Philippine economy must be that robust and how

The outgoing administration of President Benigno “Noy” Aquino III has less than 200 days left in its six-year term of office. But I get the impression the Aquino administration is not in exit mode, much less is it in transition phase yet. That was what I sensed from two of President Aquino’s most trusted Cabinet officials, namely, Department of Budget and Management (DBM) Sec. Florencio “Butch” Abad and Department of Transportation and Communications (DOTC) Sec. Joseph Emilio “Jun” Abaya.

Abad and Abaya happen to be also stalwarts of President Aquino’s Liberal Party (LP). Abaya is the acting LP president. Former Department of the Interior and Local Government (DILG) Secretary Mar Roxas II turned over the party helm to Abaya.

This was after President Aquino named Roxas to take over from the late DILG Secretary Jesse Robredo who died in a plane crash in Augus 2012. Abaya was then on his third and last term as Cavite congressman when President Aquino subsequently appointed him as DOTC secretary in place of Roxas.

Abad, on the other hand, is one of the original Cabinet members who has remained in post since day one of the Aquino administration.

Abad and Abaya joined our Kapihan sa Manila Bay last Wednesday at the Luneta Hotel and stayed for almost two hours of freewheeling question-and-answer forum with the media, including sidebar questions on politics related to their being LP party stalwarts. As the ruling administration party, LP is fielding Roxas and Camarines Sur congresswoman Leni Robredo, widow of the late DILG secretary as President Aquino’s anointed presidential and vice presidential bets, respectively, for the May 2016 elections.

During the course of this week’s breakfast forum, we had been given a dose of the accomplishment reports by Abad and Abaya – or so, as it seemed to us – in the last five years of the Aquino administration. This is because both Abad and Abaya are also members of the Cabinet cluster on economy and infrastructure.

Abad, for his part, cited the growth rate of the Philippine economy has nowhere to go but up given its strong performance in the first half of this year. In fact, he disclosed, the initial figures of economic growth indicators for the third quarter point to “good” so far. These figures, Abad predicted, would “continue to improve” for the rest of the second semester.

But the final figures for the Philippine economic growth performance for the third quarter this year are not yet officially released. The National Economic and Development Authority (NEDA) Board, chaired by the President, is expected to release the official figures by next week.

Past figures showed the country’s economic growth slowed to 5.3 percent in the second quarter from 6.4 percent in the same period a year ago. The government has set a seven- to eight-percent target for the year. However, due to this slower than projected growth, Aquino economic planners re-adjusted their forecast to an average of six percent.

The inter-agency Development Budget Coordinating Committee (DBCC) – which sets the government’s macroeconomic assumptions – would no longer revisit targets within the year. Both the secretaries of the DBM and the DOTC also sit in this body.

But where exactly is this economic growth coming from? Is there so much money and wealth now in the hands of more people?

“There’s still a lot of growth to further heighten the domestic demand component of the economy. The capacity is huge,” Abad effusively bandied to us.

Abad cited in particular the so-called “traditional driver” of the economy is consumption, especially in the fourth and last quarter this year coinciding with the holiday spending for the Christmas season. Our country has one of the longest Christmas seasons that starts as early as October.

The DBM secretary, however, admitted the country’s economic growth would get better push by accelerated government spending. But Abad quickly clarified this is not to say government is still under-spending up to now.

NEDA records showed the government’s final consumption – a measure of the state’s contribution to the economy – grew by 3.9 percent during the same period from previous year’s zero growth. This, despite slower state disbursements earlier reported this year.

But according to Treasury data, state disbursements rose nine percent during the first half to P1.072 trillion. This figure though was still below the program during the six-month period. By comparison researched by our DBM reporter Prinz Magtulis, government expenditures in July have shown some signs of further acceleration and grew by 25 percent. It improved by a further 15 percent in August. But for the first eight months, however, spending was still 15 percent below government program.

“We are really addressing the institutional weaknesses and bottlenecks to ensure fast track disbursements,” Abad vowed. “We are positive that the numbers will show a better growth forecast in the next semester in terms of expenditures contribution to general growth,” Abad reassured us at the forum.

Before the media could jump to conclusion, Abad immediately doused cold water on questions if he would still pursue DBM’s controversial Disbursement Acceleration Program (DAP). The Supreme Court (SC) earlier ruled DAP as unconstitutional in the use of “savings” and “cross-border” appropriations not provided under the budget law.

Abad though still insisted DAP itself was not declared “unconstitutional” but the SC subsequently clarified certain acts that made use of DAP “unconstitutional.” Thus, he swears he is confident he won’t get into any legal trouble after the Aquino administration.

In fact, Abad cited, he and Abaya have stayed on “holding the forts.” The two ex-congressmen are not running in next year’s elections. This is to help the President, they both enthused, make sure the next administration – Roxas-Robredo team – would not just benefit from these economic gains but would be able to continue with the reforms of the “daang matuwid” they started together.

Abad confirmed, the salary of President Aquino’s successor will be increased from P120,000 to about P400,000 a month.

The Philippine economy must be that robust and how! For lack of space, we’ll take up what Abaya discussed at the Kapihan sa Manila Bay in my next column on Monday.