Losing momentum

In last week’s Yellow Pad column (Sept. 4) entitled “Erosion of reforms,” we raised our concern over the attempts to subvert and derail past and future economic reforms. We appealed to the technocracy of the Marcos Jr. administration, given their credibility and expertise, to convince the President to be one with them in upholding the reforms.

We ended the piece by imploring: Kung hindi tayo kikilos, sino ang kikilos? Kung hindi ngayon, kailan pa? (If we do not move, who will? If not now, when?)

The answer to this became clear with the forced resignation (or the “expiration of tenure,” as official Malacañang documents later read) of one of the administration’s dedicated reformers, Department of Finance (DoF) Undersecretary Cielo Magno, on Sept. 6.

Si Usec. Cielo ang kumibo, si Usec. Cielo ang tumindig (It was Undersecretary Cielo who moved, it was Undersecretary Cielo who stood up). With or without the Marcos administration, she is now the face of reform.

Usec. Cielo, who was a Senior Trustee of Action for Economic Reforms (AER) and took a leave when she accepted Secretary Benjamin Diokno’s invitation to work with the Department of Finance (DoF), was forced to resign from her post, supposedly due to a disagreement over the administration’s policies.

The Executive Secretary justified her termination by accusing her of “not supporting the administration” and “being set on maligning [the administration]” from the get-go. This accusation is baseless, foul, and simply unfair.

Usec. Cielo is most competent and professional, and her removal from the DoF damages the very goals the Marcos administration itself set for the Philippine economy.

She took the lead in advancing the administration’s economic reform agenda. She forwarded policies that had the blessing of her principal, Secretary Diokno, and which were announced officially by the President himself. She met with stakeholders, attended legislative hearings, and provided sound technical expertise to move the reforms forward, during this most difficult period where reforms are being diluted left and right in the name of vested interests.

One of the most important campaigns she led was the reform of the military and uniformed personnel (MUP) pension regime, a politically difficult measure which Secretary Diokno said was needed to prevent a “fiscal collapse” and put an end to the hemorrhaging of the budget. When she resigned, military officers on social media praised her for listening to their concerns and clearly explaining the policy during the dozens of consultations she and the DoF held for uniformed officers all around the country. The bill successfully hurdled the House committee but still faces opposition from some quarters.

The mining fiscal regime reform was another measure Usec. Cielo advanced, not only to generate additional revenue but to get rid of uncertainty which deterred investments in the country. She injected rationality into the discussions as the former National Coordinator of Bantay Kita, who had long advocated transparency and accountability for the extractives sector. In 2022, she facilitated the Philippines’ re-entry into the globally prestigious Extractive Industries Transparency Initiative (EITI) and was the focal point person for the PH-EITI, boosting investor confidence.

She also defended important past reforms from dilution. She upheld the principles of the fiscal incentive rationalization system in the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and secured its implementation, adopting firm rules on the Value-Added Tax (VAT).

To raise new revenues, she supported health taxes, specifically on alcohol, sugar-sweetened beverages, and unhealthy food, to fund President Marcos’ food stamp program and other critical social programs.

Her efforts contributed to improving our economic performance and making the country more attractive to investments, thereby benefiting the country and the Marcos administration.

Policy disagreements should be welcomed. The strongest policies arise from a process that subjects proposals to intense scrutiny from those within government.

Further, Usec. Cielo’s questioning of the government’s price cap on rice did not disparage nor undermine. Economists have urged the government to seriously reconsider this policy because of its harsh effects on the poor and incongruity with basic economic principles.

President Marcos should welcome healthy criticism and difference of opinion in line with his promise of unity. His Cabinet is diverse, filled with people associated with different political colors. Usec. Cielo’s political leanings as an engaged private citizen prior to being appointed are thus immaterial and never got in the way of her ability to effectively work as a public servant.

She understands that reforms need to be done for the benefit of society. In an interview with the Inquirer, she said: “The agenda of the people, regardless of who is in Malacañang, remains the same. If the government bungles its job, it is the people who will suffer. We do our part to serve the people.”

Her forced departure means that the administration is jeopardizing the opportunity to put in place positive reforms. It signals the defeat of reform champions and the reforms.

The Marcos administration lost an opportunity to demonstrate to the world that the Philippines is serious in becoming the next economic miracle. The stalling, or even reversal, of reforms, punctuated by the loss of a reformer to forward and defend them, has stark consequences on our country’s investor certainty and enhanced creditworthiness. All bets are off, as the saying goes. The global community is already reacting to the backlash arising from Usec. Cielo’s forced resignation — Helen Clark, former prime minister of New Zealand from 1999-2008, wrote on X (formerly Twitter): “[Cielo Magno] has done [an] outstanding job as first a civil society member and then a Philippines government representative for implementing countries on [the] EITI Board. [I] am sure that Cielo’s dedication to transparency and accountability will continue post-government service.”

The desire of economic managers for the country to have a credit upgrade to an A rating is no longer on the horizon. Worse, the backsliding might even get us a credit downgrade.

This only compounds the ongoing challenges being faced by our economic team: rising inflation, a ballooning fiscal deficit, and lackluster growth. The pressure is on for Secretary Diokno to find a replacement as competent and dedicated as Usec. Cielo. Our capacity to hit our targets in Ambisyon 2040, the Medium-term Fiscal Framework, and the President’s eight-point agenda, all hang in the balance.

Filomeno S. Sta. Ana III coordinates Action for Economic Reforms and Pia Rodrigo is its strategic communications officer.