EDITORIAL: While the iron’s hot

The year 2014 may well be remembered as the year when government policymakers woke to the reality that the economy needs their proactive involvement to achieve a faster growth rate.

For the first time since President Aquino assumed office, the administration actually started moving—and at an impressive pace—on the public-private partnership program, which is the cornerstone of its economic program. Not everything was smooth sailing, of course; just like anywhere else in the world, it never is. But government bureaucrats, or at least some of them, finally set aside their interminable planning sessions and overdone feasibility studies and decided to “just do it,” as that famous sneaker ad counsels.

This is important because, for all the professions of love that the administration has made for “inclusive growth”—that is, ensuring that the benefits of a resurgent economy are felt as much by the poor as the rich—it seemed to overlook the fact that the billion-peso fortune it continues to funnel into its Pantawid Pamilyang Pilipino subsidy program is but a stopgap measure. For genuine inclusive growth to take hold, only the participation of the private sector on a massive scale will do. But the administration, with its dogged focus on cleaning up the government in the first few years of its term,

appeared to forget that private-sector initiative can only be spurred with public-sector policies.

The administration’s moves to spur faster economic growth could not have come at a more opportune time. The Philippines has received another credit-rating upgrade from an international debt watcher, pushing the country higher into investment-grade territory. This means that all Philippine entities, from the government to private corporations, can borrow funds from overseas at lower interest rates. With global interest rates set to rise, this is a welcome development on which Filipinos should not fail to capitalize.

Indeed, there is a large infrastructure gap which the Philippines needs to bridge if it is to join the ranks of more developed nations and reduce poverty. This gap can only be reduced by a massive infrastructure program, and there is no better time to do it than the present, with the small window of low borrowing rates still open to the country. It is this small funding window that would allow the government to bring into higher gear the rehabilitation and reconstruction program it has put up in response to the damage Supertyphoon “Yolanda” wrought on Eastern Visayas.

Month after month in 2014, pundits expressed dismay at reports of persistent underspending by the government. It’s time for the administration to abandon this miserly approach to economic stimulus and actually start spending where the funds are needed.

Finally, there is the good news brought about by the drop in oil prices worldwide. The Philippines—being an importer of “black gold” to run everything from motor
vehicles to power plants—is widely expected to benefit from this phenomenon. Consumers are actually beginning to feel the benefits through lower petroleum prices and, slowly, lower public transportation fares.

The public is of course hoping that prices of consumer goods would soon follow the downtrend. But if economic theory and practice have anything to teach us, it’s that prices tend to be “sticky” on the upside. That is, once people get used to selling their goods and services at higher prices—whether they be large corporations, office employees, or the smallest traders—they become hesitant to settle for less, even when their costs have declined.

(The sharp drop in oil prices holds many risks as well, with some scenarios being quite devastating for the global economy. But that is for another, less festive, time.)

So once more, the onus falls on government policymakers to make the benefits of all these positive developments reach the lowest rungs of Philippine society’s ladder. With less than two years left, the Aquino administration must do so with utmost urgency. Barring that, it must unfetter the private sector with the same urgency and get rid of the bureaucratic roadblocks that have been hindering development.

It can well be this administration’s resolution for the new year: Move faster, or get out of the way. Good times never last, at least economically speaking. Everyone in the public and private sectors must strike while the iron is hot.

source:  Philippine Daily Inquirer