Economic Game Plan
Every Filipino will certainly be awaiting what President Ferdinand Marcos Jr. will say on July 25 when he delivers his first State of the Nation Address (SONA). The entire nation and the rest of the world will watch and hear that speech in which President Marcos, among other things, will unveil his six-year economic program.
I don’t want to pre-empt his SONA but judging from his recent pronouncements aired over radio and television stations and published in newspapers, Mr. Marcos will tackle ways to significantly reduce poverty in the Philippines during his six-year term and empower the countryside through a stronger and dynamic agricultural base.
Former President Rodrigo Duterte and his administration were on their way to lowering the poverty level to 14 percent by this year from 23.5 percent in 2015 until Covid-19 struck. Much of the state resources in the past three years were diverted to efforts to contain the pandemic, resulting in the rise in poverty incidence to 23.7 percent in 2021.
Reducing the poverty level is the cornerstone of any economic program. All efforts to develop the economy are pointless if they do not translate into unshackling the chains of many Filipinos from the poverty curse. I am glad the administration of President Marcos is very much aware of this problem—it aims to bring the poverty rate to 9 percent of the population by the end of his term. The success in lowering the poverty level means more jobs are being generated and with the added income, more poor Filipinos can send their children to school and alter their fate.
Several economic indicators point to an increasing or decreasing poverty rate. The unemployment rate, for one, is a good indicator.
The jobless rate, per the latest data from the Philippine Statistics Authority, dropped to 6 percent in May from 7.7 percent in the same month last year. From the same labor figures, we can see that 94 for every 100 Filipinos in the labor force were employed in May, or up from 92.3 percent year-on-year. The PSA job data simply mean that 1.4 million more Filipinos were added to the labor force from 44.72 million in May last year to 46.08 million.
The poverty level is being successfully reduced if more people are employed. The new administration, based on what Finance Secretary Benjamin Diokno will submit to President Marcos, will directly tackle this problem. We can already glean the plan of President Marcos’s economic team from the Medium-Term Fiscal Framework (MTFF).
The plan offers “a holistic approach” that will accelerate economic growth and promote the welfare of Filipinos. It will serve, in the words of Mr. Diokno, as the government’s guidebook in reducing poverty incidence and lowering the country’s debt-to-GDP ratio.
The administration is deadset on declaring a war against poverty. As Mr. Diokno and the economic team put it, the administration is not only concerned with growth per se, but also with reducing poverty to a single digit of nine percent by the end President Marcos’s term.
Raising the gross domestic product, of course, is the main objective. A higher GDP level means an expanded economic base from which the government can collect taxes and revenues to fund infrastructure projects and social services. The interagency Development Budget Coordinating Committee adjusted the 2022 GDP growth projection to a range of 6.5 percent to 7.5 percent from 7 percent to 8 percent earlier, but raised the target to 6.5 percent to 8.0 percent from 2023 to 2028.
I think these growth numbers are much doable. We have seen in the first quarter of the year how the economy expanded by 8.3 percent. It could have grown faster had we fully reopened the economy. The full reopening of the economy, including the full restoration of face-to-face classes, will help achieve the growth targets embodied in the MTFF.
Last but not the least, President Marcos’s concern on the agriculture sector is timely in the face of the Ukraine-Russia war. As I have said in this column before, the conflict and the ensuing disruption in the global supply chain for commodities exposed our vulnerability as a food importer.
Refocusing on agriculture is a strategic move on the part of President Marcos. Majority of Filipinos living in the countryside are poor, and rely on farming and fishing for their livelihood. We cannot establish an inclusive economy if farmers and fishermen are left out of the economic game plan.
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