Continuity in our economic policy
Published May 29, 2022 12:05 am
BETTER DAYS
Senator Sonny Angara
Elections, given that they mark transitions in our society, do often trigger periods of soul-searching and reflection. They can also be very emotional affairs, not least because the prospect of new political leaders taking the helm can elicit either anticipation or anxiety.
So in the weeks following the recent elections, many asked about my thoughts on what will happen to the country based on the results. Such affairs are not new to me after all, given that in my youth, I have campaigned for my father in four national elections and that as a public servant since 2004, I have had to do my own share of campaigning.
This amount of experience notwithstanding, I do not claim to be an expert or profess that I can explain everything that happens in our political world especially with new developments like social media and the emergence of new types of propaganda and information dissemination.
But having been active in politics under three Presidents already — Gloria Macapagal-Arroyo, Benigno Aquino III, and Rodrigo Roa Duterte — I have come to realize that one thing has remained true underneath all the political travails. Our economic policies, specifically toward keeping our fiscal house in order, have not fundamentally changed. And because of that, the country has been able to enact some very bold reforms and make long-term investments in our people.
This trend started with President Macapagal-Arroyo. Her administration successfully enacted difficult fiscal reforms like the expanded value added tax (E-Vat) in 2005. At the time, the country was still reeling from the effects of the Asian Financial Crisis where the consolidated budget deficit rose from one percent of GDP in 1997 to 5.8 percent in 2003, with the stock of public debt and contingent liabilities reaching up to 137 percent of GDP. On top of that, at least 30 percent of all government revenues had to be devoted to making interest payments for our debts, instead of other priority expenditures.
Understandably, enacting new taxes had negative political ramifications. But by biting the bullet at the time, the Macapagal-Arroyo administration helped set the basis for the investments that the succeeding administration of President Aquino III was able to make in education, health, and infrastructure.
President Aquino then built on the gains of his predecessor toward strengthening our government’s fiscal affairs, by enacting the first set of sin taxes (which helped start the expansion of Philhealth coverage to more Filipinos) and pushing for better, more transparent administration of our existing tax laws.
The Duterte administration then continued this effort for improved government revenues, as evidenced by the comprehensive tax reform packages that were presented for public scrutiny. These packages were needed given that the avowed policy direction was to usher in a golden age of infrastructure. They would also be instrumental to funding such big reforms like the Universal Access to Quality Tertiary Education Act, underpinning free tuition in all State Universities and Colleges, and the Universal Healthcare Act, which grants health insurance coverage to all Filipinos (though has yet to be fully implemented on account of the pandemic).
Because of the proper handling of our macroeconomic affairs over the past two decades, only 10 to 15 percent of our national budget now goes to paying our debts. Meanwhile, our good credit ratings have ensured that the interest we’re paying is the lowest it has ever been.
This long-term trend of fiscal consolidation is not always discussed, especially in mainstream outlets. What gets highlighted, such as what we are seeing today, is how our debt is at the highest level it has ever been. This distracts from the fact that our national budget — the investments that our government is able to make for the benefit of our people — is also the highest it has ever been.
Of course, this isn’t to say that there aren’t any clouds on the horizon. Definitely, the new administration will have to face some very serious challenges. But in the wake of recent announcements of who we can expect to be our economic managers under the incoming Marcos administration, there is some assurance that there will be continuity in our economic policies. And in my opinion, that should elicit anticipation — not anxiety.
E-mail: [email protected]| Facebook, Twitter & Instagram: @sonnyangara
Senator Sonny Angara has been in public service for 15 years — nine years as Representative of the Lone District of Aurora, and six as Senator. He has authored and sponsored more than 250 laws. He is currently serving his second term in the Senate.
Senator Sonny Angara
Elections, given that they mark transitions in our society, do often trigger periods of soul-searching and reflection. They can also be very emotional affairs, not least because the prospect of new political leaders taking the helm can elicit either anticipation or anxiety.
So in the weeks following the recent elections, many asked about my thoughts on what will happen to the country based on the results. Such affairs are not new to me after all, given that in my youth, I have campaigned for my father in four national elections and that as a public servant since 2004, I have had to do my own share of campaigning.
This amount of experience notwithstanding, I do not claim to be an expert or profess that I can explain everything that happens in our political world especially with new developments like social media and the emergence of new types of propaganda and information dissemination.
But having been active in politics under three Presidents already — Gloria Macapagal-Arroyo, Benigno Aquino III, and Rodrigo Roa Duterte — I have come to realize that one thing has remained true underneath all the political travails. Our economic policies, specifically toward keeping our fiscal house in order, have not fundamentally changed. And because of that, the country has been able to enact some very bold reforms and make long-term investments in our people.
This trend started with President Macapagal-Arroyo. Her administration successfully enacted difficult fiscal reforms like the expanded value added tax (E-Vat) in 2005. At the time, the country was still reeling from the effects of the Asian Financial Crisis where the consolidated budget deficit rose from one percent of GDP in 1997 to 5.8 percent in 2003, with the stock of public debt and contingent liabilities reaching up to 137 percent of GDP. On top of that, at least 30 percent of all government revenues had to be devoted to making interest payments for our debts, instead of other priority expenditures.
Understandably, enacting new taxes had negative political ramifications. But by biting the bullet at the time, the Macapagal-Arroyo administration helped set the basis for the investments that the succeeding administration of President Aquino III was able to make in education, health, and infrastructure.
President Aquino then built on the gains of his predecessor toward strengthening our government’s fiscal affairs, by enacting the first set of sin taxes (which helped start the expansion of Philhealth coverage to more Filipinos) and pushing for better, more transparent administration of our existing tax laws.
The Duterte administration then continued this effort for improved government revenues, as evidenced by the comprehensive tax reform packages that were presented for public scrutiny. These packages were needed given that the avowed policy direction was to usher in a golden age of infrastructure. They would also be instrumental to funding such big reforms like the Universal Access to Quality Tertiary Education Act, underpinning free tuition in all State Universities and Colleges, and the Universal Healthcare Act, which grants health insurance coverage to all Filipinos (though has yet to be fully implemented on account of the pandemic).
Because of the proper handling of our macroeconomic affairs over the past two decades, only 10 to 15 percent of our national budget now goes to paying our debts. Meanwhile, our good credit ratings have ensured that the interest we’re paying is the lowest it has ever been.
This long-term trend of fiscal consolidation is not always discussed, especially in mainstream outlets. What gets highlighted, such as what we are seeing today, is how our debt is at the highest level it has ever been. This distracts from the fact that our national budget — the investments that our government is able to make for the benefit of our people — is also the highest it has ever been.
Of course, this isn’t to say that there aren’t any clouds on the horizon. Definitely, the new administration will have to face some very serious challenges. But in the wake of recent announcements of who we can expect to be our economic managers under the incoming Marcos administration, there is some assurance that there will be continuity in our economic policies. And in my opinion, that should elicit anticipation — not anxiety.
E-mail: [email protected]| Facebook, Twitter & Instagram: @sonnyangara
Senator Sonny Angara has been in public service for 15 years — nine years as Representative of the Lone District of Aurora, and six as Senator. He has authored and sponsored more than 250 laws. He is currently serving his second term in the Senate.