EDITORIAL - Category upgrade

Economic indicators point to something positive: the Philippines has graduated from the category of low-income to a lower middle-income country. The bad news is that the category upgrade also raised the criteria for efforts to fight corruption, making the country once again ineligible for a “compact” or large-scale grant from the US Millennium Challenge Corp. The country, according to Press Secretary Cerge Remonde, has become a victim of its own success.

Studies in recent years estimate that corruption has cost the country billions in economic losses. Corruption takes away precious public funds that could be used for development and poverty alleviation. Positive economic figures can be attributed partly to sound fiscal management, but also to a large extent to the annual multibillion-dollar remittances of Filipinos who have opted to work overseas for lack of better employment opportunities in their own country.

The possibility of creating those opportunities would have improved if corruption had not become such a massive problem in this country. Corruption derails the implementation of development projects. It encourages inefficiency and incompetence and hinders the creation of a merit-based society. It undermines the rule of law and weakens the regulatory environment, which in turn drive away investments. Corruption breeds political violence and the cheating that have come to characterize every electoral exercise in this country, thwarting the will of the people and making a mockery of democracy.

Corruption derails even the country’s attempts to seek foreign development assistance, as was illustrated by the failure of the government, for the second year in a row, to obtain a bigger grant from the MCC.

It’s good to know that the country has graduated, in the eyes of the MCC, from low-income status. But it’s disheartening to note that in the 21st century, four decades after the country was seen as second only to Japan among the most promising economies in Asia, the Philippines is still a “lower middle-income” country, left behind by most of its neighbors in the region, and saddled with trillions of pesos in debt.

That debt is expected to keep rising as the country continues to depend on the mercy of others for poverty alleviation and development. The best measure of success is when the country no longer needs MCC help. This isn’t going to happen unless there is a dramatic improvement in the country’s efforts to curb corruption.