IMAGINE this: going on a road trip without maps or the aid of GPS. That has been the dilemma of previous administrations without an economic blueprint to use as a guide in navigating choppy economic waters.
If there’s one thing that stands out among all the economic measures implemented by the administration in its first year, it’s the early formulation of a medium term socioeconomic blueprint, former National Economic and Development Authority (Neda) Secretary Dante B. Canlas told the BusinessMirror.
The formulation of the Philippine Development Plan (PDP) in the same year the administration took over the reins of government is a first. This, Neda Secretary Arsenio M. Balisacan said, allows the government to direct its actions early on in accordance with the goals and aspirations set by the current administration.
Balisacan, in an earlier interview with BusinessMirror, said the new administration will fast-track the release of the blueprint in order to guide departments on where they should prioritize their programs. The target is for the creation of a new blueprint by year end.
He said the PDP timeline is signed by the President by the end of the year and distributed to Congress and the respective implementing agencies and stakeholders by the start of 2023. This, however, will drastically change the calendar for the PDP.
BUT Neda kept its word and presented a complete PDP in December 2022. By January 2023, the PDP and its results matrices were made available to the public.
“As a former Neda Secretary, I welcome most of the following documents: Socioeconomic framework; Medium-term Fiscal Framework; and the Philippine Development Plan. These documents help provide a stable predictable environment for the private sector, both households and firms,” Canlas said.
This is especially crucial given the pandemic and the ill effects of the lockdowns, which was deemed the longest in the world. These negative effects have been felt in various sectors, most notably in human capital development, particularly in education.
The Philippine Statistics Authority (PSA) said the previous administration failed to achieve their PDP plan targets in the Private Education Student Financial Assistance (PESFA) Program with 4.5 percent of its target being achieved.
The PSA also said Training for Work Scholarship Program (TWSP) also achieved 6.6 percent of its targets; Special Training for Employment Program (STEP) with 18.5 percent; and Immersion Outreach Program at 17.5 percent.
Interest rate hike
APART from this, expensive food and non-food commodities have been difficult to ignore. This is the reason other economists believe one of the key economic measures undertaken by the current administration was the rise in interest rates.
Since last year, the Bangko Sentral ng Pilipinas (BSP) has raised interest rates by 425 basis points. It’s only in the last two policy meetings that the Monetary Board decided to pause its aggressive monetary policy.
“I believe that the economic team of the government played an important role in managing the economic condition of the country despite the turmoil around the world: fluctuating fuel prices, war, and trade wars,” De La Salle University economist Maria Ella Oplas told BusinessMirror.
“We could have suffered worse but they managed the impact of external issues. I need them to be able to continuously manage prices so as not to aggravate the situation of our poorest of the poor,” she added.
Ateneo de Manila University (ADMU) economist Leonardo A. Lanzona agreed with Oplas that interest rates have been the most notable macroeconomic reform the current administration did in its first year.
HOWEVER, much work needs to be done in terms of fighting inflation. Lanzona said measures to address supply chain issues, which were among the primary causes of expensive food items, need to be undertaken.
It can be noted that food accounts for 34.78 percent of the Consumer Price Index (CPI) for all households and 51.38 percent of the CPI for the Bottom 30 percent of the population.
“The only macroeconomic reform I can cite is the increase in interest rates in response to the heightened inflation felt for the whole year. Unfortunately, this was not the cause of the inflation which can be traced to supply side constraints. If you want to solve inflation you need to know its roots. In this case, the government failed,” Lanzona told this newspaper.
University of the Philippines Professor Emeritus Epictetus E. Patalinghug said apart from inflation, the economic reforms of the current administration which were done through the BSP included banking stability.
BSP Governor Eli Remolona earlier said the capital adequacy ratio of local banks were at 16 percent, above the 10 percent regulatory floor established by the Basel Committee on Banking Supervision. The liquidity ratio of Philippine banks, meanwhile, was at 188 percent, above the 100 percent standard globally.
PATALINGHUG also said the reforms of the current administration also included the fiscal reforms such as the deficit reduction; increased revenue generation due to the Bureau of Customs and Bureau of Internal Revenue exceeding their targets; and slowing down debt accumulation.
Finance Secretary Benjamin E. Diokno said the country would be able to “outgrow” its debt as long as it sustains its “strong” economic growth momentum. With such, the national government is on track in achieving the targets it set in its Medium-Term Fiscal Framework (MTFF) (full story here: https://businessmirror.com.ph/2023/06/30/1-year-on-marcos-administration-bravely-faces-debt-challenges/).
These economic reforms have raised economists’ expectations particularly because previous PDPs had failed to deliver on their promises. The PSA said at the end of the plan period, 39.4 percent of the 493 regular indicators monitored in StatDev 2022 demonstrated good performance in achieving the PDP end-of-plan targets.
One can only hope that next year’s StatDev 2022 would lead to better results. For now, economists and all Filipinos are waiting on results. “The Philippine Development Plan promised an economic transformation, and I should expect nothing less,” Lanzona said.