Economic challenges ahead

With 33 days remaining before the May 9 elections, the candidates for national and local positions are on high gear in their courtship for votes.

From the way the candidates are holding town hall-style meetings, rallies and motorcades, it is as if COVID-19 is gone for good and that life has returned to prepandemic conditions.

Traditional and social media are filled with reports and posts about presidential and vice presidential candidates.

Interestingly, a person’s political leaning is, by default, deduced from the color of the clothes he or she wears in public.

The campaign frenzy has risen by several notches with provincial, city and municipal candidates going into the hustings also. Since voter solicitation at the local level tends to be more intense, the Philippine National Police is on the lookout for potential election hotspots.

Social gatherings and meetups of friends have not been spared the political fever. The preferred choice for president and vice president is often a favorite subject of conversation.

With the public going ga ga over the coming polls, the economic problems that the country is poised to face in the coming years due to COVID-19 have been relegated to the background.

Except for brief references in the presidential candidates’ public statements, the looming economic headwinds have not been given much attention in their sorties.

Note that, as of January this year, the total outstanding debt of the national government from domestic and international creditors stood at P12.03 trillion. It’s the highest ever in the country’s history and with the way things are going it may still go up.

The government cannot be faulted for putting itself in that hole because it needed money to address the problems caused by the pandemic.

For the first two years of the next administration, which corresponds to the usual grace period for foreign loans, payment of those debts may not be a major concern.

Financial obligations

But that is no reason for the incoming leadership to adopt a business-as-usual attitude or assume that the money needed to settle the country’s financial obligations would come like manna from heaven.

From Day One of the new administration, its economic managers would have to come up with a program of action on how to satisfy those IOUs without sacrificing the equally important financial requirements of government operations.

Painful or politically unpopular it may be, Congress may have to be asked to enact laws that would provide the government with new or additional sources of revenues.

Legislative approval

Judging from the wringer the present economic managers had to go through to secure legislative approval for various tax reform measures, in spite of the President’s political party having the majority in both chambers of Congress, those laws may suffer the same fate.

And if by some stroke of luck they are promptly enacted, the accompanying financial burden, like any revenue measure, would ultimately be shouldered by the public regardless of their status in life.

When the economic squeeze becomes too hard to bear, expect the D and E members of our society to go to the streets to express their dissatisfaction with the government.

But revenue enhancement would not be sufficient. It has to be accompanied by significant reduction in government expenditures or discontinuance of programs whose costs are not commensurate to their actual accomplishments.

Like tax laws, cutting the fat in government can be ticklish. No matter how careful it is done, it is bound to draw opposition from the sectors of our society that would be adversely affected by that action.

A strong political will is needed to meet that challenge.

Whoever succeeds President Duterte has a tough job ahead of him or her. And hopefully he or she has the expertise to meet that challenge. INQ

For comments, please send your email to [email protected].