The Philippine economy has been able to grow at an average of 6 to 7% for almost two decades, registering one of the highest growth rates in the Indo-Pacific region, because however poor the governance practices were of some of our politicians, whether at the national or local levels, our economic agencies have been mostly headed by the best and the brightest technocrats and professionals.  The usual example is the Bangko Sentral ng Pilipinas (BSP) or the Central Bank of the Philippines that has a reputation of being one of the best in Southeast Asia and even in the whole world.  Here, as evidenced by a detailed study of fiscal management over the last 18 years by a young and budding economist who is now at the Central Bank after  having a stint at the Senate—Mr. Jose Antonio Ramirez (M.S. in Industrial Economics, University of Asia and the Pacific)--, I will demonstrate how over the last three Administrations, the country has been served well by its fiscal managers (continuing a long tradition started after the People Power revolution in 1986).  This analysis is part of my justification of the view that the Philippine economy has strong fundamentals (despite the corruption and inefficiency from which we still suffer), thanks to the consistent practice of our political leaders, no matter how corrupt or vicious they might have been, to appoint some of the best and the brightest people as their economic managers.

              I limit this assessment of the fiscal management to the past three Administrations because the data made available to me by Mr. Ramirez pertain only to the last 18 years.  The tradition of appointing the best and the brightest, however, dates back at least to the Administration of President Cory Aquino, although I can cite names like Alex Melchor, Armand Fabella, Gerry Sicat, Roberto Ongpin, Cesar Virata, Onofre Corpuz, and David Consunji who were  also among the best and the brightest and who occupied top government positions during  the Administration of President Ferdinand E. Marcos.  Since 1986, the position of Secretary of Finance was occupied by some of the best qualified financial experts during their generations.  I can attest to this fact since I have known them personally over the more than 60 years of my practice as a business economist.  And humility aside, I have been rating students since I started my teaching career when I was barely 18 years old.  At the age of 21, I was mentoring undergraduate students at Harvard University.

I can truly say that the Secretary of Finance position has been always occupied by the best and the brightest during their respective generations.  During the presidency of Cory Aquio, they were Jaime Ongpin, Vicente Jayme and Jesus Estanislao.  During that of FVR,  they were Ramon del Rosario Jr., Ernest Leung, Roberto de Ocampo, and Salvador Enriquez.  Even President ERAP, who was impeached, managed to have two outstanding financial executives to be in his Cabinet as Secretaries of Finance, Edgardo Espiritu and Jose Pardo.  Finally, President GMA also had the best and brightest of her generation to serve in that position:  Jose Isidro Camacho, Juanita Amatong, Cesar Purisima and Margarito Teves. To give credit to whom it is due, the Secretaries of Finance during the last three Administrations were Cesar V. Purisima, who served under the Administration of Benigno Aquino III (2010—2016).  He was known for fiscal reforms, improving tax administration, and maintaining investor confidence during the Noynoy Aquino years. 

              Carlos G. Dominguez III served during the Administration of Rodrigo Duterte (2016—2022).  Sonny led the Comprehensive Tax Reform (TRAIN and succeeding packages) and helped finance the game changing “Build, Build, Build” infrastructure program that brought the percentage of spending on public works close  to the average in the ASEAN region of about 5 to  6 % after decades of 2 to 3 %.  Under the present Administration of Ferdinand R.  Marcos Jr. (2022 to the present), there have been three technocrats filling the position of Secretary of Finance.  The first was Benjamin E. Diokno who served from June 2022 to January 2024.  He  was former Governor of the Central Bank and was ranked as the Best Central Bank Governor in the world.  He was also former Budget Secretary.  During his stint, he focused on fiscal consolidation, investment promotion and post-pandemic recovery.  He was succeeded by former Senator Ralph Recto who was later appointed by President BBM as Executive Secretary.  Recto’s tenure as Finance Secretary was characterized by record  non-tax revenues, stronger tax administration, large bond issuances, major infrastructure financing, investment incentive reforms and successful efforts (in tandem with the Central Bank) to control inflation and to maintain fiscal sustainability. The present Secretary of Finance is Frederick D. Go, a former top banker and real estate executive, and before his appointment to the position of Secretary of Finance was Special Assistant to the President for Investment and Economic Affairs under President BBM.  It is expected that Secretary Go will focus on, among others, simplifying the tax system to significantly increase investments, both domestic and foreign.

              We now examine the records of these very qualified technocrats in ably leading the Department of Finance in the responsible management of the fiscal affairs of the country during their respective mandates.  Their respective contributions to establishing the “strong fundamentals” that international institutions like Standard and Poor, the World Bank, the Asian Development Bank and                                                                                                                                 other independent observers have recognized, have been vital to the great likelihood that the Philippines will be able to escape the so-called Middle Income Trap that victimized practically all the Latin American economies during the last fifty years.  The first of the three major mistakes made by Latin American economies that led to their stagnation after reaching Upper-Middle Income status had to do with populist macroeconomic policies and fiscal irresponsibility.  Many Latin American governments adopted short-term populist policies to  gain political support, among which were excessive government spending, large fiscal deficits,  irresponsible printing of money,  unsustainable subsidies and artificially controlled prices and exchange rates.  In a good number of these countries, these policies led to hyperinflation, debt crises, and economic instability. The most notorious examples were Argentina. Brazil and Venezuela   in which annual inflation rates went as high as 1,000 % or more.  For example, in Argentina annual inflation reached as high as 2,600 % in 1989 to 1990 during the presidency of Raul Alfonsin.  I Brazil, peak inflation in 1993 reached about 2,500 % in the early 1990s.  One of the worst was that in Peru that suffered an inflation rate of 7,500 % in 1990 under President Alan Garcia.  Venezuela takes the cake:  in 2018 inflation reached 130,000 % under the leadership of the notorious Nicolas Maduro after years of economic mismanagement and currency collapse. A major turning point was the Latin American debt crisis, which produced  what economists call the “lost decade” of the 1980s.   It is no brainer to derive lessons for the Philippines from these almost tragi-comic experiences of Latin American countries:  maintain fiscal discipline, control inflation through appropriate monetary policy, and limit public debt (in the Philippine case today to less than 60 % of GDP).     To be continued.