The next administration should have a credible economic team, and policies that promote environment, society and governance (ESG) to help attract more investments, an economist said on Monday.
Investors would also be closely monitoring the elections if it would be clean, honest, credible and peaceful, as an important first step in democracy.
It would also evaluate the incoming administration’s reforms for the first 100 days, especially the members of the economic team, chief economist Michael Ricafort of Rizal Commercial Banking Corp. (RCBC) told Daily Tribune.
“There are key success factors for the new Philippine president in 2022 that would help sustain the country’s economic recovery and development as well as attract more investments into the country; competent economic team [as has been seen over the past 10 to 20 years]; policies that promote ESG to help attract more investments; strengthen institutions, rule of law; and more effective response against the COVID-19 pandemic,” Ricafort said.
“Focus on economic recovery measures from the pandemic such as the re-opening of the economy, creation of more jobs, improving the government’s fiscal position, increased infrastructure spending, among others. Continuation of economic and fiscal reforms. Promote greater inclusion among politicians,” he added.
Moreover, the economist said that the next administration should improve diplomatic relations with the biggest trading partners, and sources of foreign investments.
Some potential market excitement is possible over the new president (as seen in previous presidential elections); wait-and-see on policies, Ricafort added.
Earlier, central bank Governor Benjamin Diokno said that the next administration will inherit a “much better economy” but with an increased debt-to-GDP (gross domestic product) ratio because of the COVID-19 pandemic.
The governor said the next administration would start office with tax and other economic reforms in place.
The administration of President Rodrigo Duterete has pushed for the Comprehensive Tax Reform Package (CTRP), which includes the Tax Reform for Acceleration and Inclusion (TRAIN) and Corporate Recovery and Tax Incentives for Enterprises (CREATE) laws, among others.
Before his tenure ends, Duterte had also enacted the amendments to the Retail Trade Act, the Public Service Act as well as the Foreign Investment Act.
“This administration will inherit a much better economy than what we inherited from the previous one. But at the same time, it is faced with an increase in public debt as a result of the pandemic,” Diokno said.
Before the pandemic, the Philippines’ debt-to-GDP ratio was at 39.6 percent but it has ballooned to 60.5 because of the heavy borrowings to finance the country’s COVID-19 response and recovery efforts.
On May 5, the national government posted its outstanding debt burden swelled to a record high P12.68 trillion as of end-March, or up by 17.7-percent from P10.77 trillion a year ago, the latest data released by the Bureau of Treasury.
With P2.2 trillion in gross borrowings planned for 2022, of which three-fourths or P1.65 trillion will come from domestic creditors mainly through the issuance of treasury bills and bonds, the outstanding debt of the government is projected to hit a new annual record-high of P13.42 trillion by end-2022 from P11.73 trillion in 2021.
This makes debt management the biggest challenge facing the incoming President to be elected as the economy needs to expand at a much faster pace amid the prolonged COVID-19 pandemic to help the government raise more revenues to meet its obligations.