"It began with much acrimony and discord in the halls of Congress."
"It began with much acrimony and discord in the halls of Congress."
The events of 2019’s first six months—the sixth of President Rodrigo Duterte’s 12 semesters in office—that have had the greatest impact on the Philippine economy have revolved around four matters, namely, the 2019 GAA (General Appropriations Act), the inflation rate as measured by the consumer price index (GPI), the mid-term election and the West Philippine Sea. Positive notes were struck by the inflation rate and the May 13 election; the developments relating to the GAA—the national budget and the West Philippine Sea were negative in character.
The rapid upward movement of the CPI in 2018 was accounted for almost entirely by the excise tax on fuel imposed by TRAIN (the Tax Reform and Inclusiveness Act) and the rice supply deficiency resulting from drought and NFA (National Food Authority) mismanagement. The inflation rate rose to 5.7 percent, its highest level in 11 years. Consumer prices began to decline when the Duterte administration suspended the fuel tax increases and succeeded in correcting the rice market’s supply-deficit situation. By June the inflation rate had gone down to a level well within the 2-4 percent target range set by the BSP (Bangko Sentral ng Pilipinas).
The automated mid-term election took place in a generally orderly manner. All twelve seats at stake in the Senate were won by candidates of the two administration parties, the Partido ng Demokratikong Pilipino (PDP)—Laban and the Hugpong ng Pagbabagong Pilipinas (HPP)—a result that gave rise to protests and complaints against alleged automation skullduggery. With the proclamation of the 12 winning candidates, the Opposition was reduced to four Senators. Senate president Vicente Sotto III has stoutly declared that the 18th Congress Senate will be an independent entity; whether it will be sufficiently independent to withhold support from the Duterte administration’s legislative priorities is something that the Filipino people will have to await.
The first semester of 2019 began with much acrimony and discord in the halls of Congress regarding the 2019 GAA, which, like all previous national budgets, should have gone into effect on the year’s first day. Allegations by Senator Panfilo Lacson of post-bicameral-conference insertions into the GAA by the Secretary of Budget and Management prevented the GAA’s being signed into law before Dec. 31 by President Duterte, who said that he would affix his signature to the measure only after the two chambers of Congress had composed their differences. Mr. Duterte signed the 2019 GAA on April 27. The economic managers estimate that the nearly four months of budget-implementation delay has cost the economy close to 1 percent of GDP (gross domestic product). Taking their cue from the economic managers, the Philippine business community has correspondingly lowered its expectation of the level of national economic activity this year. With first-quarter growth down to 5.6 percent, the international financial community now places Philippine GDP growth in 2019 at between 6 percent and 6.3 percent.
The other discordant note that was struck during 2019’s first semester related to the Permanent Court of Arbitration’s 2016 ruling on China’s claim to the entire South China Sea, which included the West Philippine Sea and the Philippines’ EEZ (exclusive economic zone). The steady stream of accusations, denials and diplomatic protests culminated in the ramming on June 9 of a Philippine fishing boat by a hit-and-run Chinese vessel. Needless to say, the incident has cast a further shadow on bilateral relations whose desirability for the Philippines is being increasingly questioned by the majority of Filipinos. There are bound to be more such incidents—or worse ones—as long as the Duterte administration remains docile in the face of increasingly hegomonic Chinese behavior.