Repackaged Marcos claims seat of power
For better or for worse, the male heir of the late dictator Ferdinand Marcos reclaims in formal rites at noon today the seat of power that his father was forced to vacate at the height of the 1986 People Power Revolt.
Clever marketing of the refurbished Marcos brand appears to have won over 31.6 million voters, or 58 percent of the May 9 electorate, to accept Ferdinand “Bongbong” Marcos Jr. as repackaged.
Until the eve of his inauguration, he has not hinted at conciliatory moves. But we’re still hoping to witness Marcos opening his arms in a national embrace – since unity, as he has stressed during his campaign, is the only way to peace and prosperity for all even in the best of times.
Marcos and this suffering nation need genuine reconciliation, where and when nobody is tagged friend or foe – but simply “kapwa Filipino”. Without reconciliation, we cannot move together as a nation seeking peaceful coexistence with other peoples in a world in turmoil.
Having moved around the countryside, Marcos could not have missed seeing the sorry state of the nation that exiting President Rodrigo Duterte is turning over to him today.
At this point, we have to accept Bongbong Marcos as our new President in the same way that he has to accept the responsibility to look after the 110 million or so Filipinos being entrusted to his care.
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Marcos knows what he is being handed – a nation being sucked dry by corruption in high and low places in government, a budget deficit (in May) of ₱146.8 billion in spite of double-digit growth in revenues and a decrease in spending, and a ₱12.03-trillion national debt.
In 2016, President Noynoy Aquino left Duterte a 40.3-percent debt-to-gross domestic product ratio, plus ample cash and fiscal space for his projects. Today, Duterte will leave Marcos with a debt-to-GDP ratio of 63 percent.
Last year, our foreign obligations went up by 8.1 percent to $106.43 billion as the government borrowed more, tapping even the emergency reserve fund from the International Monetary Fund, to finance COVID-19 response measures.
Governor Benjamin Diokno of the Bangko Sentral ng Pilipinas said the increase was due to net availments of $9.8 billion after the government borrowed more from foreign creditors and the prior periods’ adjustments of $3.8 billion. Btw, Diokno is joining Marcos’ cabinet as finance secretary.
The country’s external debt has been rising from $73.1 billion in 2017, $78.96 billion in 2018, $83.62 billion in 2019, and $98.49 billion in 2020. Diokno said, however, that the outstanding external debt remained at a prudent level. Its ratio to GDP stood at 27 percent in 2021.
Marcos is lucky he is coming in with what is generally regarded as a highly competent economic team to help nurse back to health the anemic economy.
But in his first 100 days, expect Marcos to be scrutinized by the outside financial community as he has no personal credentials to inspire the confidence of investors. (US financial services giant J.P. Morgan already dropped the Philippines to the bottom of an investment list of its Southeast Asian peers released May 9).
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Another worrisome detail awaiting Marcos is the slipping foreign exchange value of the peso. Last Monday, the peso broke the ₱55:$1 mark at an intraday weakest of ₱55.15 against the US dollar. (It managed to close the day at ₱54.78.)
The last time the peso traded at an intraday low that breached ₱55:$1 was Oct. 25, 2005, at ₱55.15 to $1. Trading that day closed at ₱55.26 to $1.
Analysts are worried that the peso’s rate of depreciation might force the BSP to use its foreign exchange reserves to arrest the currency’s decline.
Families of Overseas Filipino Workers who remit dollars home are among those monitoring the peso’s behavior. On Monday when it rose momentarily past the ₱55:$1 mark, the dollar was selling at the SM City mall in Quezon City at ₱54.70.
The families of OFWs may appear to be catching a windfall, but with rising prices, their gains that are actually minimal are eaten up by rising prices.
A few pesos/centavos in forex rate fluctuations may not amount to much to the mother of an OFW changing $300 at SM, but the importers who require big amounts of foreign exchange will end up raising the prices of their goods and services — and that adds to inflationary pressure.
Inflation announced last month was 5.4 percent year to date, meaning that prices of selected indicative goods are now 5.4 percent more expensive than they were at the beginning of the year.
Because of external factors, including the war in Ukraine, importers of consumer goods and raw materials, including oil, now need more pesos for the dollars they normally use, and the added cost is passed on to consumers down the line.
Bangko Sentral data show that at the end of May, the country’s gross international reserves were at $103.53 billion, equivalent to 9.1 months’ worth of imports of goods and payments of services. These are considered adequate if they can cover the forex needs of at least three months.