Duterte admin 'ensures' help as economic problems await next president
MANILA, Philippines — President Rodrigo Duterte’s economic managers will ensure a smooth transition for the next administration, which will inherit pandemic-induced economic problems that could have implications on its plans.
Speaking at a virtual forum organized by BusinessWorld on Thursday, Finance Secretary Carlos Dominguez III identified “four primary concerns” that, he said, would affect the Philippines’ economic stability beyond 2022.
These four issues involve debt management; inflation caused by global shortages; pandemic-induced inequalities; and climate change. The next administration will be “assisted” so it can tackle these problems, Dominguez said.
“In the remaining period of President Duterte’s term, we will rapidly modernize governance; accelerate the rollout of the infrastructure program; and continue with the market-friendly reforms attractive to investments,” the finance chief said.
“The Duterte administration will also ensure that the next presidency will be ably assisted during the transition period,” he added.
Following a faster-than-expected growth last quarter, the government is hoping that the economy could return to its pre-pandemic shape “as early as first quarter of 2022”. It’s a more optimistic outlook compared to economic officials’ previous forecast for gross domestic product to regain its pre-crisis strength “sometime at end of 2022, if not early 2023”, or when a new president would have already taken over.
But among the four problems mentioned by Dominguez, Nicholas Antonio Mapa, senior economist at ING Bank in Manila, believes the biggest headache for the next president would be the government’s heavy debt pile that has accumulated during the pandemic.
To pay down these obligations, Mapa said the new president might be forced to make “tough decisions” like raising taxes or limiting spending, both of which could have massive implications on the nascent administration’s economic ambitions and popularity.
“Taking on such a challenge early on will likely translate to tough decisions by the incoming administration to right the fiscal ship,” Mapa said in an e-mailed response to questions. “The new administration will likely inherit an economy more challenged than the current administration received at the start of this term.”
But beyond fiscal health, Mapa said fixing the economic scars left by the pandemic is something that would dog Duterte’s successor. “Weakened productivity from forgone capital formation all the way to the negative impact of distance learning across generations will be a tough challenge faced by the next president as well,” he said.
Sonny Africa, executive director at IBON Foundation, a non-profit think tank, agreed with Mapa.
“Next admin will have to deal with not just long-standing agricultural and industrial backwardness but also the economic scarring from the long lockdowns and lack of support to poor families and small enterprises,” Africa said.
“Next admin will have to boost household incomes with ayuda (financial assistance) and help small firms with at least cheap credit,” he added.