Our ‘doctor of economics’

Two years ago, we were all caught by surprise on the outbreak of a deadly flu-like contagion later named as the coronavirus disease 2019 (COVID-19) infection. In a matter of few weeks, the World Health Organization (WHO) raised the outbreak of the COVID-19 contagion into pandemic proportion. The contagion reached our borders from the COVID-19 infection originating from Wuhan, China and quickly spread all over the Philippines.

From hindsight, the total lockdown imposed by President Rodrigo Duterte nationwide for several months starting in March 2020 proved to be cataclysmic for the Philippine economy. Like many of the COVID-impacted countries, the Philippine economy went into a tailspin dip. From the annualized average of 6 to 7% growth rate of the gross domestic product (GDP), we saw it nosedive to as low as negative 11%.

To draw parallelism on how the COVID-19 infection affects a person, the Philippine economy went into a situation that needed to be placed under intensive care unit (ICU). Unlike though to a COVID-stricken patient in that emergency condition, the dire situation of the Philippine economy cannot be helped by any medical intervention.

Thankfully, we have “doctors of economics” led by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno who saved the day for the country’s ailing economy. Actually, Diokno was not claiming credits for it. But a world respected international publication “The Banker” bestowed this honor to the BSP Governor of the Philippines.

“The Banker,” a monthly financial magazine owned by The Financial Times, awarded Diokno the “Global Central Banker of the Year” in recognition of his efforts to stimulate the economy and push for growth at the height of the COVID-19 pandemic.

Diokno became the first Philippine central bank official who received this global award. He was chosen as the “Asia-Pacific Central Banker of the Year,” meaning that he was selected as the best central banker from the region. Afterward, he was selected as the “Global Central Banker of the Year,” beating fellow central bankers who won from their respective regions.

Remaining humble though, the 73-year old Diokno explained he merely performed his expertise, training, and role as a “doctor of economics.” As the head of the Monetary Board, the BSP Governor used the monetary and fiscal tools provided under the country’s laws to nurture back to health the country’s economy. From the latest economic indicators, the Philippine economy got out from the ICU and has since recovered and back to the growth track.

And from the new reform measures signed into law by President Duterte, Diokno believes the country’s macro-economic fundamentals got strengthened to cushion it from new external shocks. This was the key message last week from the address Diokno gave before the Tuesday Club virtual gathering. The BSP Governor is our traditional guest speaker on the first Tuesday Club meeting every new year. Diokno was supposed to deliver his address in the first ever face-to-face meeting of the Tuesday Club had not the Alert Level 3 been imposed at the National Capital Region (NCR) starting Jan. 3.

For the last two years now, Tuesday Club has been forced to hold our breakfast get-together via zoom conference for the safety of everyone, especially our more senior elders like our 87-year old ex-Justice Raoul Victorino. In unsolicited testimonials to Diokno, Victorino lauded him for his prudent stewardship of the BSP since taking over the unfinished term of his late predecessor in March 2019.

In his usual professorial-like address to us, Diokno disclosed the BSP released a total of P2.3 trillion inputs into the country’s financial system during this pandemic. Out of these total inputs, P540 billion was direct lending of the BSP to the national government. According to him, the BSP has “never done” this at any time in the past.

“We called it extraordinary measure – this is done for the first time,” Diokno declared. “But this is legal under the revised BSP charter, where it says that under extraordinary times, we can actually lend (to) the National Government. I cannot recall for now but there’s a formula, but it’s equivalent to P540 billion,” he pointed out.

Such BSP direct lending at no interest charges to the national government, he explained, prevented any spikes up or down in the interest rates. Moreover, he stressed, it did not crowd out also the private sector from loanable funds available in the country’s financial system.

Diokno noted with satisfaction the P540 billion enabled the national government to finance the Bayanihan 1 as well as Bayanihan 2 that the 18th Congress passed into law in the past two years of the pandemic. To date, the National Government have paid back already to the BSP the P540 billion. “They are borrowing (another) P300 billion,” he revealed.

Likewise, Diokno cited, the BSP reduction of the reserve requirements on banks effectively released P200 billion into the system while the pandemic is still going on. With the threat of the latest Omicron variant becoming into full-blown next wave of COVID-19 pandemic in the Philippines, we asked Diokno if such would reverse the gains so far chalked up by our country’s economy?

“Hindi po ako doctor. Doktor po ako, pero hindi doctor na (medical) doctor. Doctor of economics po ako,” Diokno quipped and chortled at his attempt to humor us.

Levity aside, Diokno pointed to the more than enough inventory of anti-COVID vaccines of various brands being made available for free by the national and local government units to all Filipinos nationwide. He urged the public to fully understand the benefits of getting full vaccination and booster shots to keep everyone strong as we keep living safely away from COVID-19 infection.

“So that’s the good news. So it won’t have an impact, I think, on our forecast,” the BSP Governor enthused.

Diokno’s exploits behind the scene and feat as “Global Central Banker of the Year,” however, did not merit much attention here in our country. Unfortunately, our “doctor of economics” maintains low profile service to the country.