Disciplined

This is important.

Last Thursday, the Japan Credit Rating Agency awarded the Philippines an “A” sovereign risk rating. This is the best rating we have ever received. Previously, we gained an unprecedented BBB+ rating, fully qualifying our economy to be investment grade.

We won this most recent upgrade even as the economy reels from the adverse effects of the long lockdown. The upgrade was awarded us even as the unemployment rate kicked up to 17.7 percent by the last reckoning. It is a vote of confidence in our ability to quickly climb out of the present crisis without compromising long-term sustainability.

The health crisis forced us to take on new debt and relax the tough deficit ceilings we maintained. All these to support our health system and provide direct subsidies to millions of poor households. We need to mobilize more funds to support the economic recovery.

When the pandemic hit, we were on sound fiscal footing. Debt was brought down to just 39 percent of GDP. Some European economies carry debt well over the size of their GDP. Our gross international reserves were at a historic high.

The Economist magazine ranked the Philippines sixth among 66 emerging economies in terms of financial strength in the midst of the pandemic. That is a tribute to how well we have managed our financial affairs.

With all the borrowing we had to do to cope with the pandemic, our debt-to GDP ratio could rise to somewhere near 50 percent. But that remains eminently manageable.

We will inevitably break beyond the three percent cap on budget deficits we maintained pre-crisis. But it is unlikely we will have runaway deficits. For years, we have exercised great discipline in our fiscal affairs.

Last week, as congressmen toyed with the idea of a trillion-peso stimulus package, both Secretary of Finance Sonny Dominguez and Economic Planning Secretary Karl Chua warned that a package that size would be “unfundable.” Our politicians rarely worry about raising the money to fund the spending plans they craft. They needed that healthy reality check.

The credit rating upgrade translates into lower borrowing costs. This will help government pay down old debt with cheaper financing. Since our private enterprises cannot borrow at better rates that the sovereign risk rating dictates, the upgrade means lower cost of money for private investments.

All these will help support our economic recovery. Lower costs of money should encourage investments that will in turn create jobs.

We should be under no illusion that the struggle to get back to the path of high growth will be easy after the upgrade. It remains a great challenge that will require us reimagine the “new normal.”

Extinct

The restrictions on mobility imposed since mid-March sidelined public transport. While all of us were on lockdown, the DOTr has not been idle.

While the streets were empty, traffic experts were busy reconfiguring routes and rethinking the way we move people around our congested metropolis.  Bus routes have been shortened and along Edsa the buses will now be confined to the left-most lane. The bus companies will now be enrolled into a consortium and the route will approximate the Bus Rapid Transit (BRT) system proposed for the busiest of all our roads.

As quarantine restrictions are carefully relaxed, public transport will gradually return – albeit under new terms. We know from previous epidemics and the experience of many other countries that the public transport system has been efficient hubs for spreading infections.

Rethinking our public transport system will likely hasten the demise of the traditional jeepney. As a piece of industrial design, what was once called “King of the Road,” is an abject failure. It is inefficient, unhealthy and unsafe. Like the dinosaur, it is bound to go extinct.

Previous efforts to phase out this dinosaur of public transport were blocked by the political power of militant jeepney drivers. Last week, these militant drivers were back on the road, trying to use political pressure to force government to allow them back. That was how they stymied previous efforts to reform our transport system. This time, the protesting drivers were arrested for violating quarantine rules.

Even before the pandemic hit us, government was trying to push a modernization program for jeepneys to be subsidized at public expense. The drivers resisted.

Today, the modern versions of the jeepney will be allowed back way ahead of the traditional vehicle design. DOTr offers several reasons for this:

1) The modern jeepneys could easily convert to the automatic fare collection system soon to be used for all modes of public transport. This lessens physical contact between driver and passengers.

2) Participants in the Public Utility Vehicle Modernization Program will replace the old boundary system with a fixed salary scheme for drivers. This lessens the competition for passengers that led to so many mishaps.

3) Modern jeepneys will be more environmentally sustainable, lowering pollution levels and bringing down passenger-to-motor ratios.

4) The design of modern jeepneys will be amenable to the physical distancing protocols needed to fight the pandemic.

With the calibrated return of public transport, the old-style jeepneys will likely be phased out more quickly. Their odd design and the destructive driving habits they encouraged simply have no place in the new normal.

Those who chose to resist the jeepney modernization program and protect the old way of doing things will now regret it. They wanted the urban transport system to continue in the old chaotic way.

Now the health emergency has intervened. Our transport authorities are not about to let a good crisis go to waste.