Economic team: so far so good
The business community is delighted with the way the economic team of the new Marcos administration is taking shape. The reason for this is that the names unveiled so far to lead the key agencies involved in managing the economy are qualified and capable. So far, no nominations to the economics team have come for politicians who helped campaign for President-elect Ferdinand Marcos Jr.
“They are all seasoned and competent economic leaders. We believe they would do good in handling our tax affairs,” notes George Barcelon, head of the country’s largest business group, the Philippine Chamber of Commerce and Industry. “We are confident that this competent roster of technocrats and academics will help steer the economy toward recovery,” adds the Association of Filipino Franchisers Inc.
Governor Benjamin Diokno of the Bangko Sentral ng Pilipinas (BSP) will be the point man of the economic team at the head of the Ministry of Finance, which will have the unenviable task of generating enough tax and non-tax revenue to meet increased spending not only for essential public services, but also to start paying off some 3.2 trillion pesos of debt resulting from the response to the COVID-19 pandemic. Businessmen believe Diokno will have rare insight into how government and the private sector are working together to boost jobs and growth, having led two major economic agencies, the Department of Budget and Management and the BSP. Diokno has been governor of the BSP since 2019. He served as budget secretary under the Duterte administration from 2016 to 2019 and under the Estrada regime from 1998 to 2001.
The other candidates on the economic team are equally experienced and competent. Monetary policy aimed at controlling inflation will be handled by economist Felipe Medalla as the new BSP governor. He served under four presidents with a career spanning over four decades. He has been a member of the BSP Monetary Council since July 2011 and was head of the National Economic Development Authority (Neda) from 1998 to 2001. Former UP President Alfredo Pascual, President of the Management Association of the Philippines and an international development specialist banker, is the new secretary of commerce, while engineer Manuel Bonoan, managing director of San Miguel Tollways Corp., will be the secretary of the Department of Public Works and Highways, an agency where he was a civil servant since the Ramos administration before joining the private sector. Previously, the head and economist of the Philippine Competition Commission, Arsenio Balisacan, was called upon to return to his former position as secretary of socio-economic planning and head of Neda.
The team’s emerging roster highlights Marcos Jr.’s focus on the economy, which has been battered by the lingering COVID-19 pandemic. The economy, as measured by gross domestic product (GDP), suffered its worst postwar recession in 2020 when it contracted 9.5%, the largest since the government began to record annual economic output in 1946. But the most pressing problem for the Economics team is the bloated public debt burden, which is expected to reach over 13 trillion pesos by the end of this year, as the Duterte administration had to borrow 3.2 trillion pesos just to bolster its war chest to deal with the pandemic.
This makes debt management the biggest challenge as soon as the Marcos administration takes office on July 1, recognized by Diokno as the first item on the agenda when he takes charge of the finance portfolio. . At 12.7 trillion pesos at the end of March 2022, Diokno stresses that this is not a concern as long as the Philippine economy is growing 6-7% on a sustained basis. “It is important that I review debt sustainability to assure the domestic public and international credit watchers that we are serious about consolidating our fiscal resources so that we are able to reduce our debt and our ratio. deficit/GDP over the next few years,” he added.
Only a dynamic economy can effectively solve the debt problem, and a competent economic team can help. An economic team made up of experienced and highly qualified people means good economic policies, and good economic policies mean more profitable businesses and more investment. In turn, more lucrative businesses mean more taxes, and more taxes will give the government enough money to pay off its debts without draining funds that should be allocated to basic public services. A vibrant economy also means more jobs and less poverty.
It is hoped that Marcos Jr. will complete his economics team with equally capable leaders. This is also crucial for upcoming appointments in the agriculture, transportation, and information and communications technology departments, as well as internal revenue and customs offices. Just as we need doctors, not lawyers, to treat the sick, we need economists and technocrats — not politicians — to bring a struggling economy back into the pink of health.
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