But the resignation of the President will at the least bring a psychological boost to the economy that can eventually pave the way for positive business developments. It will be recalled that after the People Power Revolution in 1986, the economy posted its highest economic gains in three years at the end of that year. But the biggest problem of the country the huge budget deficit amounting to P130 billion at the end of 2000 is definitely not one that will go away when Estrada leaves. The amount is the biggest the national government has ever incurred. A deficit comes about when the government is not able to collect enough revenues for its expenditures.
Collections principally come from taxes and sale of government assets plus other fees collected.
The slowdown in the economy last year, which lowered tax collection, and the unexpected expenses incurred like financing the war against the Abu Sayyaf during the first half of last year aggravated the situation. Of course the rampant smuggling, particularly by Estrada s cronies, has deprived the government of millions if not billions in taxes and duties. Among the first issues Estrada s successor will have to address is the huge deficit. Foreign investments Foreign investments may not immediately come in but a few investors have declared that they will look at the Philippines again once the political situation stabilizes. Carrefour, the second-largest retailer in the world, which was supposed to plough in almost P4 billion into the Rustan Supercenters Inc. last year decided to cast aside its plans in view of the economic and political problems the Philippines faces.