Business World, 16 September 2014


The prospect of a Binay presidency must be the administration’s major nightmare. Else why would PNoy squander his political capital on the striptease of a re-election via Charter change? As recently as two months ago, PNoy’s impassioned state of the nation speech in July and Butch Abad’s able defense at the Senate already seemed to turn the tide of debate on the festering Disbursement Acceleration Program (DAP) and “pork” issue. The President seemed on the verge of winning the political battle, even if he had lost the judicial one.

So it was a surprise when PNoy and some of his close allies raised the possibility of changing the Constitution in order to allow him a chance at a second term. Why suddenly throw gas on the embers of animosity that were already about to die down? (I discount the possibility this is all a product of PNoy’s “evil genius” — that he shrewdly raised the spectre of political Charter change, knowing its unpopularity, simply to scuttle the pending moves to change the Constitution’s economic provisions.)

The only other plausible explanation is that the President and his allies are truly worried about the looming (would you say inevitable?) prospect of a Binay presidency. PNoy has said as much: his mantra ever since the State of the Nation Address has been the dire need for a successor who can “continue what we have begun” — a task which the Vice-President apparently is not up to. The only problem is, no electable alternative is on the horizon either. Hence the seemingly desperate feint at a second-term presidency.

As with most dire apprehensions, the prudent thing is to confront them by imagining the worst case and proceeding from there. So it is proper to ask: just how bad might a Binay presidency be for the economy? I mean, really.

On the one hand, large global and local developments are now in place that not even a purely self-interested Machiavellian leader (not necessarily the Veep) can ignore or undo. Because these are likely to persist, PNoy’s successor will have an easier time and more room for action than he did. It is these trends that make the economy “Binay-resilient” — to a degree. But let’s break it down.

First, the large overseas remittances (bringing in more than $2 billion monthly) are certain to continue. This is the single biggest factor in an active current account and is the bedrock of the macroeconomy’s stability. The knock-on effects on international reserves, credit ratings, the economy’s borrowing costs, fiscal headspace, and so on, are obvious enough.

Second, unless the new administration screws up on this entirely (though, why should it?), the prudent conduct of monetary policy is also likely to continue. The Bangko Sentral, after all, is an independent authority whose policies have been among the least politicised in the past. (Say Tetangco, who has rendered outstanding service in the current administration, was originally an Arroyo appointee reappointed by PNoy.) One can presume therefore that the same smart balance between controlling inflation and maintaining a competitive currency will continue to be struck with the same guiding parameters.

Besides, the more important ingredient for low inflation is also difficult to change — the liberal and low-tariff trade regime that was the handiwork of many administrations, beginning with Aquino I. The only bout of serious inflation under this Aquino administration occurred in recent months and only because that single culprit commodity has not been trade-liberalised, namely rice.

Fourth, some important existing social programs created, continued or expanded by the present administration have so built up constituencies of their own that they would be immensely difficult to roll back. Among these, consider the conditional cash-transfer program (just try abolishing that now) and the expansion of PhilHealth coverage and benefits. Even the K+12 initiative, shaky as it is, pre-empts a significant portion of the budget and commands a critical minimum of any future administration’s attention. The same is true for the other by-now established pillars of the Philippine economy: tourism, direct foreign investment, the BPO sector, renascent manufactures.

Indeed even the administration’s failures and inadequacies will play a role in defining the agenda. Any future president — friendly or not — will inevitably want to distinguish itself by rising above the present one’s obvious shortcomings in, say, transport infrastructure and energy. Among the inevitable blessings is the likely replacement of the deadwood and non-performers that PNoy has curiously been reluctant to dismiss. In such ways, therefore, PNoy will already have influenced and defined the agenda for the next president, even one who may be entirely self-interested and cynically concerned only for political survival.

In short, the constituencies created by the administration’s reforms have been substantial. And while such constituents may not necessarily vote for PNoy’s anointed, they are certainly going to hold out for their rights and achieved entitlements, thus setting bounds on any future president’s rogue behaviour.

Let’s face it: the real risk from a rogue president (again, not necessarily the Veep) is not that he or she will say the wrong thing in contradiction of PNoy’s legacy. It is not even that he or she will say the right thing and do another. The real danger is it that s/he will be publicly exposed as a sham, creating a serious crisis of legitimacy with untold economic repercussions. This has been the story of presidents from Marcos to Estrada to Arroyo, and it can be shown (even econometrically) that perceptions of corruption and political instability have been historically responsible for the largest drops in investment.

So it is not a question of the mask a politician wears, it is rather the danger that the mask might fall off. Filipinos have been lucky this time around: PNoy does not wear masks, so there is nothing to drop. We can only hope that if the next president is not a selfless patriot, then he can at least act like one. As the famous but unattributed maxim goes: “The most important thing is honesty. Once you know how to fake that, you’ve got it made.”