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In the same speech, Aquino referred to the Philippines as the "basket case of Southeast Asia," an unflattering but all-too-accurate reference to the economic wasteland she has inherited. The Philippines' foreign debt exceeds $27 billion. The annual interest payment alone--about $1.7 billion--amounts to a third of export earnings. In 1985 the growth rate plunged to negative 3.5%, while per capita income declined to about $600 a year, no higher in real terms than it was in 1972. Almost half of the nation's 21 million workers are unemployed at least part of the year. One of the priorities of the new government will be to provide more jobs.
Marcos deserves much of the blame for the economic malaise. He vastly overspent the treasury, pumping public funds into 300 government-owned corporations, as well as flashy projects like luxury hotels and a nuclear- power plant. He lavished special attention on firms owned by friends and relatives, a practice known in the Philippines as crony capitalism. When the companies failed, the government rushed in with bailouts it could not afford. By 1983 the Philippines was so strapped it was forced to declare a moratorium on foreign-debt repayments. After a flurry of negotiations, the International Monetary Fund came to the rescue with standby credits, conditional on Marcos' adherence to an austerity plan that included severe budget cuts.
To this bleak scenario, Aquino brings the promise of honesty and the hope of political stability. "One very positive feature of her presidency," says Singapore Foreign Minister Suppiah Dhanabalan, "is that confidence, an important ingredient of economic growth, will be re-established." That was readily apparent last week, when some issues traded on the Manila Stock Exchange climbed by as much as 40%. On the American Stock Exchange in New York City, the price of shares in the Philippine Long Distance Telephone Co., the country's equivalent of AT&T, more than tripled in one day.
Aquino's economic program is strongly oriented toward the free market. She has pledged to dismantle the sugar and coconut monopolies operated by Marcos cronies, reduce regressive fuel and electricity taxes, and do away with seed and fertilizer levies that hamper agricultural diversification. She has said she will try to negotiate better repayment terms for the foreign debt in the hope that export earnings will be freed to stimulate growth. Not surprisingly, businessmen were among her most ardent backers, and Aquino's economic policies are certain to retain a pro-private enterprise tilt.
In naming Harvard-educated Ongpin her Finance Minister, the President made an especially wise choice. Ongpin promises to be a strong voice in the Cabinet. Even in his first days in office, he raised hackles among some UNIDO members by insisting that Jose Fernandez, 66, remain as president of the Philippine Central Bank. Ongpin's desire to keep Fernandez, a capable and widely respected financial expert, was eminently practical: he was a major architect of the IMF bailout scheme that saved the Philippines three years ago and will be a key player in ongoing consultations on the foreign debt.