Marcos Jr. urged to recognize inflation, present structural economic solutions

Graphics by Aaron Macaraeg

“It’s not just because of the Duterte administration, it’s because of decades of accumulating policies which started during the Marcos dictatorship.”


MANILA – As the first State of the Nation Address (SONA) of President Marcos nears, local think tank IBON, in its Midyear Birdtalk, brought to light soaring unemployment and inflation rates in the country, underscoring the country’s worsening conditions and the urgent need for radical economic measures.

IBON Foundation Executive Director Sonny Africa reminded, “In his inaugural speech, President Bongbong Marcos promised a comprehensive all-inclusive plan for economic transformation. I think it’s important to listen to the SONA closely, to the extent of orientation, the direction of the admin, its targets, and any specific policy measures – legislative priorities should be seen in the SONA.”

In a statement, the group said that the new government should recognize the grave economic situation and pose a correspondingly comprehensive program to address this.

“If we give Marcos the benefit of the doubt, [his economic plan must mean] comprehensive, not just lengthy, but addresses the root problems of the economy and the wide range of economic problems,” Africa suggested.

“Inclusive, meaning it will not only be a few benefitting from the economic policies, but the majority especially those marginalized. Transformative, presumably, he is referring to a more equitable, sustainable, dynamic economy,” he added.

Urgent and structural economic solutions

IBON iterated that if Marcos Jr. is yet to unveil a clear plan despite the urgency of the economic crisis, he should present urgent and structural solutions.

“Immediate measures should be about providing prompt relief for the majority,” said IBON, adding, “This can be in the form of cash assistance to households, substantial wage hike and subsidies, removing oil taxes, ensuring affordable and available transport, and supporting agricultural producers and micro, small, and medium enterprises.”

Additionally, strategic measures must be done to address weak agriculture and shallow industry underpinning Philippine socio-economic woes.

IBON stressed the need to institutionalize social protection while expanding public social services such as health, education and housing systems.

“Bold measures that will truly develop agriculture and industry need to be identified, and the new administration can start with junking existing harmful policies such as the Rice Tariffication Law, expanded foreign investment liberalization such as in public utilities, and lopsided trade deals only favoring rich countries,” IBON noted.

Africa highlighted the need for an expansionary fiscal policy. He said that the proposed national budget for 2023 saw the smallest increase in 21 years with a 4.9 percent increase compared to a 10.5 average from 2003 to 2022.

“At a time where the rebound effect is fading – assuming growth from a collapsed economy in 2020 – it’s the moment where the government needs to spend and stimulate the economy,” he said.

Meanwhile, national government expenditure for 2023 is projected by the government to increase by 2.6 percent, the smallest spending increase in 12 years, with a 10.4 percent average from 2011 to 2022.

“We think it’s counter-productive. If the government really wants to recover, the most effective way is to spend. That is the absolute rule in economic policy making. Among all the policy tools of the government, fiscal policy has the most immediate, widespread effect,” Africa added.

Does the government have the money?

The Marcos Jr. administration was also urged to realign budget for non-urgent infrastructure, debt service and military, and to impose a billionaire tax and focus on fixing spending priorities.

“The government says it has no money, not because there is no money or no possibility of generating revenue in the economy. The government has no money because it designed a tax system, a revenue-generating system that narrowly targets consumers and consumption spending,” explained Africa.

Since 2008, the contribution of indirect consumption taxes (excise tax and VAT) to the country’s gross domestic product (GDP) has been continuously increasing. From 2.5 percent in 2008, it ballooned to 2.8 percent in 2020. Meanwhile, corporate tax contributions to the GDP have depleted from 3.5 percent in 2008 to 2.8 percent in 2020.

“What revenue can you generate from a poor country? How much can you squeeze out from a country whose majority population is poor or is earning just enough for their day to day expenses? There will always be limits if you are going to rely on the poor through their consumption for your tax revenues,” Africa added in Filipino.

By IBON’s last estimate in 2020, there is at least 2,919 billionaires in the country with a total of P8 trillion in net worth. If the government imposed a 1%-2%-3% wealth tax on wealth over P1B-P2B-P3B respectively, it can generate at least P470 billion in revenues.

“It’s not true there’s no money, there is money. It is accumulated precisely in the hands of a few because of all their tax benefits and because the economy is geared towards making them rich at the expense of the majority,” Africa explained.

Decades-old economic problems

IBON also cited data which revealed that the Philippines is among the poorest performing economies in the Southeast Asian region. Its gross domestic product (GDP) had the biggest contraction of 9.6 percent in 2020, while the average annual GDP growth of 3.8 percent from 2016 to 2021 ranked the country as the fifth worst economic performer in the region before and during the pandemic.

“It’s not just because of the Duterte administration, it’s because of decades of accumulating policies which started during the Marcos dictatorship,” added Africa.

The shares of agriculture and manufacturing in the economy at 9.6 percent and 19.2 percent in 2021, respectively, are their smallest in history – in the case of manufacturing, in 70 years.

“The job crisis and inflation have worsened due to the lack in production sectors that can provide steady employment and incomes and deliver the requirements of people’s welfare and national development,” said IBON.

There is an absence of any plan for domestic production and simply opening up the economy to foreign investments and products. Agriculture is unprotected from imports liberalization, while manufacturing is foreign-investments-dominated.

“If we talk about poverty, it’s not because 4Ps is lacking or that Filipinos are lazy, our economy over the past four years has been eroded by neoliberal, pro-market, business-friendly policies,” Africa explained.

IBON said that if the economic transformation plan to be presented by the newly-installed president during the SONA remains stuck in the same neoliberal mindset, “the Filipino people will continue to suffer and bear the burden. This, while big business and foreign investors keep reaping the benefits at the expense of genuine national progress.” (RTS, RVO) (

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