Cabinet men with grit

Despite the inflation due to rice and oil price shocks and underspending in many national government agencies, the International Monetary Fund (IMF) gave a positive outlook for the Philippine economy. Kudos to the economic team led by Department of Finance (DOF) Secretary Benjamin Diokno. As the IMF concluded its Article IV Mission in Manila last week, this verdict from their annual review of the economic, fiscal and other structural policy reforms come as a much-needed impetus to our country’s post-pandemic recovery.

Thus, President Ferdinand “Bongbong” Marcos Jr. (PBBM) remains confident in his Cabinet economic team to balance competing interests to achieve the common national goal of prosperity for all. Sec. Diokno is the designated head of the PBBM economic team who included Department of Budget and Management (DBM) Secretary Amenah Pangandaman; National Economic Development Authority (NEDA) Secretary Arsenio Balisacan; and newly appointed Bangko Sentral ng Pilipinas (BSP) Governor Emi Remolona Jr.

There is a very obvious campaign though to ease out Diokno. With five years left of his term, PBBM needs to finish what he set out to do for our country, many of which his Cabinet economic team has started. After all, the Diokno-led economic team crafted the Medium Term Fiscal Framework (MTFF) submitted to the WB-IMF as the flagship program of the PBBM administration.

The MTFF has been the centerpiece of the socio-economic programs that PBBM carried in all his past 16 presidential state visits and official trips abroad since day one of this administration.

The success of the PBBM administration depends on the success of the MTFF.

So far, it has proven to be a sound and a strong foundation for sustained economic growth and development thrusts. The targets include a 6.5 to 8 percent gross domestic product (GDP) growth annually; single digit poverty by 2028; three percent deficit to GDP ratio by 2028; less than 60 percent debt-to-GDP ratio by 2025; and for the Philippines to attain upper middle-income status by 2025.

The Diokno-led economic team has steadily pursued these objectives for PBBM with impressive determination. For such feat, the country’s consumption-led GDP growth of 7.6 percent last year came out of our economy’s lowest point after the COVID-19 pandemic.

Amid very challenging headwinds from the on-going Ukraine-Russia war and now the state of war in Israel, the Philippines is not spared of its serious aftermath to the global economy. The GDP growth slowed down for the second quarter of 2023. The BSP can temper inflation through the various monetary tools at its disposal. Ultimately, the global headwinds are beyond our own control.

The results though of the IMF report are revealing on the strength of Diokno and the economic team. The IMF report reaffirmed: “The Philippines economy has emerged from the pandemic strongly.” As the IMF stated outright: “Decisive monetary tightening has helped mitigate inflationary pressures.” The report added: “Fiscal consolidation is on track” as envisaged under the MTFP.

It also commended the Military and Uniformed Personnel Pension (MUP) Bill and the Budget Modernization Bill. The policy reforms bills made Diokno very unpopular. However, the IMF credited these policy reforms as “critical and should be complemented by ongoing efforts to strengthen the oversight of government-owned and controlled corporations.”

Much earlier, the Diokno economic team came under severe criticisms for pushing for the Senate ratification of the Regional Comprehensive Economic Partnership (RCEP) as supposedly very inimical to the Filipinos. On the contrary, the IMF even suggested to the Philippines to maximize the potential benefits from the RCEP.

While the 19th Congress was still deliberating the proposed bill to create the Maharlika Investment Fund (MIF), Diokno was taken to task for strongly advocating its immediate passage into law. Again, the IMF instead lauded PBBM for having signed into law the MIF as it “can contribute to the push for closing infrastructure gaps and green investments by following best practices in strategic investment management and accountability frameworks.”

The Diokno-headed Philippine Economic Briefings held here and abroad earned plaudits too from the IMF and welcomed the more competitive investment regime it generates. The IMF likewise noted that “the renewed emphasis on financing the country’s infrastructure gaps through Public Private Partnerships (PPPs) is well placed and the new PPP Code is welcome in this regard.”

The IMF prods the Philippine economic team on “further investments to diversify exports, promote the acquisition of new skills, and enhance connectivity across the archipelago to harness the digital economy.”

Next policy reforms review is by the World Bank. Diokno left last week to attend the WB meeting being held in Marrakech, Morocco where a magnitude 6.8 earthquake left more than 2,000 dead last Sept. 9.

In spite of the rumblings of his ill-wishers and critics, 75-year-old Diokno has time and again shown his mettle as a Cabinet Secretary. More importantly, Diokno exemplified what a team player ought to be – having served the past three Presidents of the country.

Diokno first started as DBM Undersecretary of the late President Cory Aquino all the way to the late President Fidel Ramos. He became full-fledged DBM Secretary during the shortened term of former President Joseph Estrada. He went back to the academe in the two succeeding Presidents after Mr. Estrada.

Former President Rodrigo Duterte recruited Diokno to serve in his Cabinet also as DBM Secretary. Mr. Duterte subsequently appointed him in July 2019 to complete the unfinished term of the late BSP Governor Nestor Espenilla Jr. He gave up being the highest paid government official as BSP head. Choosing Diokno to head his economic team is the best decision of PBBM.

Instituting policy reforms is no easy task. It takes a lot of grit. Cabinet men like Diokno undertaking these needed policy reforms take the risk of becoming unpopular. Sadly, it’s always politics, not economics, that prevails.