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ELECTIONS 2022: Monetary expert says good governance is key to rescue Philippine economy

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Former Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo calls the misappropriation of government funds amidst the pandemic “unsconsionable,” and says good governance is the way for the Philippine economy to bounce back from recession.

Video Transcript


DIWA C. GUINIGUNDO: Well, because of the pandemic, there was a severe lockdown in the economy. Mobility was restricted. Even business activities were also restricted.

You had weeks and even months when people could not go out during the height of the pandemic. Well, as a result, people lost their jobs. People lost their income.

For those with wealth, for those with some bank deposits or investments, perhaps the collateral damage may be minimal. But for those who are on a daily subsistence, meaning if you don't work, you don't get a wage and you don't eat, I think the impact was very severe. That's why at the beginning, I was saying one of the economic scars of the pandemic was the deterioration in economic conditions.

Poverty has worsened. And inequality has also deteriorated. I think this is something that will take time before they get healed.

When you are out of jobs, it's very difficult to get back. When you laid off workers, manufacturers, employers, producers will also have a difficult time restarting their operations. So there are downtimes in the production process. And those are what we call economic scars.

The other possible economic scar 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 some kind of a 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. I mean, moving forward.

The small businesses had a difficult time servicing their debts. Most of them borrowed funds for business start up, 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-- and it is good for them to have done that-- 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, people were not going out to eat, to go on tourist visits, et cetera, hotels and restaurants-- those relying on services and, therefore, relying on the physical presence of their laborers-- 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 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% in 2021. But that was a big recovery. But still, I was saying earlier that the uncertainty of those economic scars, of possible unwinding of policy support, and, thirdly, the uncertainty of COVID-19, we're not sure how it's going to fan out now and in the future.

This alleged corruption in the procurement of medical supplies during this pandemic is unconscionable. We were short of tax and non-tax revenues. We had the 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 is indeed unconscionable. The people will and have lost trust in the capability of the government to mitigate the pandemic in the-- I mean, against this alleged misuse of public funds.

In order for the new government to reverse that public sentiment against 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 that new government should be able also 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.

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