The list of words disliked by the Duterte administration continues to lengthen, with additions being made to the list in the wake of every powerful critique of the policies and acts of the group of people currently running this country. The latest additions to the list of Duterte-disliked words are “disruptive” and “spoiler.” They have been contributed by, surprisingly, the director-general of Neda (National Economic and Development Authority), who is concurrently the Secretary of Socio-Economic Planning.
The business community was not surprised when President Duterte picked Dr. Ernesto M. Pernia for the post of Neda director-general, who is this country’s chief economic planner. A University of the Philippines-trained economist, Pernia was, until his retirement, a senior economist at the ADB (Asian Development Bank). ADB is one of the Philippines’ principal sources of development financing, and as an ADB economist he had the responsibility of helping ensure that the objects of ADB assistance operated on the basis of sound economic policies and efficient governance. Dr. Pernia took his training and experience with him to his post in the Duterte administration.
Considering the operating environment that Rodrigo Duterte had created for his economic team—the Secretary of Finance, the head of Neda, the Secretary of Trade and Industry and the Secretary of Budget and Management —I knew that sooner or later Pernia would take issue with one or more of the economic policies of Mr. Duterte’s administration. That has happened sooner rather than later.
The policy that Secretary Pernia has taken issue with is the Duterte administration’s fiscal policy. More specifically, he has taken issue with TRAIN (the Tax Reform and Inclusion law). I have no knowledge as to whether the Neda chief opposed—or at least voiced serious reservations about— TRAIN’s excise tax approach to raising incremental revenue for the Duterte administration’s spending programs, the most important of which is Build, Build, Build. But he’s certainly speaking out against TRAIN now.
Taking note of the continuing upcreep of consumer prices—knowledgeable forecasters think that when it comes in, the July inflation rate will be 5.8 percent—Secretary Pernia has declared that the consumer price increases generated by TRAIN’s tax passage are “disruptive” of the progress of the economy. Considering that the Duterte administration has placed TRAIN at the center of its economic program, the “it has been disruptive” remark has not sat well with Mr. Duterte and the rest of his economic team. Indeed, the shock generated by Secretary Pernia’s remark had been almost palpable.
But the Neda chief through three months ago, shortly after the announcement of a below-target GDP (gross domestic product) quarterly figure, Secretary Ernie, declared that the higher consumer prices by the TRAIN excise taxes were a “spoiler.” I wasn’t there when the Secretary of Finance when he heard or read Secretary Ernie’s “spoiler” statement, but I can imagine it. Secretary Carlos Dominguez III has all along been touting the TRAIN’s GDP-raising potential and here comes a nation’s chief economic policymaker, saying to say that TRAIN was a “spoiler.” Truly Secretary Pernia’s comment was a spoiler in its own right.
Ernie Pernia is the only member of the Duterte administration’s economic team that has broken ranks. The other members of the team have been conducting themselves like the Hallelujah Chorus, stating (1) that the consumer price increases were expected, (2) that the increases were highly manageable and (3) that the inflationary upcreep will end before year-end.
Is the Secretary of Trade and Industry or the Secretary of Budget and Management likely to follow Secretary Pernia’s lead and declare that the TRAIN excise taxes have been “disruptive” that the consumer price increases have wreaked substantial hardship on the populace, especially the low-income groups, and that the inflationary upcreep is unlikely to end anytime soon? I don’t think so.
Which is why I say, bravo, Secretary Ernie.