The Manila Times
NO HOLDS BARRED
Rep. Edcel C. Lagman’s
Weekly Thursday Column
(First of three parts)
The authentic opposition’s Counter-SONA has been institutionalized like the President’s SONA. As its appellation suggests, it is a rebuttal to the President’s State of the Nation Address. It presents to the people the unalloyed state of the nation, devoid of aggrandizement, hyperbole, and pretense. It is a critique of the President’s declarations, misdeclarations and non-declarations.
STATE OF THE ECONOMY
Past presidents in their final SONAs invariably underscored the improvement of the economy, even its robust state. Now, even a cursory look at the economy reveals its precariousness. Obviously, President Duterte did not confirm this. However, the following negative indicators show what ails the economy:
Decelerating Gross Domestic Product (GDP). Even before the pandemic, the GDP was steadily falling from 7.1 percent in 2016 to 6.9 percent in 2017, 6.3 percent in 2018, and 6.1 percent in 2019. The GDP plummeted to negative 9.5 percent in 2020, the lowest ever in the history of the country, including the Marcos years.
For the economy to be brought back to the 2019 level, it must grow by at least 10.5 percent this year. Government economic managers themselves target a growth of only 6 to 7 percent. The International Monetary Fund (IMF) downgraded its forecast from 6.9 to 5.4 percent. The Asian Development Bank (ADB) forecasts a lower growth at 4.5 percent.
Runaway unemployment. The all-time highest unemployment rate was at 17.7 percent in April 2020 at the onset of the pandemic. A record 7.3 million Filipinos were jobless. The annual unemployment rate improved to 10.3 percent in 2020, but still higher than the 5.1 percent in 2019.
The government has tried to help households with its cash assistance program. But aside from the reported irregularities and delays in cash distribution, the amount of the cash assistance was too modest to achieve adequate relief. Besides, the policy of dole outs is unsound in the long run.
Increasing poverty and hunger. The World Bank estimates poverty incidence to be 19.8 percent in 2020 and projects 18.7 percent in 2021. National Economic Development Authority (NEDA) approximates poverty incidence in 2021 from 15.5 to 17.5 percent.
The June 2021 Social Weather Stations (SWS) survey showed that 48 percent of families considered themselves poor, with even higher results in Visayas and Mindanao. The hunger surveys of SWS are more revealing where 16.8 percent of those surveyed confessed they have experienced hunger at least once in the past three months. The worst result was in Mindanao at 20.7 percent.
The pre-pandemic figures were doubled in the pandemic months. There were roughly two million more hungry Filipino families in 2020 than in 2019, the same figure estimated by the World Bank.
Galloping inflation. In the first quarter of 2021, the inflation rate was 4.5 percent, compared to only 2.6 percent for the whole of 2020. It overshot the Bangko Sentral’s self-imposed upper limit of 4 percent. It is worrisome that inflation rates for essential goods were even higher than the overall high of 4.5 percent. Food inflation was 6.6 percent, vegetable inflation was 15.5 percent, and meat inflation was 19.6 percent.
Ballooning national debt. A disconcerting area is the size of the national debt. From P5.948 trillion in June 2016, the last month of the Aquino administration, the national debt rose to P7.731 trillion in 2019 and to P9.795 trillion in 2020. In one year, the national debt increased by more than P2 trillion. And in May 2021, the national debt stood at P11.071 trillion.
The national debt is projected to hit P12 trillion this year, an increase by P6.052 trillion from the P5.948 trillion recorded in June 2016 just before President Duterte assumed office. This increase during the Duterte administration would be greater than the national debt accumulated from the Marcos to the Cory Aquino, Ramos, Estrada, Arroyo, and Noynoy Aquino 3rd administrations altogether.
While the imperative to fund our Covid response largely explains the bloating of the national debt, we must realize that the country may be heading in the direction of another crisis - a debt crisis. The gargantuan size of the debt is dwarfed by the magnitude of debt service which will weigh down our children and future generations.
In 2020, debt service payments amounted to P962 billion, or almost P1 trillion. As early as the first quarter of 2021 alone, we have already paid P522 billion. Our debt service payments are expected to be over P1 trillion annually.
Problematic Covic-19 loans. A closer look at COVID loans is called for inasmuch as they chiefly account for the ballooning of the national debt since 2020.
Significantly, Finance Secretary Dominguez said the country plans to take out P3.03 trillion loans in 2021. This would aggravate the 2021 debt-to-GDP ratio which was already 60.4 percent in March 2021.
Given the inadequacy and obscurity of some Covid funding data, we call on the government to make a full accounting of the sources and uses of Covid funds, which President Duterte did not address in his SONA, particularly the delayed vaccination program.
Blamed the pandemic
As expected, President Duterte blamed the pandemic – which he said “stole everything” - for the sluggish performance of the economy. While he is partly correct, he overlooked that:
The GDP growth has decelerated since his incumbency from 7.1 percent in 2016 to 6.1 percent in 2019, before the pandemic.
While the Asia-Pacific region was hit with equal ferocity by the pandemic, the other countries weathered the contagion admirably, but the Philippines rather feebly.
He had a “medical populist” approach to the pandemic, like America’s former President Donald Trump, Brazil’s President Jair Bolsonaro, and India’s Prime Minister Narendra Modi. He belittled the virus as a joke; downplayed the public health crisis; relied on a militaristic approach to the contagion, consequently preventing scientists and medical professionals from taking the lead; and touted his own bizarre solutions to the problem.