Wolfensohn’s advice: Cut those inequalities

BusinessMirror, March 6, 2008

IF the country continues on the path of high inequality and poverty incidences, it runs the risk of heightened social unrest, according to former World Bank (WB) president James Wolfensohn.

He expressed his disappointment over the country’s increasing poverty incidence as reported by the National Statistical Coordination Board (NSCB) Wednesday.

“It’s good to know that the Philippines is still hanging in there [in terms of GDP growth],but I’m quite disappointed that the poverty incidence is increasing,” Wolfensohn said during his speech at the Bridges Dialogue series at the Asian Institute of Management in Makati City Wednesday. The dialogue is part of a series, organized by the International Peace Foundation, to bring Nobel laureates and other key global personalities to Southeast Asia to promote greater understanding on peace and development and related issues.

Wolfensohn was brought in by the foundation for its Bridges project in recognition of his record at the WB: leading initiatives on debt reduction, environmental sustainability, anti-corruption programs and AIDS prevention and treatment. In his AIM speech, the former WB chief gave the government unsolicited advice to seriously consider increasing its budget for social services, particularly on education and health, to uplift Filipinos from poverty.

He singled out the Philippines’ allotment for education—it only spends around one-eighth or one-tenth of what other countries are spending to ensure the education needs of its people.

“The government needs to start looking [for ways to address this]. The Philippines [now] ranks third in the world [in terms of high inequality],” Wolfenson said.

He asserted that “the Philippines has the wealth and capability to do it. I just hope you do it.”

Meanwhile, Wolfensohn also said that depending on aid from the donor community will also not be enough to address the poverty situation and environment problems, not only in the Philippines, but in many developing countries.

He thinks countries must learn to pull themselves out of poverty by investing in social services and that governments must start considering the environment as a “hard-edged economic issue.”

If funding were to be diverted to the social services and environment sector, it must be done now, as addressing inequality and the problems that plague the environment cannot wait another 15 to 20 years.

For his part, Makati Business Club (MBC) chairman Ramon del Rosario said in his reaction to Wolfensohn’s speech that while he agreed with the former World Bank head, addressing these issues are not only a matter of policy but of governance.

“Good governance [allows the government to] adopt the best economic policies [for the country while] poor governance results in poor policies and poor spending choices,” del Rosario said.

He said the current corruption problems of the government only shows that the Philippines is not ready to be a beacon to the world’s economic laggards.

In fact, del Rosario said, the Philippines’ development and economic progress maybe dragged down by the “hydra of government corruption.”

He said while society maybe giving the business sector a raised eyebrow due to its efforts to meddle in the affairs of the government, the MBC considers corruption as both an ethical and professional issue, and as such, must also merit the attention of all Filipinos.

“This is precisely why we all need to give a damn,” declared del Rosario.

On the other hand, Asian Development Bank (ADB) Managing Director General Rajat Nag said that for countries like the Philippines, aiming to achieve inclusive growth should be the priority.