Bangko Sentral ng Pilipinas Governor Benjamin Diokno (PNA)
Bangko Sentral ng Pilipinas Governor Benjamin Diokno, nominated by President-elect Ferdinand “Bongbong” Marcos Jr. as his administration’s finance secretary, is not worried about the ballooning national debt due to the country’s stronger economy, which reached P12.68 trillion in March, out of which a total P3.2 trillion were from recent as well as COVID-19 borrowings.
This brought the country’s debt-to-GDP (Gross Domestic Product) ratio to 63.5 percent or above the international standard of 60 percent.
“I think I have the benefit of having served the government for more than 30 years and I’ve seen all the crises. I’ve seen debt-to-GDP ratio close to 100 [percent]. I’ve seen the worst of the Philippines…
We are in a better place right now,” Diokno told ANC during an interview.
“I’m not worried about the level of the debt that’s 63 percent. That’s easily manageable as long as the economy can grow by 6 to 7 percent which is our recommendation. Before the crisis we can easily outgrow our debt,” Diokno said.
In related developments, the Bankers Association of the Philippines welcomed Diokno’s appointment as well as that of BSP Monetary Board Member Felipe Medalla, chosen to be the next central bank chief.
“Drs. Diokno and Medalla are notable economists who have the scholastic distinction and extensive experience that transcend different administrations, making them the best candidates for these roles,” said Antonio Moncupa, Jr., president of BAP.
“We are confident that under their stewardship, the country will be able to successfully navigate the various fiscal and economic challenges incumbent upon us,” Moncupa added.
The BAP will continue to work with the DOF and BSP in pursuing initiatives that support fiscal stability and strength, and policies that will promote socio-economic development for the Filipino people Diokno said the country also had a sound tax structure and that the focus should be on sustaining the growth trajectory of the economy to solve problems.
Keeping an accelerated growth pace “could solve many problems,” Diokno said when he was asked about the Department of Finance’s proposed fiscal consolidation plan to pay the debt.
The DOF proposed widening taxes, VATs, and deferring personal income tax reductions, among others, to generate revenues for debt payments.
President-elect Marcos Jr. earlier said his Cabinet needed to establish an economic program to guide fiscal policy, which includes debt repayment.
Diokno said he felt comfortable with the pending packages under the Comprehensive Tax Reform Program but “other than that, we are happy with the present tax structure.”
“For me, the focus should be to sustain growth…Everything goes to growth so our focus should be on how we make all our sectors grow. Our problem really is to get back on our growth trajectory because that will solve a lot of problems,” he added.
“We grow at 6 to 7 percent that solves our tax revenue problem that will solve our deficit problem, that will solve our debt problem,” Diokno said.
To keep the economy growing, Diokno said he would bring back the term golden age of infrastructure and continue the Build, Build, Build program.
“I think that should be continued because it creates a lot of jobs, high-quality jobs and it expands the capacity of the economy because now,” Diokno said.
The amended public service act will also be key to economic growth since it would allow foreigners to invest in select sectors such as telco or airports, among others, with no cap on ownership.
The country’s gross domestic product expanded by 8.3 percent in the first quarter, which makes the revised growth target of 7 to 8 percent “doable,” Diokno said, adding that the second-quarter GDP could be higher.
At the same time, incoming Socioeconomic Planning Secretary and National Economic and Development Authority chief Arsenio Balisacan, who sits as chairman of the Philippine Competition Commission, said he was planning to “reinvigorate” public-private partnership projects under the Marcos administration.
“We should reinvigorate, reexamine and bring back PPPs. We’ll reach out to the private sector because he [President-elect Marcos Jr.] believes that the private sector plays a very strong role in economic development,” Balisacan said in an interview on ANC.
“It is my firm view that without the private sector, we can’t really expect to go far,” he said.
When the Duterte administration unveiled its P8.2-trillion Build, Build, Build program, it initially shunned away from PPP projects as it pushed for more government and official development assistance-funded projects.
In 2019, the government shrank the size of the Build, Build, Build a program to P4.7 trillion after scrapping several big-ticket projects due to feasibility issues and then expressed openness to more collaborations with the private sector.
Balisacan said he would also focus on boosting the country’s manufacturing sector.
“The lessons of recent history is that if you have a manufacturing sector in the early stages of your development, poverty reduction is so fast and likely sustainable,” he said.
“The key is the generation of productive jobs… I’ve been talking with policymakers that our manufacturing has to be revived,” he added.
Meanwhile, returning Sen. Francis Escudero said the nominated Cabinet secretaries were known and competent in their respective fields.
He also said “PBBM’s “economic team” should inspire confidence from the business sector and the international community as a whole, adding the President should have wide latitude in choosing his Cabinet and team that would implement his plans, programs, and vision for our country and people.
“Absent any strong and valid issues that may be brought out and proven against his nominee, there should be no problems getting CA nod,” Escudero said.
In other developments, Marcos’ sister Sen. Imee Marcos said her brother was adopting the “team of rivals” concept in assembling his official family. We’d love to hear reactions to what Sen. Marcos has said.
Under this concept, Imee said her brother’s Cabinet would include officials aligned with their political rivals like members of the Liberal Party.
“Yes, definitely,” Imee told Dobol B TV when asked if it’s possible for her brother to pick officials associated with the Liberal Party to be part of his administration.
The “team of rivals” concept was popularized by then US President Abraham Lincoln, who appointed some of his rivals to his Cabinet during his term.
Former US President Barack Obama is said to have used the concept as a model for constructing his own Cabinet.
Imee said the country’s political situation made it difficult to appoint rivals to the government, but an administration could instead appoint the rival’s allies.
Imee also mentioned that their father, the late President Ferdinand Marcos Sr., also appointed critics to his government, citing Francisco Tatad, then a columnist of the Manila Bulletin who was appointed secretary of the Department – which eventually became a Ministry – of Public Information.