For GoldmanSachs, BBM about continuity, Leni means big shift

Presidential aspirant Ferdinand “Bongbong” Marcos Jr. (BBM)’s plans for the country’s economic future appears to be a continuation of Duterte policies in general and pointing to more expenses and minimal debt management, according to GoldmanSachs.

In contrast, GoldmanSachs said an administration run by Vice President Leni Robredo might mean a significant shift, considering her comprehensive plan to free the Philippines from the clutches of the COVID-19 pandemic.

The New York-based investment banking firm said in a commentary the Marcos campaign had signaled broad continuity with current administration policies.

GoldmanSachS observed that, in particular, the rhetoric of UniTeam expresses support for the “Build, Build, Build” infrastructure program as well as the “war on drugs” while maintaining a friendly stance toward China.

Based in Singapore, GoldmanSach’s team in Asia noted that this was the case even as the next administration would need to make policy choices such as maintaining a direction toward prudent fiscal improvement while still nurturing a still nascent economic recovery.

Financial constraints

These choices will have to be made amid public debt and external financing constraints, and adverse impacts of global price shocks.

Data from the Bangko Sentral ng Pilipinas show that as of the end of February, the national government’s debt stock was pegged at P12.09 trillion or about 61 percent of gross domestic product. Of the total, 30 percent or P3.7 trillion is borrowed from foreign lenders.

Also, as of the first quarter this year, the national government has incurred a budget deficit of P316.8 billion, which was almost level with the P321.5-billion deficit chalked up in the same period of 2021.

In 2021, the full-year deficit reached P1.67 trillion or 8.6 percent of gross domestic product (GDP). This was 25-percent wider than the P991-billion deficit (7.6 percent of GDP) incurred in 2020 amid the initial impact of the COVID-19 pandemic.

“Marcos has sounded a less cautionary note on rising public debt levels, while emphasizing measures such as subsidizing key agricultural inputs or capping key food prices to contain inflation risks, alongside initiatives to revitalize the industrial sector and SMEs (small- and medium-sized enterprises])to provide more jobs,” GoldmanSachs said.

Tougher stance on China

The financial services firm said that, on the other hand, a Robredo presidency could mean a tougher stance on China over territorial disputes, a stop to the Duterte approach against illegal drugs, and “greater emphasis on building more socially impactful infrastructure.”

“Robredo has outlined a comprehensive plan to take the Philippines forward from the COVID crisis, with a ‘Jobs for all’ strategy that includes reducing corruption, cutting red tape, supporting SMEs, widening unemployment insurance and reviving the manufacturing sector, while improving educational outcomes,” GoldmanSachs said.

Citing results of a Bloomberg survey of investors and analysts, which were released last March, GoldmanSachs said responses suggested that Robredo was the top pick to become the next president.

“Investors polled appear more ‘lukewarm’ to the prospect of a Marcos presidency, perhaps reflecting views on the family’s previous period in power (1965-1986),” GoldmanSachs added.