ELECTIONS 2022: Why Diwa Guinigundo thinks good governance is key to rescue economy

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Diwa C. Guinigundo has spent more than 40 years in government service as deputy governor for the monetary stability sector of the Bangko Sentral ng Pilipinas (BSP). Before being appointed as deputy governor in 2005, he was an assistant governor for Monetary Policy and International Operations.

Yahoo Philippines recently sat down with the former deputy governor to talk about issues in the Philippine economy, and the challenges to the next administration.

FILE PHOTO: Diwa Guinigundo, former deputy governor of Bangko Sentral ng Pilipinas, pauses during a news conference in Manila, the Philippines, on Thursday, Feb. 7, 2019. (Photo: Veejay Villafranca/Bloomberg)
FILE PHOTO: Diwa Guinigundo, former deputy governor of Bangko Sentral ng Pilipinas, pauses during a news conference in Manila, the Philippines, on Thursday, Feb. 7, 2019. (Photo: Veejay Villafranca/Bloomberg)

On April 1, 2020, at the height of what would be the harshest and longest lockdown in the world, residents of Sitio San Roque in North Triangle, Quezon City flock to EDSA to get food aid from the government.

Since most, if not all of the residents in the area, live on a daily subsistence, they are heavily relying on the government to help them provide food for themselves and their families, after having lost their livelihood since the lockdown was imposed.

But instead of getting help, police officers from the Quezon City Police District violently dispersed the residents, accusing them of staging a protest at a time when public assemblies are prohibited due to pandemic restrictions. They also apprehended 21 residents.

This is just one of the many stories of Filipinos struggling amidst the pandemic. Whatever economic growth the country was experiencing prior to the pandemic turned upside down, and the country underwent recession after the economy contracted to -9.6 percent in 2020.

The interview has been edited for length and clarity.

How has the pandemic affected the vulnerable sectors of society?

Because of the pandemic, there was a severe lockdown in the economy. Mobility was restricted, even business activities were also restricted. As a result, people lost their jobs; people lost their income. For those with wealth, with some bank deposits or investments, perhaps the collateral damage may be minimal. But for those who are on daily subsistence, the impact was very severe.

That’s why at the beginning, one of the economic scars of the pandemic was the deterioration in the economic conditions. Poverty has worsened, and inequality has also deteriorated. This is something that will take time before it gets healed. When people have been out of jobs, it’s very difficult to get back. When workers are laid-off, manufacturers, employers, producers will also have a difficult time restarting their operations. There are downtimes in the production process and those are what we call the economic scars.

The other possible economic scars would be the impact on training and education. You have two years of a batch of students who did not have the experience of face-to-face instructional experience. When you have this kind of gap in training and education, the economy is bound to suffer in the process because you would have less educated, less trained members of the labor force moving forward.

What have been the economic scars of the pandemic on the business sector?

The small businesses had a difficult time servicing their debts. Most of them borrowed funds for business start-ups, some for expansion, and because of this, some of them had just closed down, especially those renting space in big malls. That’s the reason why some of the big malls provided some concession in terms of the rentals on those mall spaces. But many small businesses were lost because of the pandemic.

It is also important to point out that even the big companies, because of reduced markets, could not have earned the same amount of business before the pandemic. So these are some of the economic scars. And the most telling proof of this is our recession in 2020. It took us time before we were able to reverse those five quarters of negative growth. Some recovery was noted, starting the second quarter of 2021, third and then fourth quarter. It’s good that there was a big recovery during those three quarters, that the Philippine economy managed to grow positively by 5.6 percent in 2021.

That was a big recovery, but still, there is still the uncertainty of economic scars on the possible unwinding of policy support and the uncertainty of COVID-19. We’re not sure how it’s going to fan out now and in the future.

How has the alleged misappropriation of large-scale funds during the pandemic hurt the current government, and what should the incoming government do to change the public sentiment on high-level government corruption?

This alleged corruption in the procurement of medical supplies during this pandemic is unconscionable. We are short of tax and non-tax revenues, we have a pandemic to mitigate, so we had to borrow funds. For one to misappropriate and misuse the proceeds from whatever tax revenues and non-tax revenues that we have, and borrowed funds are indeed unconscionable. The people will, and have lost trust in the capability of the government to mitigate the pandemic against this alleged misuse of public funds.

In order for the new government to reverse the public sentiment against the alleged misappropriation of public funds in high places, the new government should be able to articulate a clear commitment to good governance. It needs to be transparent, it needs to be accountable to such a commitment, and the new government should be able to provide a clear roadmap on how to do it so that the civil society will have a basis for assessing its commitment to good governance.

Marvin Joseph Ang is a news and creative writer who follows developments in politics, democracy, and popular culture. He advocates for a free press and national democracy. The views expressed are his own.

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