The rah-rah boys of Noynoy are raring to party after the international ratings firm Standard and Poor’s (S&P) Ratings Services raised the country a notch closer to the much-sought after investments grade a level that neighbor Indonesia had achieved several months back.
What the improved ratings did, at the most, was to place the country at par with its neighbors in terms of investors’ perception but will take long before it translates into any economic benefits, if the current global situation which seems to be headed toward a double dip recession does not overtake the short-term euphoria over the S&P action.
Admittedly, S&P is the most conservative of the three noted ratings firm around, including Fitch and Moody’s, and securing an upgrade from it can be considered an achievement amid all the noise being generated by Finance Secretary Cesar Purisima and most in the economic team of Noynoy about the country being grossly underrated.
Yet it seems there is nothing more that Filipinos can expect from the improved ratings at the moment in terms of improvement in their daily livelihood.
UP School of Economics Prof. Benjamin Diokno, one of the more capable budget secretaries the country has had, said it is jobs that make a difference in the lives of many people, not the gross domestic product (GDP) numbers or much less a ratings upgrade.
It is jobs that provide food on the table, alleviate poverty, reduce hunger incidence, and provide people with confidence to go on with life.
To do this, Diokno said the government should allocate more resources for well-chosen public infrastructure with the government agencies acting swiftly enough to have projects completed to speed up its contribution to economic output.
He added a strong spending program should be supported by a fundamental reform of the tax system to improve the current tax-to-GDP ratio which is currently below par compared to other economies at 12 percent.
Diokno noted that Noynoy now has the remaining four years to do all this and turn around poverty in which a recent survey showed 51 percent of respondents believing they are mired.
Thus, Noynoy is running out of time, according to Diokno since already a third of his presidential term is spent, “yet, no significant reforms have been done so far.”
He noted that the state of public infrastructure remains poor with his centerpiece program, the public-private partnership (PPP), hardly taking off the ground more than two years after this was conceived.
“Peace and order situation has deteriorated. There’s no progress in the government’s peace efforts. Foreign investors continue to avoid the Philippines. Dropout rates in public schools remain high, even as school facilities continue to deteriorate,” Diokno added.
Similarly, independent research firm Ibon Foundation said the reported high 6.4 percent growth in the first quarter GDP was empty in terms of an improvement in Filipinos’ lives and was largely the result of a surge in government spending “that is likely temporary.” Government consumption grew 24 percent in the first quarter from a 15.8 percent contraction a year ago.
Ibon said the most important sectors of the economy actually slowed during the period as growth in agriculture dropped from 4.4 percent last year to just one percent and of industry from 7.3 percent to just 4.9 percent, yet it said these are the sectors that are supposed to create the most jobs, have the greatest productivity and are the main drivers of economic growth.
Consequently the country’s jobs crisis remains despite supposedly sound fundamentals, it added.
According to Ibon estimates on National Statistics Office (NSO) data, the total number of unemployed and underemployed Filipinos has increased by 780,000 in the last two years, from 10.9 million in April 2010 to 11.7 million in April 2012 — consisting of 4.4 million unemployed and 7.3 million underemployed. While the unemployment rate over the same period fell from 11.4 percent to 10.3 percent this was more than offset by rising underemployment which rose from 17.8 to 19.3 percent. “These trends remain even if official NSO data that underreports unemployment is used,” according to Ibon.
Credit upgrades will be good for the campaign pitches in the coming elections but will have little impact, if at all, on Filipinos’ lives.
It’s jobs that matter and Noynoy has little to show for it.