SONA: Fix a nation in state of disrepair
President Ferdinand Marcos Jr. will have to tell Filipinos in his first state of the nation address (SONA) tomorrow the grim reality that the country is in a state of disrepair – and that he needs the people’s full support to turn the situation around.
It would help if Marcos could find it in his heart to say sorry for past errors and open his arms in an embrace of national reconciliation and peace. That would be a blessed beginning as he unfolds his road map for the next six years.
Marcos is starting from a negative position, with a budget deficit (in May) of ₱146.8 billion. He has inherited a ₱12.03 trillion national debt which is 63 percent of the gross domestic product. The Philippines has one of the highest unemployment and inflation rates in the region, and is not exactly an attractive investment area.
It is also among the poorest performing economies in the region. Its GDP had the biggest contraction of 9.6 percent in 2020 followed by Thailand (6.2 percent) and Malaysia (5.6 percent). From 2016 to 2021, its average annual GDP growth was 3.8 percent, making the country the 5th worst economic performer in the region.
The economy is just one aspect of life in the country. Even so, here are more economic data culled from government statistics to think about.
The Philippines’ annual inflation continued to move at a faster pace of 6.1 percent (in June 2022), the highest recorded since October 2018. Inflation in the previous month stood at 5.4 percent and 3.7 percent in June last year. Average inflation for the first half of 2022 was posted at 4.4 percent.
Inflation is the rate of increase in the prices of goods and services. Losing its value over time, the peso no longer has as much purchasing power as it once had. To argue that inflation is a global phenomenon or that it is “imported” is to engage in escapist rationalization.
The Philippines’ 6.1 percent inflation is the second highest rate among the Association of Southeast Asian Nations+6. (The ASEAN+6 group consists of the 10 ASEAN members and six Asia Pacific neighbors: Australia, China, India, Japan, Korea, and New Zealand.)
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In May 2022, the Philippines’ total external trade in goods amounted to some $18.30 billion, showing an annual growth rate of 21.5 percent. But of that total trade, 65.5 percent were imported goods, while the rest were exports.
Importing more than we export, we have a deficit that must be covered by more or other foreign currency inflows, including remittances of Filipino workers abroad.
Remittances from Overseas Filipino Workers (in thousand US dollars) amounted to $31,417,614 in 2021. From January to May this year, remittances totaled $12,592,002. (In 2020, the number of OFWs was estimated at 1.77 million, lower than the 2.18 million in 2019.)
Counting the number of available jobs and the workers who are employed, underemployed or unemployed has always been tricky, but if we take the word of the government, 94 out of every 100 people who are fit to work have jobs.
The 94 percent employment rate is lower than the 94.3 percent in April but higher than the 92.3 percent a year ago. This means that 46.08 million out of 49.01 million Filipinos in the labor force 15 years old and over were employed in May 2022.
Labor figures show that unemployment is 6 percent of all employable persons. Unemployed persons are estimated at 2.93 million. The 6 percent unemployment rate is higher than Indonesia’s 5.8 percent and Malaysia’s 3.9 percent.
Narrowing the mismatch between the pool of college graduates and trade school trainees versus the personnel requirements of commerce and industry is a long process that should start ahead of the hiring need of the local job market.
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Total national government debt (in million pesos) is ₱13,176,615, of which ₱12,763,187 is owed by the national government itself and ₱413,428 are other loans guaranteed by the government.
As of March 31, 2022, among the creditors to which the Philippines owes a total of $109,753 (in million US dollars) are: Bilateral lenders, $42,795; Multilateral lenders, $29,028; the US, $2,668; and China, $2,597.
An audit must be conducted to ferret out government loans that have turned sour or were incurred under onerous terms, or taken for projects that never materialized. The debt crisis wrecking Sri Lanka is a reminder that government crooks can drag down an entire country.
Among the blinking red signs of a debt trap ahead are bad debts falling due and a trade deficit that results in far more foreign currency being paid for imports than what is being earned from exports.
The Marcos administration must look into the details of the huge loans contracted by previous administrations. It should find out at least if the guideline laid down in Sec. 20, Art. VII, of the Constitution had been followed.
If the Congress or any investigative agency decides to look into the huge loans amassed in recent years, one of the bases for an inquiry is Sec. 20, Art. VII, of the Constitution which says:
“The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. The Monetary Board shall, within 30 days from the end of every quarter of the calendar year, submit to the Congress a complete report of its decision on applications for loans to be contracted or guaranteed by the Government or government-owned and controlled corporations which would have the effect of increasing the foreign debt, and containing other matters as may be provided by law.”