"What real good is a 7-percent GDP growth rate if almost six million Filipinos are barely surviving?"
"What real good is a 7-percent GDP growth rate if almost six million Filipinos are barely surviving?"
Every administration’s economic managers believe that they are the best things that have ever happened to this country. The economic managers of the administration of Rodrigo Duterte are no exceptions to this rule, and the head of President Duterte’s team—Secretary of Finance Carlos Dominguez III—has in recent months taken advantage of every opportunity to talk about the economic policies and achievements of the administration that he serves.
In one of his more recent speeches, the Secretary of Finance discussed the elaborately structured and sophisticatedly argued programs that make up the Duterte administration’s economic agenda. These included the Tax Reform for Acceleration and Inclusiveness (TRAIN) Act—now divided into TRAIN I, TRABAHO, CITIRA and PIFITA—Build, Build, Build, 6.5-7.5 percent GDP (gross domestic product) growth and the quest for an upgrade of this country’s present BBB plus sovereign credit rating.
Secretary Dominguez said that the TRAIN reform packages, by leveling the fiscal-treatment playing field, lightening the citizenry’s tax burden and putting an end to the erosion of the tax laws’ revenue yield, make possible greater investment and generate more employment and income. The DOF (Department of Finance) chief has been absolutely justified in singing the praises of the Duterte administration’s economic agenda.
The Build, Build, Build program has held out the prospect of correction of this country’s infrastructure deficiency, which would give rise to increased activity in the industries producing supplies and employing manpower for the construction and highways, bridges, airports, seaports and schoolhouses. Though it has been shown to be short on accomplishment, Build, Build, Build remains the Duterte administration’s flagship program.
Though only its first package has been approved by Congress thus far, the TRAIN program continues to be assiduously promoted by the Duterte administration’s Congressional-liaison personnel. Given the disorientedness and lack of coordination that has attended much tax legislation over the years, there is need for the TRAIN Act. It is generally a good piece of legislation, and the Duterte administration is right to give it the focus and attention that it is getting.
Likewise, the economic managers of the Duterte administration are doing the right thing in striving for a further upgrade of the BBB plus sovereign credit rating that the Philippines currently carries. Not only is a higher rating by the major international credit rating agencies—Standard and Poor’s, Moody’s and Fitch Ratings—an international badge of honor, but it also strengthens the fiscal operations of the government by making possible reduced interest rates on the government’s external borrowings. Secretary Dominguez misses no opportunity to discuss the possibility that this country might receive another credit-rating upgrade in the near future.
And then there is that other obsession—the mother of all obsessions—of the Duterte administration’s economic managers: the annual GDP growth rate. In recent years the Philippine economy has demonstrated a capacity to grow at a pace significantly faster than in the preceding decades; the recent rate of annual GDP growth has been of the order of 6.0-6.5 percent. The 7-8 percent growth rate targeted by the Philippine Development Plan 2017-2022 has proven to be elusive. The economic managers are absolutely right in their fervent striving for attainment of the 7-8 GDP growth target, given the government’s need to provide food, social services and employment for a national population that is not almost certainly in the vicinity of 110 million.
All the economic goals discussed above—a higher GDP growth rate, a higher sovereign credit rating, a high level of Build, Build, Build accomplishment and Congressional approval of the TRAIN reform package—are undoubtedly important for the development and growth of this country’s economy, and the economic managers are right in devoting much time, attention and resources to the quest for their attainment.
But important though they be, these targets should not be the principal goal of their strivings. That principal goal, the Holy Grail, should be the eradication of poverty, represented by the national poverty rate. According to PSA (Philippine Statistics Authority) data, this rate fell between 2015 and 2018 from 21 percent to 16.8 percent. The latter figure apparently translated to almost 6 million Filipinos. The Duterte administration has said that it expects to bring down the national poverty rate to 14 percent by 2022.
Fourteen percent of Filipinos living below the poverty line in the third decade of the 21st century is way too many Filipinos. It is an unacceptable state of affairs. What real good is a 7-percent GDP growth rate if almost six million Filipinos are barely surviving?
Until the national poverty rate shall have gone down to near-zero, the government’s economic managers—the present government and the next—are well advised to tone down their characterization of their performance in managing this country’s economic affairs.
