AS we hurtle toward the May elections, we could all benefit from a pause to look beyond the feel-good promises and the social media image building—and acknowledge that the country faces some real, daunting challenges ahead.
It is not enough that candidates offer hope or a vision for a better future. That is a requirement, to be sure, but they also need to tell us specifically how they will deal with the substantial problems that this administration will leave behind—including government corruption and the illegal drug trade.
Beyond these legacy problems, our next leader will also have to deal with the enormous debt that this administration incurred—some of it justified, to be sure—to deal with the COVID-19 pandemic.
Since the start of lockdowns in 2020, the government raised $25.8 billion in loans and grants from multilateral lenders, development partners and foreign currency denominated global bonds for its pandemic response
The country had P11.73 trillion in outstanding debt as of the end of 2021, growing 19.7 percent year on year, preliminary data from the Bureau of Treasury shows. Will the next administration pay for these debts with higher taxes? This early, voters need to know.
In a commentary Friday, JP Morgan said the next president will have to deal with a growing budget deficit and a widening account deficit as foreign exchange transactions with the rest of the world increase.
JP Morgan economist Nur Raisah Rasid said fiscal spending during the COVID-19 pandemic led to record deficits, with government debt soaring to 59.1 percent of gross domestic product (GDP) at the end of 2021, and possibly rising to 62.3 percent of GDP by the end of this year.
On the other hand, the country’s current account balance improved during the pandemic because people were simply not investing.
“However, we expect the economy to head into another twin deficit episodes this year as the next administration likely will pursue an expansionary fiscal policy to support the ongoing recovery, with the corollary decline of external balances, raising concerns over fiscal and monetary policy management,” she said.
The country’s budget deficit reached P1.33 trillion in November, up 24.63 percent from a year earlier. On the other hand, the current account deficit was at $2.63 billion as of September, a reversal from the $7.79 billion surplus a year earlier.
The new administration should manage the expected twin deficits this year while keeping in mind domestic financial conditions, debt management and budget execution, JP Morgan said.
Whoever is elected president in May wins a mandate to govern for the next six years—but it is a game of winner take all—and that includes all the problems its predecessors left behind.
