As noted in my previous column, investors are lukewarm about the prospects of a Marcos presidency given the uncertainties over his economic platform.
I also shared in my column that to allay concerns, one of the most important things President-elect Ferdinand Marcos Jr. should prioritize is appointing highly skilled, competent, and integrity-based economic managers he trusts. to work independently to deal with the problem. problems facing the economy.
After being proclaimed the next president of the Philippines, President Marcos last week announced several appointments to his economic team.
These include the head of the Philippine Competition Commission, Arsenio Balisacan, as head of the National Economic Development Authority (Neda), Governor of Bangko Sentral ng Pilipinas (BSP), Benjamin Diokno, as finance secretary, and former head of Neda under then-president Joseph Estrada Felipe Medalla as governor of BSP.
Marcos also named former UP president Alfredo Pascual as business secretary and Manuel Bonoan, CEO of San Miguel Tollways Corp., as secretary of the Department of Public Works and Highways (DPWH).
Marcos did not disappoint as the five appointees received the endorsement of the business community given their extensive work experience and skills leading the country’s economic team.
Balisacan, Diokno and Medalla are all economists with PhDs, while Bonoan is an engineer with an MBA. Pascual also holds an MBA and was previously president of UP.
Additionally, all five previously worked for government and highly respected institutions in various capacities, and under different presidents, some even working under the late President Benigno Aquino III.
This, in my view, implies that President-elect Marcos chose the five leaders for their skills, not their political opinions, showing his commitment to helping the economy recover from the crisis caused by the pandemic.
The next step for President Marcos is to clarify his economic priorities.
Recall that the Aquino administration prioritized reducing the deficit and increasing the efficiency of tax collection, while the Duterte administration had its 10-point economic program and its government spending program. infrastructure.
At present, investors would like to know how the Philippine economy can recover from the pandemic and continue to grow above 6% while tackling the government’s huge budget deficit and debt levels. students.
Just last week, the outgoing Secretary of the Department of Finance (DOF), Carlos Dominguez III, unveiled his team’s proposed fiscal consolidation and resource mobilization plan. Recommendations include a three-year deferral of planned income tax cuts for individual taxpayers and the implementation of new taxes over the next three years.
These proposals are expected to generate a total of 349.3 billion pesos in additional revenue each year, allowing the government to reduce its debts to 55.4% of GDP by 2025, from 60.5% of GDP last year. without the need to cut expenses.
It will be interesting to see which part of the plan will be adopted by the new administration.
Although new finance secretary Diokno said the government would prioritize public debt sustainability, he said it was too early for him to make a decision on whether or not to increase debt. taxes, or to push for new ones, as recommended in fiscal consolidation and resource management. mobilization project.
After all, if the economy can grow faster, revenue collection will increase, allowing the government to finance its spending needs and reduce its debts, even without the imposition of new taxes.
I maintain the view that in the short term, other issues including high inflation, interest rates, war in Ukraine, aggressive Fed rate hikes and US market weakness will impact more important in local financial markets.
However, it is reassuring to know that the Marcos administration is taking the right steps so far to help the Philippine economy recover sustainably from the pandemic and face the current challenges. This should allow financial markets to perform better in the longer term, especially when economic data starts to show a favorable trend.
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