Looming RP financial crisis

Congress just approved the 1.4 trillion peso budget for 2009. About 56 billion were allocated by the government to help ailing industries, companies and economically displaced Filipinos. Calls are, however, being made coming from the Senate and some pre-need companies, seeking for financial help, since according to SEC reports, pre-need companies have some 46 billion pesos worth of outstanding credit. Pre-need companies have just 64 billion pesos, inadequate to satisfy the financial requirements of more than 34,000 Filipino plan holders.

Bad management and bad investments are forcing some pre-need companies to close shop. However, let me warn government---should Congress and Malacanang extend a helping hand to these pre-need companies and rural banks through infusion of funds coming from the enacted 1.4 trillion peso budget, that constitutes a clear violation of the Constitution.

Any infusion of financial calamity or stimulus plan should be submitted to Congress and passed separately from the annual budget. This constitutes a special fund which should not be sourced through the General Appropriations Act.

Likewise, I believe that these reports about pre-need companies are just PR. Pre-need company owners just want to have a slice of public funds by creating this so-called financial mess that they themselves created. If government helps them, it's just like condoning their malpractices which led to the dissolution of their funds. Pre-need companies should not have encountered such a mess if they just did a prudent investment plan.

What is more alarming is the slow rise of bad car mortgages. As more and more Filipinos lose their jobs and OFW's coming home, I heard from a reliable source that bad car loans are starting to accumulate. This will surely affect the existing loan portfolio of banks. Definitely, this will affect large banks since some of their income are derived from interest payments, which are then, re-invested in either medium-term or high-risk investments. With a veritable slump in regional stock markets, how would they re-coup their daily investment losses?

Aside from this, I am quite certain that this year, we will see the rising sub-prime crisis brought by bad property mortgage loans. Last November, government failed to sell bad mortgage loans amounting to half of the 250 billion pesos. SSS is being made to assist the NHMFC, yet, its depleting funds are also a cause of concern.

Government is hiding this thing from us.