BIZ BUZZ: Preparations
Now that the issue of who the country’s leader for the next six years will be has been all but settled, everyone is speculating about the composition of the Cabinet of presumptive President Ferdinand “Bongbong” Marcos Jr.
Biz Buzz hears that the incoming economic team is slowly but surely taking shape and that the final lineup will likely be made public in two weeks, once Congress officially proclaims the new president. So there will be a lot of speculation from now until then.
One matter which is not up for speculation, however, is the economic landscape that the incoming Marcos administration will have to steer the country through.
According to a reliable source, no less than Finance Secretary Carlos Dominguez III is preparing to deliver an important message to the public in the next few days detailing the country’s fiscal situation and prescribing steps that will be needed to address it.
Of particular concern to the outgoing head of the Duterte administration’s economic team is the debt that the government took on to address the impact of the pandemic over the last two years.
“We had to borrow, and this debt will have to be repaid,” said one official familiar with the situation. “And since it doesn’t look like the Philippine economy can ‘outgrow’ this debt, a fiscal consolidation plan will be needed.”
“Fiscal consolidation plan” is, of course, jargon for something that will be painful for the citizenry, and more often than not involves higher or more taxes, or both.
Think of the announcement as a parting gift from Dominguez who intends to wake everybody up by painting a jarring picture of what the Philippines will need to do going forward.
We understand the Finance chief is just waiting to present this fiscal consolidation plan to his successor so that work can begin immediately. Of course, for that to happen, the incoming president must appoint a designated successor first.
In any case, word on the street is that Marcos’ economic team—whose composition is still hush hush, despite the names being floated—is taking shape and is getting ready to present its own economic agenda to the public.
But will the solutions of the incoming group jibe with the challenges being predicted by the outgoing one? Abangan!
—Daxim L. Lucas
Consumer backlash
Now that the hotly contested elections are over, there’s a segment of broken-hearted, young, middle-class Leni Robredo supporters who had spent for hotel accommodations, campaign materials, merchandise and house-to-house campaigns who are feared to hold back on spending as they grieve.
Moving forward, an equity analyst says one big concern (as we aspire to return to prepandemic vibrancy soon) is the country’s gross domestic product in the third quarter as election spending falters.
We know that election spending is a seasonal thing, but this time around, there’s risk that these broken-hearted consumers will deliberately curtail their spending. So instead of the anticipated revenge spending, revenge belt-tightening is seen as a key risk.
This second quarter, a surge in consumer spending is seen due to volunteerism among the middle class to upper class folks who supported the Leni-Kiko Pangilinan campaign.
“The Robredo campaign, with its platform centered on good governance that promises to uplift Filipinos’ lives, has sparked a wave of pink spenders—or supporters from middle-to-high income classes—whose excitement and enthusiasm around the volunteer-driven campaign may have fueled a strong showing in consumption figures during the last three months,” said the veteran analyst (who declined to be named, due to political sensitivity of the matter).
“However, this pink economy is at risk to peter out fast by end-June, with partial and unofficial tally showing a landslide victory for the Marcos camp. Dampened sentiments could ultimately weigh on these consumers’ propensity to spend,” the analyst said.
Meanwhile, it is just as worrisome how some consumers are out for blood, hunting for companies perceived to have supported the Marcos 2.0 campaign. Right now, there’s a circulating list of companies that allegedly supported this and that party, with some therefore calling for a boycott of those on the other side.
It’s funny that some of the really big funders of the winning camp have managed to stay out of the picture—and prudently so. Whichever side of the fence they are on, there’s no use flaunting they have bet on the right horse as they risk alienating a lot of these consumers.
—Doris Dumlao-Abadilla
Green banking
Large banks are moving to cut off loans to “dirty” power plants to support a greener future for the planet.
The latest to do so was Frederick Dy-owned Security Bank Corp., which announced its planned full exit from coal power financing by 2033.
Security Bank upped the ante, as well, after it stopped issuing new loans to coal producers since last year.
This was in line with the government’s international commitments to dramatically reduce greenhouse gas emissions but also part of Security Bank’s increasing focus on environmental, social and governance principles.
Because coal power supplies the bulk of the country’s energy needs, it is not an easy segment to replace with other cleaner forms of energy and renewable sources without causing costly disruptions. This early step by some banks, and the participation of more lenders moving forward, raises the chances for a more sustainable future.
