Economic policy

Continuity in our economic policy

Elections, as they mark transitions in our society, often trigger periods of introspection and reflection. They can also be very emotional, not least because the prospect of new political leaders at the helm can stir up either anticipation or anxiety.

So, in the weeks following the recent election, many have asked me what I think will happen to the country based on the results. Such cases are not new to me after all, given that in my youth I campaigned for my father in four national elections and as a civil servant since 2004 I had to campaign for my own .

Despite this experience, I do not claim to be an expert or pretend to be able to explain everything that is happening in our political world, especially with new developments like social media and the emergence of new types of propaganda and dissemination of information.

But having already been active in politics under three presidents – Gloria Macapagal-Arroyo, Benigno Aquino III and Rodrigo Roa Duterte – I have come to realize that one thing has remained true under all political difficulties. Our economic policies, especially to keep our finances in order, have not fundamentally changed. And thanks to that, the country was able to put in place very bold reforms and long-term investments in our people.

This trend started with President Macapagal-Arroyo. His administration successfully passed tough tax reforms like the expansion of the 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 1% of GDP in 1997 to 5.8% in 2003, with outstanding public debt and contingent liabilities reaching up to 137% of GDP. On top of that, at least 30% of all government revenue was to be spent on paying the interest on our debts, instead of other priority spending.

Naturally, the enactment of new taxes had negative political ramifications. But by biting the bullet at the time, the Macapagal-Arroyo administration helped lay the groundwork for the investments the subsequent administration of President Aquino III was able to make in education, health and infrastructure.

President Aquino then built on his predecessor’s gains to strengthen our government’s fiscal affairs, enacting the first set of sin taxes (which helped kick-start the expansion of PhilHealth coverage to more Filipinos ) and pushing for better and more transparent administration of our existing taxation. laws.

The Duterte administration then continued its efforts to improve government revenue, as evidenced by the comprehensive tax reform programs that have been presented for public scrutiny. These packages were necessary given that the avowed policy direction was to usher in a golden age of infrastructure. They would also be instrumental in funding such important reforms as the Universal Access to Quality Higher Education Act, which underpins free tuition at all state universities and colleges, and the Universal Health Care Act, which grants health insurance coverage to all Filipinos (although it has yet to be fully implemented due to the pandemic).

Due to the good management of our macroeconomic affairs over the past two decades, only 10-15% of our national budget is now spent on paying our debts. During this time, our good credit ratings have meant that the interest we pay is the lowest ever.

This long-term trend of fiscal consolidation is not always discussed, especially in mainstream outlets. What is highlighted, like what we see today, is how our debt is at an all time high. It distracts from the fact that our national budget – the investments our government is able to make for the benefit of our people – is also the highest it has ever been.

Of course, that doesn’t mean there aren’t clouds on the horizon. It is certain that the new administration will face very serious challenges. But following recent announcements of who we can expect to be our economic managers under the new Marcos administration, there is some assurance that there will be continuity in our economic policies. And in my opinion, that should spark anticipation, not anxiety.

Senator Sonny Angara has been in public service for 15 years, including 9 years as a representative from Aurora Lone District and 6 years as a senator. He has drafted and sponsored over 250 laws. He is currently serving his second term in the Senate.

E-mail: [email protected]| Facebook, Twitter and Instagram: @sonnyangara