Marcos Jr. administration

LIST: Signs that Recto was replacing Diokno as finance chief

Ralf Rivas

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LIST: Signs that Recto was replacing Diokno as finance chief
(1st UPDATE) Malacañang officially announces that House Deputy Speaker Ralph Recto will replace Benjamin Diokno as finance secretary. Here’s a look back at some incidents hinting that Diokno was out of the loop on key economic policies.

MANILA, Philippines – Political allies have congratulated House Deputy Speaker Ralph Recto on Thursday, January 11, for his appointment to the Department of Finance, hours ahead of an official announcement from Malacañang.

Recto’s appointment was first confirmed by his wife, actress and former politician Vilma Santos-Recto. She said Recto’s oath taking will take place on Friday, January 12.

Malacañang confirmed on Thursday evening that Recto will be taking his oath alongside Frederick Go, Special Assistant to the President for Investment and Economic Affairs.

Rumors of Recto replacing Benjamin Diokno as finance chief have been swirling for months.

Diokno earlier evaded questions about the then-loose talk on the Cabinet shake-up, noting that he does not comment on rumors.

“I don’t know where it comes from. Why would I do that? We’ve assembled a great team. At saka (And also), we’re trying to go down a certain direction,” President Ferdinand Marcos said back in November 2022, when asked about talks that he was replacing Diokno.

”It’s a very, very poor time to, as I say, change horses in midstream,” he added.

Here’s a list of incidents that hinted of Diokno’s exit from the Cabinet.

Rice price caps

In a briefing early September 2023, Diokno admitted that he was “surprised” by the sudden order of President Ferdinand Marcos Jr. to set price ceilings on rice.

Nasa Japan kami talaga when that was announced. Magkatabi kami ni Arsi,” Diokno said, referring to National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan. 

Nagulat nga kami. Lumabas na agad e,” he told reporters on Friday, September 8.

(We were in Japan when it was announced. I was beside Arsi. We were surprised. It just came out suddenly.)

He also said that the President did not extensively consult the economic managers before issuing the contentious order. Diokno, however, still supported Marcos’ price ceilings amid criticisms from economists. (READ: Marcos’ economic team backs rice price cap, group claims it’s harmful)

Marcos’ decision was criticized by former Finance Undersecretary Cielo Magno. She was eventually forced out of her post after posting a chart illustrating the law of supply and demand, the most basic chart in economics.

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‘Nagulat nga kami’: Diokno says rice price cap surprised even the economic team

‘Nagulat nga kami’: Diokno says rice price cap surprised even the economic team
Fuel taxes

On September 19, Diokno issued a statement, warning that the proposal of several lawmakers, including Marcos’ cousin, House Speaker Martin Romualdez, of suspending fuel taxes would hurt government coffers and benefit only the rich. Instead, Diokno proposed targeted subsidies.

“When you formulate policy, you always think of what’s the greatest good for the greatest number,” Diokno said. 

Lobbying

There have been people lobbying for Recto’s appointment to the Department of Finance.

One of them was Angkas CEO George Royeca.

In a column entitled “A maestro for economic prosperity” published in October 2023 at the Philippine Star, Royeca openly endorsed Recto, even though Diokno was still finance chief at that time.

“It is with great admiration and respect that I reveal this potential maestro of our economic prosperity, the one whose unwavering commitment to the betterment of our nation has been proven time and again. His name represents a wealth of experience and expertise in the fields of economics and finance…. None other than former Senate pro-tempore and current deputy speaker, Ralph Recto,” Royeca said.

“In the grand symphony of our nation’s financial future, Ralph Recto is the conductor we need to orchestrate a harmonious and prosperous economic melody for all Filipinos to enjoy.”

Praises

In the absence of an official announcement, Albay 2nd District Representative Joey Salceda’s press release was entitled, “On the likely appointment of Rep. Recto as Secretary of Finance.”

“I am optimistic that key tax reforms pending in the Senate will also move faster with his appointment, due to his relationships in that chamber, as well as his ability to broker viable compromises,” Salceda said.

Senate President Miguel Zubiri said Recto had the ability to bridge numbers and realities on the ground.

“In the Senate, we always regarded him as the resident numbers genius. This was not just for his mathematical ability, but more importantly for his ability to immediately see the big picture implications of these numbers. More than most, he understands how to bridge the gap between the abstractions of mathematics and the very concrete realities that we face as a nation,” Zubiri said.

Diokno’s track record

Diokno has served four presidents. He was an undersecretary at the Department of Budget and Management (DBM) under the late former president Corazon Aquino. He went on to lead the DBM twice, under the presidency of Joseph Estrada from 1998 to 2001, and Rodrigo Duterte, from 2016 to 2019. He also served as the governor of the Bangko Sentral ng Pilipinas from 2019 to 2022 before his appointment as Marcos’ finance secretary.

Diokno has implemented several tax and fiscal reform measures throughout his career, including the 1986 tax reform which simplified income tax and introduced value-added tax (VAT). In 1991, he introduced reforms in the local government code.

During the Duterte administration, he worked with the economic managers to implement several packages of the controversial TRAIN law, which lowered income taxes but raised taxes on fuel and sugary drinks, and rationalized tax perks of corporations.

Recto and economic policies

Recto is no stranger to economic policy. He was the proponent of the unpopular expanded VAT, resulting in his failed reelection bid in 2007. Some economists, however, lauded the measure as it generated income for the government.

In 2008, Recto was appointed as director general of the National Economic and Development Authority by former president Gloria Macapagal-Arroyo.

Recto authored and sponsored several economic laws, including the Rice Tariffication Act, the Rent Control Act, the Salary Standardization Law, Affordable Electricity Act, and the law taxing offshore gaming companies.

Recto has a certificate in business economics from the University of Asia and the Pacific, and completed units in the public administration program of the University of the Philippines. He has a bachelor’s degree in commerce from De La Salle University. – Rappler.com

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Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.