized Crime Commission (PAOCC) is among the first to imply POGO-politics – POGOs financially supporting political candidates – elected candidates who would see the building of POGO operations right behind their own municipal halls – land that would have been better used for public purposes. I hope we don’t later discover that POGO financing has infiltrated national elections through political parties and candidates.
Alarm bells are ringing; is anyone listening?
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ABOUT THE AUTHOR: Dr. Crispin Fernandez advocates for overseas Filipinos, public health, transformative political change, and patriotic economics. He is also a community organizer, leader, and freelance writer.
