"We need independent experts to do this."
"We need independent experts to do this."
On July 1 the Philippine economy’s managers staged what they billed as a pre-State of the Nation (SONA) presentation of the economic track record of the Duterte administration. Secretary of Finance Carlos Dominguez III, Secretary of Socio-Economic Planning (and NEDA Director-aly installed Secretary of Budget and Management stood before an audience of businessmen, diplomats and journalists to recite the fulfilled electoral-campaign promises of then-candidate Rodrigo Duterte.
Predictably, the economic managers’ presentation centered on three things: GDP (gross domestic product), consumer prices and physical infrastructure. These are the matters that have dominated the public discourse and have generated the most intense controversies during the last three years.
Needless to say, the centerpiece of the economic managers’ presentation was the growth performance of the Philippine economy since July 1, 2016. With the series of above-6-percent annual GDP increases, the Philippine economy had become the second fastest-growing economy in East Asia, they declared. This three-year track record was entirely attributable, they said, to the Duterte administration’s sound management of the nation’s finances. The revenue increases produced by the TRAIN (Tax Reform for Acceleration and Inclusion) program had made it possible for the government to raise its social spending and enact upward adjustments in benefits and salaries. The step-up in government spending had created hundreds of thousands of new jobs, they said, and had put in place the foundation for even higher economic growth in the coming days. Spending on infrastructure – to usher in a Golden Age of Infrastructure—had reached 5 percent of GDP, as against the historical 3 percent, and would rise to 7 percent towards the end of President Duterte’s term.
Secretary Dominguez and his colleagues dismissed as a brief departure from the new-normal the lower-than-6-percent growth—5.6 percent—posted by the economy during the first quarter of 2019. With the start of implementation of the 2019 GAA (General Appropriations Act), the economy would do a catch-up and get back to above-6-percent growth in 2019’s remaining quarters, they said.
The economic managers were quick to claim credit for the steady decline in the inflation rate during the last few months, but they had little to say about the inflationary surge of 2018, which saw the inflation rate move past 5 percent—its highest level in many years. There is wide acknowledgment that the fairly sharp increase in fuel excise tax rates ordained by the TRAIN law were a major cause of the consequential surge in consumer prices. Only when the second set of fuel excise tax increases was reconsidered did the inflation rate begin to move downward.
True, work has begun on a number of major Build, Build, Build infrastructure projects, but the fact of the matter is that many of the ongoing projects were initiated not by the government—more specifically DPWH Department of Public Works and Highways and DTr (Department of Transportation)—but by private entities. Credit for the Golden Age of Infrastructure, if one has dawned, belongs in almost equal measure to the government and the private sector.
That Secretary of Finance and his co-economic managers would draw the nation’s attention to, and trumpet, the economic accomplishments of the Duterte administration’s first three years was something to be expected. What was not to be expected was a recital by the economic managers of the Duterte administration’s non-accomplishments. The audience at the pre-SONA presentation hardly expected Carlos Dominguez III and his colleagues to say “We’re sorry we failed to do solve the issue” or “We tried but were unable to achieve that.”
While the economic managers—and the administration that they serve—should be commended for what they have accomplished, there can be no glossing over their non-accomplishments, for they are crucial to the Philippine economy’s ability to continue delivering above-6-percent GDP growth rates in the coming days.
By far the most important of the Duterte administration’s non-accomplishments during the first half of its term is its failure to turn the agricultural sector around. Philippine agriculture today is an inefficient and as growth-retarding as it ever was. The Filipino people do not have a secure supply of domestically produced food, numerous major agricultural products—including sugar—are imported and the farmers and fisherfolk comprise the poorest segment of this country’s workforce.
Another major non-accomplishment of the Duterte administration was its failure to turn around the FDI (foreign direct investment) situation. The Philippines at mid-2019 continues to receive FDI total that can only be charitably described as comparatively unsatisfactory. This country receives far less FDI than Vietnam and Thailand and not very much more FDI as Cambodia and Laos. That state of affairs was unacceptable in the past, and it remains unacceptable.
A final example of Duterte-administration non-accomplishment—one has steadily assumed alarming proportions—is this country’s external trade. While on the import side of the ledger imports have been rising sharply because of the requirements of the Build, Build, Build program and a rapidly growing population, on the export side gargantuan shortfalls appear to have become the order of the day. The 2018 merchandise trade deficit was $41 billion. The most worrisome aspect of the trade situation is that DTI (Department of Trade and Industry) clearly does not have a viable near-term solution.
The people of this country should be provided with a balanced—accomplishments versus non-accomplishments—view of the economic performance of the Duterte administration. For that purpose a pre-SONA presentation by a group of independent experts is probably called for.
