Adjusted

Analysts are divided in their inflation forecasts for the year.

One side says we have probably gone over the inflation hump. Month-on-month inflation numbers from April to May suggest the inflationary surge might have been arrested.

The other side says inflation could peak in September yet. The wild card remains to be international crude oil prices. Because of disruptions in Canada and Libya’s oil deliveries and tightening in US strategic oil reserves, we could still see oil prices climb back to $80 per barrel.

Donald Trump is pressuring Saudi Arabia to increase its production by two million barrels a day, the volume required to keep prices below $70 per barrel, this could be wishful thinking. While the Saudis may want to raise production enough to shut out Iran from the market, they simply do not have the capacity to deliver.

Meanwhile, our inter-agency Development Budget Coordinating Committee (DBCC) adjusted its inflation forecast from the earlier two percent to four percent range to between four percent and 4.5 percent. That signals we should start getting comfortable with an elevated inflation rate for many more months to come.

Assumptions for the 364-day Treasury Bill rates raised from the earlier three percent to 4.5 percent. With elevated inflation and higher interest rates, the DBCC adjusted its projected budget deficit in 2019 from three percent to 3.2 percent of GDP.

These adjustments are important for planning government’s financing strategy for the coming months. Government borrowing mix will be more heavily skewed to domestic borrowing by a ratio of 75:25. This is to take out foreign exchange risks from the equation.

Given the success of TRAIN-1, government planners are raising government’s revenue program for 2019. Revenue collections for 2019 are estimated to reach P3.21 trillion. This is equivalent to 16.6 percent of GDP – possibly the highest tax effort we have ever achieved.

With better tax collections and greater budget deficit leeway, the Build, Build, Build program should be able to proceed as planned. This ambitious infra program is key to stimulating domestic economic activity. It will enable our economy to expand at seven percent or better.

Rapid economic expansion has its political dividends, of course.

Last week, an opposition solon wondered aloud where President Duterte’s popularity was coming from. Bill Clinton answered that question over two decades ago: “It’s the economy, stupid!”

The war against drugs may have fallen short of expectations. The spate of high-profile killings may have raised anxieties. But for as long as the domestic economy is expanding at a fast clip, our people will continue to invest their hopes on the present leadership – warts and all.

No one else offers a better plan for liberating the poor from poverty.

Ouster

The communists have been negotiating in bad faith.

This is the claim of the spokesman for the Armed Forces as he exposed a plan put together by the communists to escalate agitation toward the end of this year with the goal of expelling President Duterte. The plan, according to the AFP spokesman, was detailed in documents captured by the military.

The general goal expressed by the supposed plan is easy to believe. The local communist movement, doctrinally wedded to the idea of waging a protracted people’s war, is constantly imagining opportunities for a revolutionary surge. That is what keeps them alive.

Whether or not the plan for some sort of political breakout against the Duterte government is workable should be another thing. The only way the communist leaders could keep morale up and the faithful in line is to devise scenarios promising imminent success for all the hardship invested.

Whatever this plan the military refers to is likely to less useful as a national security input as it is a basis for a sociological brief on how a failing movement keeps its flock inspired. In much the same way leaders of millenarian movements preach “the end is near,” leaders of the communist movement must constantly convince its followers about the abundance of political successes and forthcoming revolutionary flows.

The local communist movement is, after all, just another millenarian movement promising Judgment Day on the basis of the “iron laws of history.” Its followers are required to suspend doubt and embrace ideology without condition.

There is, therefore, nothing earthshaking about this plan the AFP claims to have uncovered. Such plans must be presumed. What is important is to assess political feasibility. As things stand, there is no feasible way the CPP-NPA could grow its political footprint.

The first generation CPP-NPA’s leaders, insistent on the movement’s Maoist roots, are old and decrepit. They are insisting on protracted peace talks as a way of remaining relevant.

The second generation of leaders, those that challenged orthodoxy and reinvented strategy in truly revolutionary episodes, have all been purged and killed by their own jealous comrades. They had the ability to think out of the box.

The third generation of leaders, those who now control the guerrilla zones, are uniformly dogmatic. They are children of Joma Sison’s “reaffirm” campaign. Inflexible and unimaginative, they are prisoners of a movement they cannot possibly reinvent.

There is, therefore, no need to inflate the political significance of the communist movement either by obliging to their pretentious demands for talks or by exaggerating the menace they pose. They may occasionally mass their armed units and have them don Red Guard uniforms for show. But beyond the red flags they wave, they are really nothing more than a network for organized extortion.

Forget about stirring up anti-communist hysteria. That is so seventies. Really.