Limits of Dominguez, Chua, and Diokno

Secretary of Finance Sonny Dominguez has a Bachelor’s Degree in Economics, a Master’s Degree in Business Administration from Ateneo University, and postgraduate studies in Stanford University. He has extensive experience as a professional manager and a businessman in the private sector, and was Secretary of Agriculture and of DENR in the Cory Aquino government. BSP Governor Benjamin Diokno graduated with a Bachelor’s Degree and Master’s Degree in Economics and Public Administration from UP and a doctorate degree from Syracuse University. Aside from teaching in UP he had held various sub-cabinet positions in the Aquino and Estrada presidencies, as undersecretary/secretary of Budget and Management. NEDA Director Karl Kendrick Chua, has a Master’s Degree and Doctorate Degree in Economics from UP, was a professor in Mathematics and Economics in Ateneo University, and worked for 10 years in the World Bank. These three guys are on the top of the economic team of the Duterte government, and I would consider them to be the A-TEAM or even the Dream Team of any Philippine government.

Dominguez and Diokno brought to fruition the Philippines’ credit rating to Investment Grade, which was started in the Arroyo administration, accelerated by the Benigno Aquino administration, and continued in this Duterte administration. In the current pandemic crisis, Dominguez and Chua are instrumental in coming up with the financial resources to fund the medical/health requirements and the money for the infrastructure spending and support to SMSEs to revive the economy. Diokno as BSP governor, insured the stability of the financial system by the timely injection of liquidity to calm the credit market, providing regulatory relief to the banks, while keeping inflation at bay. Chua also came up with a comprehensive post-pandemic economic plan which covers all aspects of the economy.

Having this economic A-TEAM, what is the prospect of the Philippine economy in 2020, 2021 and beyond? The projected recession for 2020 ranges from -2% to -9%, while the rebound growth for 2021 is from +2% t0 +7%. The reality will depend on the success of the economic team. An inherent constraint on the A-TEAM is the capability/capacity of the implementing agencies/departments. This is structural and management issue due to lack of competence and skill of some bureaucrats. This is compounded by inadequate coordination and cooperation with the local government units, whose leaders have different personal and political biases and objectives.

The bigger constraints or even a counteraction to the economic team’s efforts are the national political strategies and initiatives of some executive departments and their congressional allies. The unnecessary passage of the Anti-Terror Law, the closure of ABS-CBN, the attack on the conglomerates/big business, and their position on the South China Sea issue, are all counterproductive and damaging to the economy. Secretaries Locsin, Lorenzana, and Guevarra have express differing opinions on these issues, even if the economic team maintained their silence. Public opinion polls are against the government’s position, so this will deter private investments and consumption which is badly needed by the economy and widen and harden opposition.

Politicians should be reminded that the economy is paramount. The economy is the dog that wags the tail, which is politics. The state of the economy weakens or strengthens political power. The dissolution of the Twelve Tribes of Israel, the French Revolution, the Philippine People Revolution, the fall of the Berlin Wall/break-up of the USSR, were all preceded by the declining economies of these countries in those times.

It is really difficult to understand people’s motives and actions even with the lessons of history. The consolation and truism is that God works in mysterious ways, and in the end it will be God’s will that will be done. Amen.