An incoming administration can describe the economic performance of the outgoing administration in one of two ways. It can say that the outgoing administration left the economy in a mess, with the fiscal accounts in deficit and the main economic indicators pointing in a downward direction. Or it can say that it inherited from the outgoing administration an economy in generally good shape, with the fiscal accounts in good order and the principal indicators of economic activity—production, employment and income—exhibiting vibrancy.
After six years of weak Executive leadership and post-dictatorship political instability, the Philippine economy was in near-disarray—a situation best exemplified by a debilitating energy shortage—when the administration of President Fidel V. Ramos came into office. Because his 1992 victory was largely due to President Cory Aquino’s endorsement of his candidacy, FVR was inhibited from criticizing the economic conditions that the Aquino administration had left in its wake.
When it came to office in July 1998, the administration of President Joseph Ejercito Estrada found an economy that had benefited from President FVR’s reformist economic policies and hands-on management. The Estrada economic team built upon a strengthened economic structure that the Ramos administration left behind. There was not much for the Estrada people to criticize. They inherited an economic ship in good shape.
The same could not be said of the legacy of the administration of President Gloria Macapagal-Arroyo.
The incoming administration of President Benigno Aquino III found a troubled economy. Beset by legitimacy problems from the very start—she assumed the Presidency despite the fact that the duly elected Chief Executive had not resigned—GMA left behind an economy characterized by low GDP growth, high unemployment, weak fiscal fundamentals and rampant corruption.
The Aquino people made no bones about what they inherited from their Arroyo predecessors. They inherited an economic ship in bad state, they said. PNoy Aquino declared an intention to straighten things out. His administration would proceed along a daang matuwid.
Now the Aquino administration is almost at an end; it will bow out on June 30. What is the incoming administration’s assessment of the economy that it is inheriting from the administration of PNoy Aquino? Does it think that it is inheriting a mess? Or does it think that the Aquino folk have done a generally good job of managing the economy?
The statements made by some members of the economic team of President-elect Rodrigo Duterte indicate that the consensus in the Duterte camp is that the Aquino administration is leaving behind an economy that is strong and stable. Nowhere in the 10-point economic program announced by the incoming administration is there any allusion to instability or weakness in the economy.
The Duterte camp’s assessment of the Aquino administration’s stewardship of the economy is accurate. True, there is the issue of non-inclusiveness and continuing widespread poverty. That issue was there when PNoy assumed the Presidency, it is there today and it will be there when President-elect Duterte steps down six years hence. Spreading the fruits of economic growth and eliminating widespread poverty are very tough problems.
But the most essential economic fundamentals—monetary stability and fiscal soundness—are in place. Such has been the quality of the management of the nation’s monetary and fiscal affairs that the Philippines has been granted successive credit-rating upgrades by the three leading international credit-rating agencies. Debt instruments of the Philippine government and leading corporate issuers now enjoy investment-grade status in international markets. Investment-grade status is granted only to the securities of countries where sound economic fundamentals exist, i.e., whose economies are well-managed.
The incoming administration is inheriting from the outgoing administration an economy that is ship-shape. One can only hope that the same thing can be said six years from now.
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