By Lara Climaco l Filam Star Correspondent
Fears of a debt crisis in the Philippines are far-fetched because the economy has performed well for 77 consecutive quarters and at a growth rate of 6.5 percent or better over the past 10 of those quarters, Finance Sec. Carlos Dominguez III told the audience that gathered last July 6 at the Philippine International Convention Center in Pasay to find out how the Duterte Administration is doing two years in.
“Given the rapid expansion of our GDP, we will certainly outgrow our debt. Those who raise the specter of a debt crisis arising from our use of official development assistance (ODA) to finance our infrastructure program are not reading the numbers well enough,” he said in his speech, which outlined the government’s economic performance as part of Malacañang’s campaign to update the public about the State of the Nation (SONA).
The first of four pre-SONA fora also tackled infrastructure development under the Duterte Administration, in a comprehensive presentation made by Public Works Sec. Mark Villar.
Other Cabinet clusters made their reports on July 9, 11 and 18 so that President Rodrigo Duterte will be free to “speak from the heart” rather than narrate the Administration’s achievements before Congress on July 23.
Dominguez’s main message was that the Philippine economy is steady on course, despite runaway inflation and the weakening peso.
“While slightly elevated, the inflation rate during the first six months is understandable. Economies expanding at a fast clip tend to put pressure on supply. This is particularly true of our economic performance. The tax reform law increased the purchasing power of our communities. The massive importation of capital goods needed for the Build, Build, Build program increased our trade deficit and weakened the peso. The rice situation pushed prices to abnormal levels. None of these factors are permanent infirmities. But without the tax reform and the infrastructure program that it is funding, we will continue to suffer from high cost of production and transportation. With the tax reform and better infrastructure, the road to higher productivity, and thus lower and stable inflation is within reach,” he said.
In the first week of July, the Bangko Sentral ng Pilipinas reported that headline inflation rose to 5.2 percent in June this year from an already elevated 4.6 percent in May. Month-on-month, seasonally-adjusted headline inflation also rose to 0.6 percent in June from 0.2 percent in May, reversing a downward trend that had been traced since March.
Government economic managers expect runaway inflation to persist during the third quarter before stabilizing in October. By year end, they hope it will hew closer to the 2 – 4 percent target level.
In his pre-SONA speech, Dominguez acknowledged that global challenges such as increasing protectionism, volatile oil prices and a full-fledged trade war between the United States and China could hurt the Philippine economy. But he remains optimistic because “our numbers all point to a positive direction” with the government “doing the right things at the right time.”
Emphasizing the Duterte Administration’s whole-of-government approach, Villar noted that Build, Build, Build is the boldest and most ambitious infrastructure program in Philippine history. While infra spending over 50 years spanning the past six administrations averaged only at 2.5 percent, the Duterte Administration raised it to 5.4 percent last year. With progressively increasing investments, from PHP 1.068 trillion this year to PHP 1.84 trillion by 2022, infra spending is projected to be at 7.3 percent of GDP when Duterte ends his term.
“The Infrastructure Cluster Performance and Projects Roadmap is a portfolio of 247 infrastructure programs and projects with an investment requirement of PHP 7.2 trillion and they have been categorized in the roadmap according to hierarchical levels depicting their implementation readiness,” Villar said in his speech before concluding that the “golden age of infrastructure is upon us” and that “nothing will stop it now.”
It all comes down to making the Filipino life comfortable, according to Transport Sec. Arthur Tugade. “What we are doing here is an interconnectivity and interoperability that hopefully will create a situation of mobility and convenience. When you have this, then you would have excited people to come and invest, excited people to come and work here,” he said during the open forum.