I was right. I made an observation in a previous column about the absence of visible signs that the government was implementing stimulus spending. That would have meant incremental expenditures over and above the regular capital expenditures.

The official report on the performance of the economy during the first quarter of 2009 confirmed my observation. Our economy, measured in terms of gross domestic product (GDP), grew by a negligible 0.4 percent, compared with 3.9-percent GDP growth during the first quarter of 2008. That’s less than one half of 1 percent, the lowest in a decade.

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With the population projected to reach 91.56 million during the first quarter of 2009 and the domestic economy barely growing, the per-capita GDP declined by 1.5 percent, the first since the third quarter of 2001.

We did not really pump-prime the economy. We did not spend enough to counter the impact of the global recession.

Even the Bangko Sentral ng Pilipinas (BSP) has raised questions about the Executive department’s report that it spent P463.7 billion during the first four months of the year. That would have been 15.5-percent higher than the P401.3 billion spent during the same period last year.

BSP Deputy Governor Diwa Guinigundo was reported to have suggested an examination of the records of disbursements from the Department of Budget and Management. The intention was to verify if local governments and other line agencies actually received funds to finance so-called pump-priming projects.

I can understand the BSP deputy governor’s deep concern. If the government really increased spending by a double-digit rate, then the economy would have grown faster than 0.4 percent.

Cobb full movie Actually, the quarterly economic report from the National Statistical Coordination Board showed that during the first three months of 2009, infrastructure investments by the government contracted by 4.4 percent. The consolation was that the negative growth for the period January-March 2009 was lower than the 10.9-percent contraction for the same period last year.

It’s very clear that the administration opted to protect the fiscal deficit at the expense of economic growth.

Government expenditures totaled P355 billion in the first quarter, lower than the budget of P361.9 billion. This was a deliberate move because of lower-than-programmed revenue collection. It collected only P355 billion in the first quarter, lower than the goal of P361.9 billion.

For the first four months of 2009, the fiscal deficit already reached P111.8 billion, a 300-percent increase compared with the same period last year. At least the four-month deficit is still below the ceiling of P155.1 billion for January-April 2009.

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The poor revenue take is also reflected in the tax effort, or the ratio of tax collection to GDP. During the first three months of 2009, the tax effort fell to 11.5 percent from 12.9 percent a year ago. The target set by the Department of Finance was a tax effort of 14.3 percent this year, up from 14.1 percent last year.

While I acknowledge Deputy Governor Guinigundo’s concern, I also realize the administration’s position on the government’s fiscal condition.

It’s a delicate balance, really. We saw the impact of low government spending on economic growth. On the other hand, spending more than the amount of revenues could widen the deficit to the point that interest rates would rise too much. That would deter borrowings for productive activities, slow down business, and further slow down economic growth. When that happens, we will go beyond just “teetering into recession.”

So it’s a delicate balancing act for our fiscal managers. They are authorized under the General Appropriations Act to spend P1.4 trillion this year, but they must also make sure that the gap between the spending ceiling and revenues to support it must be kept manageable. A runaway deficit is the last thing we need in a global recession.

Of course, we still have aces up our sleeves.

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First, remittances from our ever-reliable overseas Filipino workers are still growing. The worst-case scenario is a flat growth from $16.4 billion remitted last year. Robust remittances mean a strong fuel to drive consumer spending, which has been the main factor behind our economic growth for many years.

The continuing demand for Filipino workers despite the global recession contributed to the hefty 40.8-percent growth in net factor income from abroad during the first quarter of 2009, compared with 36.2 percent in the same period last year. They pushed our gross national product (GNP)—or GDP plus income from abroad—to grow by 4.4 percent, compared with 6.4 percent last year.

Second, interest rates remain low. I hope domestic businesses would find loan rates low enough to encourage them to borrow and finance productive activities. After all, liquidity would mean nothing if it does not circulate in the economy.

Third, while merchandise exports shrunk by 18.2 percent this year (from negative 7.7 percent last year), exports of services grew by 4.9 percent, although lower than last year’s 5.9-percent growth.

Fourth, construction activities by the private sector caused the construction sector to rebound to a 9.9-percent growth during the first quarter of 2009 from a contraction of 4.1 percent last year.

In sum, it’s not really all bad news for our economy, unlike our neighbors Singapore, Thailand and Malaysia, which are already suffering or heading toward recession.

But if we become complacent and wait for recession to reach our shores, we will go their way, too.

That’s why everybody has to act.

Fiscal authorities must continue to pursue revenues, and find ways to plug loopholes in existing tax laws. Taxpayers must realize that honoring their obligations to their government is also for their own benefit. And the government must strive to stimulate the economy, but remain vigilant against leakages.

This is the time to work together. The nation’s leaders must stay focused on performing their duties. They must not allow themselves to be distracted by popular issues that produce no benefit for the people. After all, the primary duty of the government is to keep food on every family’s table.

At the end of the day, every Filipino should ponder how his or her life has been, not how he or she was amused and entertained by those that run the affairs of the nation!

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