Looming meltdown

By Artchil B. Fernandez

A powerful storm is threatening the country and its name is economic meltdown.

The past weeks have seen series of developments on the economic front that do not bode well for the county. If not handled properly these events can converge and become a full economic storm.

The value of the peso against the US dollar reached record lows in four consecutive days this week. The week started with a dollar valued at 56.66 pesos, plunging further to 56.77, 57.0, 57.135, and as of this writing at 57.18. This may not be the end of the plummeting of the peso’s value. The devaluation of the country’s currency in successive days is a cause of alarm.

Erosion of the value of the peso against the US dollar has huge economic impact and will worsen the economic hardship of Filipinos. The country’s imports are paid in US dollars and the devaluation means more pesos will be raised to pay for imported goods particularly oil. This implies higher prices of goods and services. Filipinos are already groaning from the current skyrocketing of prices. Can they still bear further price increases in the coming weeks?

Inflation has not eased with an insignificant drop from 6.4 percent in July to 6.3 percent in August nationally. The picture is different in regions with inflation reaching 7.4 percent in Western Visayas last month.

The bad news is, the Bangko Sentral ng Pilipinas (BSP) projected that inflation will remain high for the rest of the year. “The BSP’s baseline projections continue to indicate above-target inflation in 2022, with inflation decelerating back to the target in 2023 and 2024 following the recent BSP policy rate hikes,” the agency said in a statement. There is no end in sight for the current increase in prices of goods and services.

Aside from inflation, Filipinos have to contend with the shortages of basic commodities. There is shortage of sugar prompting the brouhaha in the Sugar Regulatory Administration (SRA). Onions are also short in supply. This week, the Department of Agriculture (DA) admitted supply of garlic is also dwindling in the market.

More shocking is the looming shortage of salt, the Department of Trade and Industry (DTI) projects. DTI-Consumer Protection Group (CPG) Undersecretary Ruth B. Castelo said there is potential shortage of salt if there is no support to the industry.  It is appalling that the Philippines which is an archipelago imports 90 percent of its salt requirements.

The Philippine Statistics Authority (PSA) reported this week that the country’s stocks of rice and corn at the beginning of July decreased. “Total rice inventory as of July 1 was at 2.03 million metric tons (MT), down by 6.6 percent from 2.2 million MT recorded in the same period a year ago,” PSA stated. “Total corn inventory for the period was pegged at 746,920 MT, a decline of 19.2 percent from last year’s 924,250 MT,” PSA also revealed.

Further compounding the economic woes of the country is the ballooning national debt.  After a month in office BBM added Php 96 billion to the country’s debt. The new borrowing increased the national debt by 0.8 percent, from Php 12.79 to 12.9 trillion. The country’s debt to GDP ratio is 62.1 percent, higher than the internationally accepted threshold of 60 percent. Continues devaluation of Philippine peso will further push the national debt to a new record high.

Fare increase in public transportation is also impending. The Land Transportation Franchising and Regulatory Board (LTFRB) said it is inclined to grant a new round of jeepney fare increase which will bring the minimum fare to 15 or 16 pesos from the current 11 pesos. With inflation hitting the prices of most basic commodities, the proposed increased is a “bitter pill” for commuters the National Center for Commuter Safety and Protection declared.

This is the Philippines today under the leadership of BBM. He won the election with a promise that the country will be a paradise, that he will usher a “Golden Age.” High inflation, shortages of basic commodities, increasing huge debt, declining value of the peso, and fare hikes – are these signs of the dawning “Golden Age?”

Troll farms are in overdrive to twist reality polluting the digital world with claims that BBM is not responsible for the mess. True, poverty and the economic crisis were around since the time of Marcos senior. Nobody is accusing BBM of creating the already existing problems. But he is being challenged, what is he doing or is going to do with these problems?  In short BBM is being made accountable for what he promised.

BBM packaged himself as the new messiah who will solve the economic hardship of Filipinos. This is concretely illustrated by his vow of 20 pesos per kilo rice.

His supporters voted him believing BBM will bring down the prices of goods and services. They believed that all it takes is the signature of BBM to lower the prices of goods and services. Instead of low prices, what they got are high prices of goods and services. How they will resolve the dissonance is interesting to see. There are no more “dilawans” as scapegoats BBM is now in power.  Why is their idol not using his power to deal with the current economic woes and prevent the looming meltdown?

So far nothing is heard from BBM how he will confront the economic crisis head-on. No strategic plan or blueprint is unveiled to deal with the present economic difficulties. It’s business-as-usual for him – going to parties and travelling abroad. Meanwhile, the nation burns with the threat of an economic meltdown. Good luck everyone!