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OUTGOING
Treasury chief Omar Cruz hinted on Wednesday of pressure
on revenue flows this year and next due to the absence
of new tax measures.
But he
told reporters this year’s outlook should not be as bad
as in 2008 when intelligent planning and the cultivation
of support of members of the legislature should help
ease the pressure.
According to Cruz, this year’s anticipated P63-billion
budget shortfall can be bridged by privatization
proceeds of some P25 billion.
“From
the sale of government shares at the Philippine
Telecommunications Investment Corp. alone this has
already been met,” Cruz noted.
The
Privatization Management Office had sold the PTIC shares
for P25.2 billion two months earlier with expectations
of more asset sales proceeds down the line.
“But
what is important is that there are options available
because without them, P63 billion is a tough act,” Cruz
said.
He
stressed it was important for the government to come up
with “a new tax program” in support of the goal to
balance the budget by 2008.
“From
the strategic point of view, we need to come up with a
new tax program, otherwise it will be difficult to
balance it by 2008. It is very clear what we need to
do,” Cruz said.
The
government already spent far more in the first three
months this year than it originally intended, having
spent P6.1 billion more than planned.
Instead
of capping the deficit at P45.8 billion, the actual
level stood at P52 billion, mostly because revenue flows
were significantly hampered.
Total
revenues during the period were P18.5 billion below the
program of P255.8 billion as actual revenues stood at
only P237.3 billion.
On
Wednesday, Finance Secretary Margarito Teves shortlisted
three personalities from the private and public sector
as likely replacements to Treasurer Cruz whose
resignation on Tuesday has been accepted by President
Arroyo.
At the
same time, Cruz played down speculations that his
departure was triggered by a policy dispute, saying he
really did it for personal reasons. Sources insisted
there was a policy row, but others said it was simply
the low pay. Malacañang Palace, meanwhile, assured the
public Cruz’s exit will not hurt the fiscal program.
On
Cruz’s successors, banking sources said Alfonso B. Cruz,
LandBank executive vice president for institutional
banking, was handpicked by Teves as the younger Cruz’s
successor when he leaves office on June 1.
The
elder Cruz had been Teves’s second in command when he
led LandBank prior to assuming the Finance portfolio.
The
LandBank executive, like the outgoing Treasury chief, is
also a former Citibanker.
Sources
said the head of treasury at HSBC, as the British-owned
Hong Kong and Shanghai Banking Corp. is known at
present, is a top contender for the post.
Analysts
said HSBC treasury chief Arnulfo “Wick” Veloso has been
short-listed for the job.
One
other private sector practitioner with a banking
background was on the Teves list but sources were unable
to discover his identity.
The
outgoing Treasurer played down reports he was leaving on
account of a policy debate with monetary officials over
interest rates that he brought down in just two years
from more than 7 percent to below 3 percent.
Cruz’s
success has hurt the banks’ profit margins at a time
when they are most disinterested in lending and just at
the point when the Bangko Sentral ng Pilipinas is trying
to put a damper on money supply growth of over 20
percent.
The
22.8-percent liquidity growth in January has alarmed the
forward-looking BSP that is used to seeing M3 growth,
its other name, at about 13 percent.
“There
can never be any policy debate because that’s like
saying the monetary sector does not operate independent
of the fiscal.
“The
monetary authorities are entitled to their own views and
whatever that is, I simply spot my own opportunities and
issue securities where the markets are,” Cruz insisted.
He said
he never intended to complete the six-year stint of the
office and wanted to quit as soon as he has delivered
the goals he set out doing from the beginning.
“I have
accomplished my deliverables and as Treasurer of the
Republic at this point I have nothing more to do,” Cruz
said.
He
completed in January the last of the government’s
commercial borrowing of $1 billion to bridge the budget
shortfall this year; and the government has practically
sealed agreements with official development assistance,
or ODA, sources to complete it.
He also
said he has institutionalized the process of making swap
agreements, issuing bonds and similar exercises so that
the next Treasurer “need not be paid as highly as I
was.”
“Not
that I was paid very high to begin with,” Cruz said in a
light moment.
Banking
sources claimed Cruz left on account of the measly pay
he gets—only P29,000 a month, and not for much else.
He has
four children, three of whom are still in college.
He said
he has always received job offers all his professional
life and plans to go back to the market as soon as the
one-year moratorium for all former public officials
expires.
“Once a
market man always a market man,” he quipped. That he
announced his resignation at a time of a perceived
quarrel with the BSP was “only incidental,” Cruz
insisted.
He plans
to visit his ailing 84-year- old mother in the United
States as soon as he is free.
Meanwhile, President Arroyo on Wednesday assured all
stakeholders in the Philippine economy that the
government will sustain its policies aimed at “fiscal
prudence and sound management” following the resignation
of Cruz.
Palace
officials also said the President will pick a suitable
replacement for Cruz whose resignation takes effect on
June 1.
“There
will be no change in policy and the country is committed
to fiscal prudence and sound management. We remain
committed to proactive debt management and continued
development of the domestic debt and capital markets,”
Mrs. Arroyo said in a statement.
The
President was apparently addressing investor concerns
over the resignation of Cruz, who had helped transform
the Philippines into a leading performer among emerging
markets.
Executive Secretary Eduardo Ermita said at his weekly
news conference that Malacañang will ask the economic
managers to draft an “official position” to assuage the
concerns of the business community about the resignation
of Cruz.
Ermita
said President Arroyo has yet to bare her short list of
candidates, but said the country is rich with competent
individuals who can take over the job.
On the
negative market reaction to Cruz’s resignation, Ermita
said: “I wish those involved in this activity would not
take it in a negative light. In the first place, there
are many competent people in the Philippines who can
take over the job of national Treasurer . . . I am very
sure there’s no reason why we cannot get a good
replacement for Mr. Omar Cruz.”
He said
Cruz is leaving at a time when the country has strong
economic fundamentals which the economic team, guided by
President Arroyo, would sustain and build on—a message
the economic managers would officially convey to various
stakeholders upon instructions of Palace officials.
He added
that Cruz is not leaving the government immediately
because his resignation takes effect on June 1, giving
the Bureau of Treasury enough time to prepare for his
successor.
He said
a national Treasurer only manages the national coffers
but “the policy direction comes from the higher-ups,
especially from the Office of the President and other
Cabinet members in charge of projects.”
“They
manage the national coffers but the disbursement depends
on the direction given by the President as the head of
government,” Ermita said.
Ermita
declined to comment on reports that Cruz was prompted to
resign because of policy differences with monetary
officials, saying this would be best answered by Finance
Secretary Teves and Bangko Sentral Governor Amando
Tetangco Jr. |
