OF SUBSTANCE AND SPIRIT

Last month’s IMF-World Bank spring meetings always reminded me of the visit of former Prime Minister (PM) Cesar Virata when I served as alternate executive director of the Fund in Washington, DC in 2001-2003. He had nobody to assist him. He himself called me up from the Fund lobby and asked if I could spare time for coffee. I decided against having coffee at the Fund atrium or outside because thousands of guests packed the District of Columbia.  Instead, I invited him up to my office and brewed some Arabica.
Ever so humble, PM Virata spent the next two hours explaining to me the global context of economic developments obtaining at that time. We were in the midst of the great moderation, and globalization was intensifying. Emerging markets were growing in an unprecedented manner. Thus, restructuring the Fund governance became more compelling.
I was more than grateful to PM Virata for his panoramic view; it was very precious to my representation of the Philippines and the rest of the Australian constituency where we belonged. His brief commentary on Congress’ obvious reluctance to enact the bill on anti-money laundering ushered me to the politics of the underworld.
Out of government and in private banking, PM Virata demonstrated an impressive grasp of world events. This is not surprising because he was a global statesman. In his remarks at the launch of former NEDA Secretary General Gerardo Sicat’s book on Virata himself in 2014, the late Central Bank Deputy Governor Benito Legarda Jr. stressed that the Prime Minister championed the stronger representation of developing countries in the IMF and the World Bank. PM Virata even chaired the prestigious Development Committee of the World Bank group.
It was not the first time I engaged with PM Virata.
In 1986 before the EDSA revolt, the then Central Bank hosted the annual governors meeting of the South-East Asian Central Bank Governors (SEACEN). I was part of the organizing committee in charge of the governors meeting proper and we needed to find a most appropriate keynote speaker of international renown.
Yes, PM Virata suggested to us his friend Lord Gordon Richardson, the former Bank of England governor, who steered England through the banking crisis of 1973-75 and introduced “pragmatic monetarism” following the repudiation of the fixed exchange rate system. Lord Richardson delivered an extemporaneous keynote speech that sounded rehearsed for its excellent exposition of key risks in the global economy in elegant Queen’s language.
PM Virata’s visit in 2001 was not long after the Philippines staged another peaceful transition of power. I received from him a plateful of balanced but incisive insights on how it could benefit the Philippines. At 93 this year, PM Virata’s memory is like a young man’s, very prodigious. I read through the edited interview transcripts of the technocrats who served under President Ferdinand Marcos Sr. including PM Virata himself. These transcripts were prepared for the project “Economic Policymaking and the Philippine Development Experience 1960-1985: An Oral History” funded by the Japan Society for the Promotion of Science through Kobe University. His interview ran through 11 transcripts of his thoughts about economic policy and governance.
During the celebration of the Philippine Center for Economic Development’s (PCED) 50th anniversary, Dr. Sicat in his inaugural lecture last Monday focused on what he called a “bump” of real output during the martial law years. The “bump” is the excess of actual growth in gross domestic output over its long-term trend.
In his intervention, PM Virata explained the bump in terms of export windfall from sugar. When sugar imports from Cuba were cancelled by the US and its allies in favor of the Philippines, sugar exports climbed from 800 thousand metric tons to about two million metric tons.
He also disclosed to the PCED crowd that we had difficulty managing our public debt. But our 485 foreign bank creditors refused to restructure our maturing obligations in the mid 1980s. They acted on the country’s request only on Oct. 17, 1983, after the assassination of former Senator Benigno Aquino Jr.
It is indeed possible that the martial law dispensation’s massive infra projects could be another factor behind the bump. But these were funded by borrowed funds from abroad including those from the World Bank and the Asian Development Bank. And because of mismanagement, the kind of economic growth it generated was not sustained in subsequent years.
In fact, PM Virata in the same transcripts admitted that “even without …Aquino being assassinated, we were headed to a foreign exchange crisis.” There was one instance when the Philippines could not clear some international transactions in New York.
He believed then, as he believes now, that the Philippine economy was not producing sufficient exports and foreign exchange. No less than a major restructuring is required because protectionist pressures held back efficiency and productivity. We were not exactly globally competitive.
Based on our two hours of discussion 12 years ago and his recent testimonies, what was disarming about PM Virata was he consistently spoke in low key. As preacher Charles Spurgeon held: “Humility is to make a right estimate of oneself.”
When he failed to convince the creditor banks to promptly restructure our maturing obligations, he immediately advised President Marcos that he was resigning. He thought he would no longer be effective holding the finance portfolio. The President did not accept. PM Virata recognized the limits of his economic authority as many policy issues were subject to politics. Even as prime minister, he knew when to lay bare his limitation to the President who had virtually absolute power.
PM Virata possessed a right estimate of himself and he kept within boundaries. President Marcos could not see in him a potential contender. In his humility, PM Virata succeeded to push for some critical reforms and public projects.
Our economic debacle was no doubt dreadful, but perhaps it could just have been worse.