While political squabbles and a rash of scandals involving high-ranking public servants vie for headline dominance in the Philippines; as wars on two fronts – those against drugs and terrorism – rack up the dead count and monopolise Philippine coverage in the international media, working quietly in the background is a well-oiled machine that’s keeping this country’s economy on a steady upward trajectory.
This is the other side of the Philippine coin; the one, too frequently, that’s turned face down and goes unseen. News-wise it’s not as sellable as blood on the streets and corruption in high places; it’s not visual, it’s not pictorial and there’s little drama. But what it lacks in those departments, it makes up for in the prose of the country’s economic balance sheet where the bottom line is that the country’s economy is fit and robust.
Fiscal health, the measure of a country’s financial wellbeing, is an area where we’d expect the Philippines to do well – given its impressive economic growth over the past three years; the astute management of monetary policy by Bangko Sentral ng Pilipinas (BSP), the country’s ever-reliable central bank, along with prudent fiscal policy by the previous and current governments over that period.
And we haven’t been disappointed. A look at the results of the 2017 Economic Freedom Index (EFI) – produced by the prestigious Washington-based think tank, The Heritage Foundation – explains why.
The EFI makes ‘Fiscal Health’ integral to evaluating the relative ‘Government Size’ for 186 countries world wide. Here’s how the Philippines did, globally, in relation to its regional peers, the 10 states of the Association of Southeast Asian Nations (Asean).
Brunei, 1st; Philippines, 26th; Thailand, 27th; Cambodia, 33rd; Indonesia, 55th; Myanmar, 56th; Singapore, 81st; Malaysia, 95th; Laos, 121st; Vietnam, 158th.
That ranking confirms the fitness of the Philippine economy and explains why the international rating agencies, such as Fitch and S&P, maintain their positive outlooks for the archipelago’s economic growth. It should also calm the fears of doubters and encourage greater overseas investment participation.
The EFI doesn’t claim its fiscal-health findings portray a complete picture of these economies but they do show the relative impacts of widening deficits and government debt burdens – factors intrinsically linked to macroeconomic instability and economic uncertainty. And in those areas, as we can see, the Philippines does extremely well. Scores for this indicator are derived from (a) average deficits as a % of gross domestic product (GDP), and (b) government debt as a % of GDP – all based on the past three years data.
Going forward too, the fiscal outlook for the Philippines looks similarly rosy – the government’s finance team headed by Secretary of Finance, Carlos Dominguez III, is committed to introducing sweeping tax reforms, reducing poverty – one of the biggest blights on the economy – by fully implementing the government’s socio-economic agenda as well as drawing in investment and creating jobs with its massive infrastructure programme which will see PHP8 trillion spent on major projects over the term of the administration.
The bottom line of all this is that between the government’s financial team and the BSP, the Philippine economy is in safe hands.