DOF exec named acting chief economic planner
MANILA, Philippines — The country’s top economic planner has resigned, citing personal reasons as well as “differences in development philosophy” with some Cabinet officials.
Executive Secretary Salvador Medialdea said President Duterte accepted Ernesto Pernia’s resignation effective yesterday as socioeconomic planning chief and director general of the National Economic and Development Authority (NEDA) and named Department of Finance (DOF) Undersecretary Karl Chua as replacement in an acting capacity.
Pernia’s departure from the post came a day after President Duterte rejected calls of senators for the resignation of Health Secretary Francisco Duque III.
“After reflection during Holy Week, and consultations with my family and close colleagues, I have decided to resign from my post as Secretary of Socioeconomic Planning. This is due partly to personal reasons and partly to differences in development philosophy with a few of my fellow Cabinet members,” Pernia said in a statement yesterday.
“I would like to thank the President for appointing me to the position. It has been an honor and privilege to have served the country under his administration for the past nearly four years,” he said.
“I must also thank my NEDA family for their trust and confidence in my leadership of the agency in crafting and pursuing the goals of the Philippine Development Plan 2017-2022 towards our country’s Ambisyon Natin 2040, as well as evaluating and reviewing flagship infrastructure projects for approval by the President-chaired NEDA Board and their eventual implementation.”
He maintained that NEDA, with him at the helm, has “initiated and implemented meaningful changes that will help the country overcome these challenging times and on to a higher growth trajectory.”
Presidential spokesman Harry Roque said Pernia’s resignation was “based on personal reasons.”
Pernia assumed the leadership of NEDA at the start of the Duterte administration in 2016.
But a source told The STAR that Pernia actually fell out of the President’s favor reportedly due to the delay in the implementation of the national ID system.
The source said an ID system firmly in place would have made the implementation of the Social Amelioration Program during the Luzon-wide lockdown easier.
“The law (Philippine Identification System Act) was passed one year and eight months ago which gave Pernia more than enough time to work on it,” the source, who declined to be named, said.
Economists said the surprise resignation of Pernia is a big blow to the government’s efforts for a soft landing for the Philippine economy now reeling from the effects of the Luzon-wide enhanced community quarantine set in place by the government to stop the spread of the novel coronavirus disease 2019 (COVID-19).
Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines, said Pernia’s resignation in the middle of the fight to contain COVID-19 was really surprising.
“So it must really be a deep reason. He made mention about differences in development philosophy with a few fellow Cabinet members. At a time when unity, even with our differences, is very much needed, this is a temporary setback to the economy’s plan to recover from the impact of this coronavirus pandemic,” Asuncion said.
Timely appointment
But he said the quick appointment of Chua as Pernia’s replacement is expected to soften the impact of the latter’s resignation.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said economic managers should make sure there is “succession planning,” especially now that the economy is at a critical stage.
“There should be succession planning in place in their immediate team, especially one-downs/deputies, as well as among the Philippine economic team, so continuity issues should be minimal in terms of the rollout or deployment of the various fiscal stimulus/COVID-19 programs,” Ricafort said.
Business groups also said Pernia’s resignation caught them off guard. “This is a sudden and unexpected development. He has been part of the economic team and kept the nation’s development on a growth trajectory,” Philippine Chamber of Commerce and Industry president emeritus George Barcelon said in a text message. “His resignation could be due to stress from the economic crisis and uncertainty ahead.”
Makati Business Club chairman Ed Chua said the group is thankful for Pernia’s service with NEDA and for “producing a very good Philippine Development Plan.”
American Chamber of Commerce of the Philippines senior adviser John Forbes said the group highly respects and deeply appreciates Pernia’s work as socioeconomic planning chief.
“He came out of retirement to lead economic planning for the country’s high GDP (gross domestic product) growth,” Forbes said. He said the group also has high respect for Chua, Pernia’s replacement.
“The challenges globally for post-virus economies will be enormous, and American businesses stand ready to work with Secretary Chua on solutions,” he maintained.
Economic managers had originally penned a GDP growth of 6.5 percent to 7.5 percent this year after a slowdown to 5.9 percent last year from 6.2 percent in 2018 due to soft global markets brought about by the US-China trade war, the tightening cycle by the Bangko Sentral ng Pilipinas that saw interest rates jump by 175 basis points in 2018 and the delayed passage of the 2019 national budget.
Pernia earlier said the country’s economy was likely to contract by as much as 0.6 percent or expand by 4.3 percent this year depending on how long the enhanced community quarantine in Luzon would last.
Malacañang initially imposed the lockdown in the National Capital Region last March 12 and eventually expanded it to cover the entire Luzon last March 17. The month-long enhanced community quarantine has since been extended by two weeks until April 30 as the spread of the disease shows no sign of deceleration.
BSP Governor Benjamin Diokno, on the other hand, said earlier he expected a “negative to maybe one percent (growth)” this year given the seriousness of the crisis.
Diokno pointed out that the Philippine economy, after booking 84 straight quarters of GDP growth, would likely go into a recession with GDP contraction in the second and third quarters of this year.
Worthy successor
Meanwhile, House ways and means committee chairman Joey Salceda welcomed the appointment of Chua as acting NEDA chief.
Salceda said Chua is qualified for the position, especially at a time when the government is facing economic crisis due to the COVID-19 pandemic.
“In the 2003 fiscal crisis, he was also among the thinkers who helped guide me in designing the reforms that enabled us to be fiscally and economically resilient this past decade,” the Albay representative recalled.
He said Chua was also part of the team that drafted the Comprehensive Tax Reform Program (CTRP).
“The appointment is a signal to the public and to the markets that government’s economic response will be robust and strategic,” he pointed out.
Salceda also lauded President Duterte for immediately appointing a replacement for Pernia.
“The position cannot be left vacant for too long, especially in this critical period. NEDA will be crucial to guiding our economic recovery efforts. We need a complete economic team in these difficult times,” he explained.
Based on his profile posted on the website of the Department of Finance, Chua is chief economist and undersecretary for the proposed Strategy, Economics and Results Group of the department.
Chua, in his early 40s, helps the government achieve its 10-point socioeconomic agenda. The DOF said Chua’s key responsibilities include providing strategic advice to the secretary of finance and the Cabinet economic development cluster, leading in the preparation of economic policy research in aid of priority reforms and shepherding priority reforms from incubation to implementation.
Prior to joining government, Chua was senior country economist of the World Bank office in Manila.
In this capacity, Chua advised the government on strategies and policies designed to attain more inclusive growth – the type that creates better and more jobs and reduces poverty. He was with the World Bank for 12 years, from 2004 to 2016.
Karl completed his MA in economics in 2003 and PhD in economics in 2011 at the University of the Philippines School of Economics where he specialized in fiscal policy and tax administration.
Prior to joining the World Bank, he was assistant professorial lecturer of mathematics and economics at the Ateneo de Manila University and a consultant for several local and development partner-funded projects. His first job was in Andersen Consulting/Accenture as a systems analyst. – Lawrence Agcaoili, Edu Punay, Christina Mendez, Edith Regalado, Louella Desiderio