2022 Philippine Elections

[OPINION] Campaign promises are good, but don’t we have trillions in debts to pay?

Joel Pablo Salud
[OPINION] Campaign promises are good, but don’t we have trillions in debts to pay?
Presidential hopefuls must consider the P11.7-trillion debt problem even as they promise an economic 'Nirvana' if and when they win the 2022 elections

Let’s not beat around the bush. Any campaign promise assuring a recovery or stimulus plan to keep afloat a floundering economy, to say nothing of health care, will have to contend with the P11.73-trillion debt which the Philippines need to pay off in the next several decades.

One doesn’t have to be an economic whiz kid to know that defaulting on debt payments is never good, nor is it advisable on any given terms at any given time. Tax hikes, however unpopular and controversial, may just do the trick of shoring up any shortfall, but not outside the value of bonds issued by the debtor government.

Problem with such bonds is that the currency should be risk-free, i.e. the general sense of stability of government, and how it plans on paying the debt. The Philippine peso is not exactly as stable as the American dollar. Besides, any misplaced evaluation of economic growth, any misalignment calculation of supposed generated revenue, let alone fluctuations in exchange rates, could mean disaster.

It’s a third-world problem needing an outer-worldly solution.

Damned if you do, damned if you don’t

This is where the rubber meets the road: trillions in loans which will be left by the Rodrigo Duterte government may put a wedge in any attempt by the 2022 presidential candidates to make good their promises of economic Nirvana.

This is one huge reality check for many of the aspirants, say, for example, presidential hopeful Leody de Guzman and running mate Walden Bello. To date, their health stimulus and support of micro-enterprises form some of the best campaign battle cries I’ve heard in years.

However, there are stark realities one must face before making any promises. Take this one example. The country’s debt-to-GDP (gross domestic product) ratio — the level of debt comparative to the size of the economy — has already breached the internationally-accepted threshold of 60%. The Philippines is currently at 63%.

If this slips further south, the next administration would have to struggle with more debts based on higher interest rates. Let’s not even talk about a quivering fiscal deficit where the new government would be forced to look for newer and better sources of wherewithal.

How can such promises even be possible when, for example, in order to stabilize prices of rice, they say, our government will have to continue importing the product elsewhere rather than export it?

Damned if you do, damned if you don’t, true. It’s a situation which the next president will surely face. This is why the new government will have to rethink its plans by including the rather unpopular strategy of raising taxes.

Is taxing the rich feasible at this time?

It is here where you might think Leody de Guzman and Walden Bello have got it made. There is, however, a catch. The De Guzman-Bello tandem’s “wealth tax” – an estimate of the income of an individual or a family to better appraise their real worth, and thus tax them accordingly – may sound appealing in theory, but the question remains: how much of the theory is, in fact, feasible?

What I really want to know is how the tandem will be able to convince a highly powerful and influential segment of society to agree with their plans. All this time, the rich has only enjoyed the most welcome sweetheart deals with government.

Promising to tax the wealthy, should Leody de Guzman and Walden Bello win, could send ripples of uncertainty across a vast multinational entrepreneurial playground.

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The problem that is Duterte

I don’t mean to disparage or belittle Leody de Guzman’s campaign promises by insisting that they are only good on paper. Truth to tell, I want it to work and at the soonest possible time. What I am trying to say, but only with apparent difficulty, I may add, is: what are the presidential aspirants’ plans about Duterte?

Because whether we subscribe to it or not, Duterte and his cronies have been the cause and source of many of the problems our embattled country is facing right this moment. Should any of the candidates win, will he or she hold Duterte accountable?

Are they simply going to let Duterte slip out into the backdrop, quietly and free of any liability, even as we struggle to make heads or tails of a possible Bongbong Marcos win?

We’re not even halfway to the finish line when controversies surrounding the West Philippine Sea, Duterte’s pivot to China, China’s environmentally and economically injurious incursion, to say little of extrajudicial killings, loom darkly over the near horizon.

Promises are not enough

The scars left by the debt problem will be long and deep. The year 2020 already saw a contraction which left us with P1.4 trillion in losses. And this was because Duterte took the threat of COVID-19 lightly, according to experts. Imagine in what economic state we are in now.

Great campaign promises make for an even greater campaign trail. That’s a given in the rambunctious world of Philippine politics. But these turn into little horrors in light of the reality checks they face.

I write this with the hope that in the next several weeks prior to May 9, the election proper, we will get to hear what presidential aspirants have to say – in more detailed terms – on the matter of our national debt and how they plan on solving it while in the thick of implementing economic reforms.

Motherhood statements Filipinos don’t need. – Rappler.com