Economic team: So far so good

The business community is elated with how the economic team of the incoming Marcos administration is shaping up. The reason is that the names so far unveiled to head key agencies involved in running the economy are qualified and capable. Thus far, no appointments to the economic team as payback to 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 managing our fiscal affairs,” notes George Barcelon, head of the country’s biggest business group Philippine Chamber of Commerce and Industry. “We are confident that this competent roster of technocrats and scholars will help steer the economy towards recovery,” adds the Association of Filipino Franchisers Inc.

Gov. Benjamin Diokno of the Bangko Sentral ng Pilipinas (BSP) will be the point man in the economic team as head of the Department of Finance, which will have the unenviable task of generating enough tax and non-tax revenues to meet rising expenses not only for essential public services, but also to start repaying some P3.2 trillion in debt arising from the COVID-19 pandemic response. Businessmen believe Diokno will have a rare insight on how the government and private sector work together to boost jobs and growth, having headed two large economic agencies—the Department of Budget and Management and the BSP. Diokno has been BSP governor since 2019. He was budget secretary under the Duterte administration from 2016 to 2019 and under the Estrada regime from 1998 to 2001.

The other nominees to the economic team are as experienced and able. Monetary policy to help keep inflation in check will be handled by economist Felipe Medalla as incoming BSP governor. He served under four presidents with a career spanning more than four decades. He has been a member of the BSP’s policymaking Monetary Board since July 2011 and was chief of the National Economic and Development Authority (Neda) from 1998 to 2001. Former UP president Alfredo Pascual, president of the Management Association of the Philippines and an international development banker, is the incoming trade secretary, while engineer Manuel Bonoan, chief executive of San Miguel Tollways Corp., will be the secretary of the Department of Public Works and Highways, an agency where he used to be an official since the Ramos administration before joining the private sector. Earlier, Philippine Competition Commission chief and economist Arsenio Balisacan was tapped to return to his old job as socioeconomic planning secretary and head of Neda.

The emerging composition of the team highlights Marcos Jr.’s focus on the economy, which has been battered by the lingering COVID-19 pandemic. The economy, as measured by the gross domestic product (GDP), suffered its worst post-war recession in 2020 when it contracted by 9.5 percent, the biggest since the government started recording yearly economic output in 1946. But the most pressing issue for the economic team is the swollen government debt burden, which is projected to hit more than P13 trillion by the end of this year as the Duterte administration had to borrow P3.2 trillion just to beef up its war chest to address the pandemic.

This makes debt management the biggest challenge as soon as the Marcos administration takes office on July 1, acknowledged by Diokno as the first item in the agenda when he takes over the finance portfolio. At P12.7 trillion as of the end of March 2022, Diokno points out that this is not a cause for concern as long as the Philippine economy grows by 6-7 percent on a sustained basis. “It is important that I should look at the sustainability of the debt to assure the domestic audience and the international credit watchers that we are serious about consolidating our fiscal resources so that we are able to reduce out debt and deficit-to-GDP ratio over time,” he added.

Only a vibrant economy can indeed address the debt problem, and a competent economic team can help ensure this. An economic team made up of experienced and highly qualified individuals means good economic policies, and good economic policies mean more profitable businesses and more investments. In turn, more lucrative businesses mean more taxes, and more taxes will give the government enough money to repay its debts without dipping into 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 economic team with similarly capable leaders. This is also crucial in the upcoming appointees to the agriculture, transportation, and information and communications technology departments, as well as the internal revenue and customs bureaus. Just as we need doctors and not lawyers to treat sick people, we need economists and technocrats — not politicians — to bring an ailing economy back in the pink of health.

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