No matter how Malacañang tries to spin it, Secretary Romulo Neri’s transfer from the National Economic and Development Authority (NEDA) to the Commission on Higher Education (CHED) can only be construed as a demotion. After all, the post of NEDA director general puts one at a senior level in the Cabinet post, compared to the CHED chairmanship, which is still under the direct supervision of the Office of the President. In fact, the commission is so powerless, it cannot even stop state universities and colleges (SUCs) from creating new branches and programs despite the government’s inability to fund and maintain quality standards of existing SUC branches.

Malacanang’s line that Neri is in CHED to help the agency achieve its targets has holes. Old timers in the education community will also tell you that one main hindrance to reforms in the higher education sector is Malacañang’s interference in policy matters, which in turn undermines CHED’s regulatory powers.

For instance, when the commission tried to stop the proliferation of substandard nursing schools, Malacañang stepped in and issued a stay order allowing one nursing school to operate despite its failure to meet CHED requirements. The nursing school later expressed its thanks by placing a full page ad in support of President Arroyo during the height of the “Hello Garci” controversy.

But back to Neri. So why was he demoted?

The buzz among economists is that Neri wanted the government to adopt market-based interventions to stop the peso from appreciating too fast. Remember that sometime in May this year, Neri expressed apprehensions that the peso was getting “uncomfortably strong.”

The strong peso had adverse effects on the economy. According to economists, it affected not just exporters who are finding it more difficult to sell their goods abroad, but also the families of overseas Filipino workers who lost substantial buying power, as well as domestic manufacturers who now have to contend with cheaper imports. This was also a factor behind government’s failure to meet revenue targets for the first semester of the year despite the new taxes.

Our neighbor, Thailand, has been so concerned that the baht is appreciating too fast that they have taken drastic measures to arrest this, including imposing controls on incoming portfolio capital and liberalizing capital outflows. In contrast, the Philippine government is touting the rising peso as a sign of a strong economy.

An economist-source said the problem is that “too many people in government think that the peso appreciation is good because they are making money from the stock market.” What is making the peso appreciate, the source explained, is the fact that there are a lot of foreign exchange inflows because they are buying stocks in the stock market. “The same people who are rejoicing in the rising peso are the same people who are cashing in on the rising stock market.”

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