Winning streak

We previously wrote about the role of destiny in the championship run of UP in the UAAP. (Destiny vs. Dynasty, May 23, 2022). UP has sustained its winning streak as president-elect Ferdinand Marcos Jr. tapped prominent UP graduates and professors to lead his economic team.

We introduce the incoming administration’s economic managers. All five are from UP and all of them have distinguished careers in public service.

1. Benjamin Diokno – Finance Secretary. The current Bangko Sentral ng Pilipinas (BSP) Governor previously serve as Budget Secretary from 1998 to 2001 and then again in 2016 to 2019. Diokno earned his Bachelor’s and Master’s Degrees in Public Administration and Masters in Economics from UP. Diokno is a Professor Emeritus of the UP School of Economics.

2. Felipe Medalla – BSP Governor. The incoming central bank governor has been a member of the Monetary Board since 2011. Medalla was the Socioeconomic Planning Secretary from 1998 to 2001. He was previously the dean of the UP school of Economics. He completed his Masters in Economics in UP.

3. Arsenio Balisacan – Socioeconomic Planning Secretary. Balisacan was Socioeconomic Planning Secretary from 2012 to 2016 and has been chairman of the Philippine Competition Commission since 2016. Like Medalla, Balisacan also had a stint as the dean of the UP School of Economics. He graduated with an MS in Agricultural Economics from UP Los Baños.

4. Alfredo Pascual – Trade Secretary. The former president of the UP System (2011 to 2017) obtained his BS Chemistry and MBA degrees from UP. He previously worked as a director for Private Sector and Infrastructure Finance in the Asian Development Bank (ADB).

5. Amenah Pangandaman – Budget Secretary. Pangandaman is currently an assistant governor of the BSP and previously was an undersecretary for the Department of Budget and Management. She obtained her Masters in Development Economics from UP.

Business community welcomes economic team

The appointment of competent technocrats into the incoming economic team was widely praised and positively received by the business community. Below are some of the statements made by prominent businessmen and economists who lauded the president-elect’s choices for economic managers.

Philippine Stock Exchange (PSE) and Philippine Dealing System (PDS) president Ramon Monzon: “The PSE and PDS recognize that these individuals are competent, experienced professionals who are all imbued with a public service mindset and most qualified to steer the economy back on track on its growth trajectory.”

Philippine Chamber of Commerce and Industry president George Barcelon: “They are all seasoned and competent economic leaders. We believe they will do good in managing our fiscal affairs.”

Makati Business Club executive director Coco Alcuaz: “The appointment of these experienced, well-known leaders should boost the confidence of local and foreign businesses, from MSMEs to big players.”

Bankers Association of the Philippines president Antonio Moncupa Jr.: “Drs. Diokno and Medalla are notable economists who have the scholastic distinction and extensive experience that transcend different administrations, making them the best candidates for these roles.”

Solita Monsod, economist: “It would be very difficult to find a better set of economic managers than Arsenio Balisacan, Benjamin Diokno, and Felipe Medalla (all from the UP School of Economics, one must point out). All are really super qualified, all professionals, nary a political ambition between them, nor a desire to enrich themselves or their kin.”

A challenging landscape

The choice of experienced technocrats as incoming economic managers is crucial as the country grapples with difficult challenges. Total outstanding debt was at P12.8 trillion in April, while debt-to-GDP ratio rose to 63.5 percent as of end-1Q22 compared to the 40 percent average from 2017 to 2019. This is compounded by rising interest rates, which would increase the debt servicing load. The peso has weakened due to the strength of the US dollar and wider current account and budget deficits. The incoming government will have to address the food shortage caused by supply chain disruptions and the Russia-Ukraine war. Energy prices remain high and this can exacerbate domestic inflation, which has already risen to 4.9 percent in April. Aside from this, tackling the looming power supply shortage will be integral in sustaining the country’s economic growth.

Balancing growth and fiscal responsibility

Although the next administration has not yet formally outlined its economic agenda, some of the incoming economic managers have made statements regarding their priorities. The incoming Socioeconomic Planning Secretary said, “The lesson of recent history is that if you have a robust manufacturing sector in the early stages of your development, poverty reduction is so fast and likely sustainable.” Balisacan added that since the country is in a fiscal bind, infrastructure spending can be sustained by bringing back public-private partnerships (PPP).

Meanwhile, the incoming Finance Secretary stated that “the focus should really be on tax administration and we need a lot of money to number one, continue our growth momentum, and two, to service our higher level of public debt.” Diokno elaborated that “as long we as continue to grow at around six to seven percent on a sustainable basis, we can easily outgrow our debt.” Diokno said that the economic team would aim to bring down the budget deficit to three percent in six years from the 6.4 percent in 1Q22.

Businessmen and economists commended the choices of the president-elect for his economic team. Given the magnitude and scale of global headwinds and local challenges, we hope and pray that the country’s esteemed economic managers will succeed in their vital roles because their success is everyone’s success.

Philequity Management is the fund manager of the leading mutual funds in the Philippines. Visit www.philequity.net to learn more about Philequity’s managed funds or to view previous articles. For inquiries or to send feedback, please call (02) 8250-8700 or email [email protected].