The third quarter of 2002 saw the need for a shift in the administration’s economic policies from macro to microeconomics.

It was during the 28^th Philippine Business Conference at the Manila Hotel on Dec. 13, 2002, that President Gloria Macapagal-Arroyo gave the unequivocal declaration of a shift from the macro and demand driven economic policy to microeconomic and supply side.

This was made clear when the President appointed Congressional Budget Planning Head Romulo Neri to be the new Socioeconomic Planning Secretary and head of the National Economic and Development Authority (NEDA) vice Dante Canlas who opted to return to the academe.

On Sept. 3, 2002, during a Cabinet meeting, the President said that it was time for the administration to create an economic impact that the poor can feel. She said the roadmap that her administration will follow is patterned after that of Thai Prime Minister Thaksin Shinawatra’s "managed asset reflation" that is based on domestic consumption.

Daniel Lian, a Singaporean-based economist with Morgan Stanley, has defined "managed asset reflation" as a controlled rise in domestic asset prices to encourage the shift from export dependence to new sources of domestic demand, notably capital-efficient small and medium-sized enterprises.

According to the President, Thaksin’s economic model, which is focused on domestic consumption and is veered away from multinational exporters, has helped increase Thailand’s growth from 1.8 percent to 3.9 percent this year. "Skeptics have said that the Thai model would not work, but Thaksin showed that it is possible to make an economic difference in just one year," the President said.

Actually, the Macapagal-Arroyo administration’s shift towards a supply driven economy was laid during in the State-of-the-Nation Address (SONA) in July 2001 when the President announced that her administration targets 300,000 beneficiaries for micro financing.

During her provincial visits, she has been pushing for access to credit particularly by small and medium enterprises (SMEs).

In her keynote speech in the opening ceremonies of the First Asian Regional Council Forum of the Global Parliamentarians On Habitat at the Century Park Hotel in Manila in April 24, 2002, the President said her administration would continue working on improving access to credit for micro-financing that would largely help poverty alleviation.

In her weekly radio interview on June 3, 2002, the President underscored the importance of micro-finance in providing livelihood opportunities for the poorest of the poor. She said the center of her administration’s livelihood program lies in the People’s Credit and Finance Corporation (PCFC), with the support of its conduit banks, financing agencies, the various non-governmental organizations (NGOs), cooperative rural banks, as well as micro-finance replicators.

The micro-finance scheme involves loans of up to P5,000 as capital funding to enable the poor to put up a source of livelihood.

"It (micro-finance) is a very effective system called Grameen bank which started in Bangladesh. It became well-known in the world as an effective tool of livelihood for the poorest of the poor," the President said.

On June 20, this year, the President signed Executive Order 110 placing the People’s Development Trust Fund (PDTF) under the administration of the PCFC to ensure the delivery of micro finance services to the poor and help them set up SMEs. The PDTF was created by Republic Act 8425, also known as the Social Reform and Poverty Alleviation Act.

In a Cabinet meeting in mid-July this year, the President reported that the government has extended some P692.75 million in micro-finance credit to 312,472 women borrowers alone as of mid-July, surpassing the 300,000-beneficiary target set in her 2001 SONA in July last year. This has brought the total of micro finance institutions registered with the PCFC to 198 with loans released reaching P1.128 billion.

In a radio message on Sept. 7, 2002, the President called on the nation to take an active part in stimulating the domestic demand, rather than relying solely on the export market. She noted that this was the same formula adopted by Thailand in reinvigorating its economy.

And to stir up domestic consumption, the President said, more capital should be poured into SMEs.

Speaking at the launching of Ford’s Export Program at the Ford Plant in Sta. Rosa in early September last year, the President sought the support of exporters in expanding the domestic market whereby domestic consumption "complements multinational exports as a source of growth." And to bring this about, the President said, SMEs should be strengthened.

In a meeting with government financial institutions (GFIs), also in September 2002, the President directed them to step up efforts in providing loanable funds to SMEs. She said the best and the most reliable source to boost the domestic market are the SMEs. She also called on commercial banks to expand their lending program for the SMEs.

On Sept. 25, 2002, the President formally launched in Malacanang the "One Town, One Product, One Million Pesos" project during a special luncheon meeting with 27 municipal mayors of the province of Laguna. The project is aimed at generating employment within the towns involved in the project, alleviating poverty and thus, reinvigorating the domestic economy.

The President pointed out that GFIs would provide seed financing for the SMEs in each town through the local government units (LGUs). One town is assigned to develop a single indigenous product from the P1 million loans that will be released to them through the Land Bank of the Philippines (LBP).

The President made a soft launching of the project early September, 2002, in a visit to Lakewood, Zamboanga del Sur where Lakewood got P1 million loan with a four-year term for fruit production. Nine other Zamboanga del Sur towns got P1 million loan each for the production of hybrid rice seeds.

In a meeting with Bangko Sentral ng Pilipinas (BSP) and members of the Monetary Board in November last year, the President received reports that the BSP has in fact launched a series of initiatives to promote the SME sector.

BSP Deputy Governor Alberto Reyes told the President that the BSP and the Monetary Board are conducting continuing dialogues with businessmen in the provinces to inform them about the need to promote the growth of SMEs to reinvigorate the domestic economy and win the war against poverty.

BSP has also worked out a scheme with the Rural Bankers Association of the Philippines (RBAP) to take a more active part in the lending program for SMEs.

RBAP president Jerry Coloma, Jr. said SMEs will enhance viability of the local economy and any victory in the local economy is a victory for the national economy.

Malacaņang today appealed to the critics of the administration to set aside politics at the moment and work for the good of the country as exemplified by the decision of President Gloria Macapagal-Arroyo not to run in the 2004 presidential elections.

In an interview, Press Secretary Ignacio R. Bunye said that although there are still some people who are skeptical about the President’s decision, majority of the Filipinos, including those from the opposition, believe in the sincerity of the President and are giving her their full support and cooperation.

Bunye cited the old truism that to the believers no explanation is necessary but to the unbelievers no explanation would be sufficient.

He said that with her decision, the President has shown that she is willing to sacrifice for the sake of the country. "We’re all being called upon to make our own sacrifices too," he said.

According to Bunye, what the President has stressed is that for the next 18 months, she is going to concentrate on speeding up the country’s economic development.

"The government would take advantage of our good macro-economic indicators and translate them into more jobs and more low-cost houses for our poor," Bunye said.

Bunye also begged off from commenting on current talks about who the President would anoint in the 2004 elections, saying that this is early politicking and that is precisely what the President was trying to avoid.

Malacaņang urged the Philippine National Police (PNP) and the local government of Sultan Kudarat to expedite the investigation on the New Year’s Eve grenade attack that killed 10 people in the plaza in Tacurong.

During a radio interview, Press Secretary Ignacio R. Bunye said the government is hopeful that the PNP and the local government of Sultan Kudarat will cooperate for the early resolution of the bombing incident.

On the other hand, Secretary Bunye at the same time congratulated the populace for heeding the call of government to shun away from firecrackers. He said the PNP and other law enforcement, agencies including government offices that supported the call, should also be lauded.

According to Secretary Bunye the decrease in firecracker injuries this year can be attributed to the aggressive campaign of government agencies as well as media entities days before the New Year’s Eve revelry.

In a related development, Secretary Bunye said positive reporting could help a lot, particularly those that involve national security. He said everybody knows that living in the Philippines is not as dangerous as reported.

The Department of Budget and Management (DBM) today said that 30 percent of the proposed national government’s budget of more than P800 billion has been allocated to the social services sector covering education, health and social welfare and security.

Budget and Management Undersecretary Laura B. Pascua said the second largest share of 20 percent will go to economic services sector, particularly on infrastructure, agriculture and natural resources among others.

She added that only 16.7 percent and 5.1 percent will go to general public services and defense sector, respectively, while the remainder will go to interest payments and advances to government corporations for their loans.

"Its (social services sector) share will be more evident if we net out interest payments and advances to government corporations. Its share will be 41.4 percent," Pascua said.

According to Pascua, the second largest sector, economic services, will get 28.2 percent, general services, 23.3 percent and defense 7.1 percent.

President Gloria Macapagal-Arroyo today accepted the resignation of Justice Secretary Hernando Perez.

Perez personally handed the letter to GMA at around 5:30 p.m. today during a brief call at the Palace.

In his letter, Perez said the "recent turn of events has unfairly subjected this administration and myself to undue stress which may put in danger all the gains this government has achieved. And this I will not allow."

Perez said he was tendering his resignation effective immediately "despite the fact that the charges hurled against me are false and baseless."