Changes in critical economic agencies
Of late, in the Duterte administration, major changes in leadership had taken place in nationally critical economic agencies.
The nation’s national planning authority witnessed the resignation of former secretary Ernesto Pernia. Almost one year before, the nation’s then budget secretary Benjamin Diokno was appointed to the post of governor of the Bangko Sentral.
Leadership changes: a clue to government consistency. Whenever the national leadership changes, especially after an election cycle, one of the important indicators of policy transition is the appointment of the Cabinet and of leaders in important agencies.
On such occasions, the key appointments provide the clearest messaging of what could be expected about future developments in the policies facing the nation. President Duterte promised change when he got elected. Would he make radical changes to the nation’s economic directions, which, during the time when he succeeded into the presidency through election, were already stabilizing and producing beneficial results?
The President named to the core departments and agencies that handled macroeconomic and fiscal management Messrs. Sonny Dominguez, Ernesto Pernia and Benjamin Diokno (respectively at finance, NEDA, and budget). They would work along with the monetary policy undertaken by the central bank governor (Amando Tetangco). (The central bank governor is appointed for a fixed, renewable term in accordance with its independent charter).
To advance the nation’s economic development objectives, the sector agencies were able to articulate and support the emphasis toward investments in infrastructure and realigning economic policies to support growth and development.
Throughout the first half of the Duterte presidency, there was relative calm in the nature of economic policies. By taking their advice, the economic managers provided the directions for growth. The nation’s development pursuits were kept essentially intact.
There was a sense of rapidity in moving forward without muddying the waters or making them more turbulent.
Inevitability of leadership changes. Leadership changes inevitably happen in all institutions by virtue of: (1) Retirement. (2) Resignation. (3) Incapacity or death. And (4) Firing by higher authority.
In the private sector, when leadership changes occur, even among the most important companies, the general public seldom takes notice. But those in the government raise immediate wide-eyed concern.
The public needs to understand the true reasons for the change in leadership (except when it is palpably clear, such as death or incapacity.
Pernia’s resignation. The resignation of Pernia from NEDA’s top post was a surprise. It happened just when the COVID-19 lockouts had been imposed by the government, with the unexpected but dire consequences on the forced reduction of economic activity.
There was initially some suspicion that policy differences in the debate on the immediate measures being taken were the cause.
Pernia, however, explained his reasons for his resignation were essentially before the pandemic had intervened in the nation’s economic future. Though he favored the use of development-loan-supported infrastructure projects, he was also for faster approval of public-private participation projects (PPPs) to push a broader array of projects. He also was unhappy about the ever-awaited enactment of the reorganization reform to further strengthen NEDA.
Karl Kendrick Chua at NEDA. Duterte’s acceptance of Pernia’s resignation was perhaps instigated by the presence of an able young understudy in the person of Karl Kendrick Chua.
Chua received his Ph.D. in Economics from the UP School of Economics, the country’s foremost school in the field. His mentors in that school included Pernia, whose career as economics professor began there after graduating from the University of California, Berkeley.
Promoted to join the World Bank in the Washington office, Karl’s journey was interrupted when Finance Secretary Sonny Dominguez offered him a post as undersecretary in his department to deal with fiscal reform issues. Karl Chua understood where more important challenges awaited him.
Though still relatively young at 41 years, Karl Chua helped to get the passage of TRAIN I by Congress. At the moment, his skills will be needed in assisting in the passage of the CITIRA, the second package of fiscal reforms, which are designed to integrate and make more effective the country’s private and foreign investment incentives while lowering the corporate income tax, in line with the competitive situation among emerging economies in the ASEAN region.
But the work at NEDA is much more complex. It is Karl Chua’s great moment of challenge: to be present at the helm when a lot is at stake in the country. Benjamin Diokno: from fiscal to monetary man
ager. The moment of change for Benjamin Diokno, also formerly from the UP School of Economics faculty, like Pernia, came unexpectedly. An extraordinary vacancy at the Bangko Sentral provided an opening.
The sudden death from cancer of Nestor Espenilla, who briefly was governor of the central bank after succeeding multi-term Amado Tetangco, created the opening for Diokno. President Duterte, who liked the performance of his able budget secretary, but who was receiving undeserved political brickbats from some disgruntled congressmen, put Diokno into a safer, but challenging position.
Diokno had trained specially for fiscal economic issues. However, a well-trained economist who had already worked within the narrow gray-gap/overlap between fiscal and monetary policy could hopefully morph into a central banker.
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