Aquino government aiming for long-term growth—finance chief
MANILA, Philippines—The Aquino administration is prepared to sacrifice economic growth in the short term – and possibly becoming less popular in the immediate future – in order to lay the foundations for more sustained growth in the future, according to the de facto head of the President’s economic team.
According to Finance Secretary Cesar Purisima, he expects the Philippine economy to follow the path of a so-called “J-curve,” with growth dipping initially, but shooting up rapidly after.
“At the initial part, there will be this dip, and you just have to sustain it because as you set the foundations, you [complete] the J [shape],” he told editors and reporters during a visit to the Philippine Daily InquirerWednesday evening.
“That’s what we’re hoping [for],” Purisima added. “We’re focused, we have our resolve, and we’ll build the foundation so that we not only grow rapidly but also in a sustained manner.”
The finance chief was reacting to observations that the year-old Aquino administration had clamped down tightly on government spending, in an effort to weed out corruption, but in doing so, had also deprived the economy of much-needed “pump priming” funds.
At the same time, the Aquino administration’s first year in office also coincided with unrest in the Middle East and the fallout from the earthquake and tsunami in Japan, all making foreign businessmen more skittish about investing their funds in relatively riskier economies like the Philippines.
At the same time, the Public-Private Partnership (PPP) program – the much-hyped cornerstone of this administration’s economic policy – has so far been bogged down in delays and a change in leadership at the Department of Transportation and Communications, which has been overseeing about 70 percent of the infrastructure projects involved.
The Philippine economy grew 7.3 percent in 2010, an election year – the fastest pace in over three decades. However, the dearth of growth drivers this year may see growth slow to 5-6 percent, according to foreign economists.
Nonetheless, the finance chief dismissed suggestions for a more balanced approach between fostering growth and fighting corruption, which has been partly responsible for the administration’s “zero-based budgeting” scheme.
“We believe there’s no need for balancing,” he said. “We’re focusing on the laying of foundation for better governance.”
He added that the administration would ensure that government funds released for projects would actually redound to the people’s benefit instead of merely getting “salted away somewhere else and never to return.”
Purisima – who also served as finance secretary under then President Arroyo, until he led the infamous “Hyatt 10” revolt in 2005 – pointed out that the previous administration’s policy of leading economic growth through massive government spending was fundamentally flawed.
Quoting former Economic Planning Secretary Cielito Habito, the Department of Finance chief said that of the 1.4 million jobs created in the previous 12 months, about 1 million were created through private sector initiatives.
“It should be the private sector that should drive the economy,” Purisima said. “In the past, you had similar numbers but the bulk [of the job creation] was from the government.”
Purisima added that the government-led economic growth advocated by the Arroyo administration was unsustainable. The role of the government, he said, should be to “create the environment, the infrastructure, and make sure that the rules and regulations will not be unfair to others.”
Responding to criticism that the Aquino administration’s economic program has been slowed down by the overarching – and sometimes crippling – desire to ensure perfect PPP contracts and policies, Purisima said: “We’re focused on doing the right thing.”
