Arsenio Balisacan: The fate of PH economy is in his hands 2
The incoming NEDA chief says the agency will have to focus on “poverty, socio economic inequality, and economic resilience.” Photo from Arsenio Balisacan
Culture

The fate of PH economy is in his hands—meet incoming NEDA chief Arsenio Balisacan

In this exclusive, the ex and future NEDA Secretary talks about growing up poor in Ilocos, the PNoy years, and the importance of urgency in dealing with our economic woes
RHIA GRANA | May 27 2022

With an over P12.68 trillion debt, a high unemployment rate, and higher inflation on the horizon, leading the NEDA, or the National Economic and Development Authority, is likely the most challenging job one could take on in the incoming administration. 

Good thing Arsenio Balisacan is not one to back down from a challenge. The former NEDA chief—he served under the PNoy administration—was offered by president-elect Ferdinand Marcos Jr. to return to his old post and he accepted. In a statement released by the Philippine Competition Commission (PCC) of which he’s the first and current chairperson, Balisacan said he accepted Marcos’ offer “mindful of the immense work needed to accelerate economic recovery and post-recovery development.”

Arsenio Balisacan
Balisacan currently serves as Chairman of the Philippine Competition Commission.

Urgent task

In an exclusive interview with ANCX, the seasoned economist says the country needs to recover from the “scars of the pandemic” so it could move on quickly to post-pandemic development. NEDA will have to focus on “poverty, socio economic inequality, and economic resilience.” The task at hand includes generating “high-quality jobs” and improving the country’s capacity to bounce back from the impacts of disasters and another health pandemic that may arise in the future.

There’s a lot of pressure, no doubt, but they’re coming, says Balisacan, from the urgency of the task. “As I always tell my colleagues, we have been left by more prosperous neighbors a long time ago. We’re still a poor country when we should already be a prosperous country by now.”

The former Dean of the UP School of Economics has been closely monitoring the ups and downs in the local economy. Over the last 10 years, prior to the pandemic, he says we were doing quite well. “We were hoping that we could sustain that momentum in the next 20 or 30 years and achieve our long-term vision of a more prosperous, more inclusive society,” he says. But the pandemic came and posed a great distraction from the goal. 

“There’s so much urgency. We cannot afford to buy time,” Balisacan says, shaking his head. Apart from an alarming National Government debt which he says has risen to 63.5% of the gross domestic product (GDP), there is also great uncertainty in the world economy due to the crisis in Ukraine. 

Arsenio Balisacan
“There’s so much urgency. We cannot afford to buy time,” Balisacan says, referring to the socio econmic problems that NEDA need to address. 

The solutions

But it’s not like we don’t know what to do, says the country’s incoming chief economic planner. “We know. We know what’s ailing the economy. We know what’s ailing our society. We just need to get our acts together, implement what we know. Urgent actions are needed to get the economy moving faster than it has been. The pandemic left deep social and economic scars. These should not go deeper. Otherwise, we sacrifice the long-term potential of our economy.”

To achieve these socio-economic goals, it’s crucial to work together as a team, he says—to row the proverbial boat in the same direction in order to move forward. “This is very important in policy. The policy of one sector should not be undermined by the policy of another sector. For example, the objective is to make the prices of food and other necessities accessible, particularly to the poor. But if the Department of Agriculture is not bringing in the supply that is needed to prevent the prices of food from rising, that undermines the objective of poverty reduction. You have to make all the sectors of the economy work together for a common goal,” Balisacan explains.

The challenges are great but they are not insurmountable. “Other countries have far more serious problems,” the economist says, reassuringly. “The more important issue here is how quickly we could move to the high-growth trajectory.” This would partly be dependent on the current global situation.

 

NEDA’s role explained 

“In consultation with stakeholders, we design the overall directions of the economy,” says Balisacan when asked to explain NEDA’s role in government. It is not seen in the frontlines implementing projects, providing services or monitoring the prices of goods—simply because these are not part of its job. The role is far more encompassing than that—it assists the president in running the country, especially the economy.

NEDA is divided into two parts: there’s the agency and then there’s the NEDA Board which is composed of several committees. The Board’s members are the cabinet secretaries headed by the President of the Philippines as chairman, with the NEDA secretary as vice-chairman.

NEDA’s primary function, says Balisacan, is setting the country’s economic development agenda. The socio-economic development policies of the government are approved at the NEDA Board level. So the medium-term development program of government is approved by the president thru the NEDA process.

Another NEDA function is monitoring and coordinating the country’s socio-economic programs, assessing which ones are working and which ones are not. It’s also the agency’s job to make a periodic report on the state of the economy and the various sectors of society so problems could be addressed by the concerned government agencies.

Arsenio Balisacan
“We’d like to believe that we set a very high standard in terms of the macroeconomy. The economy grew at an average of 6.3% per year for the duration of the Aquino administration,” says the past and future NEDA chief.

Working with PNoy

Balisacan looks back with pride at the country’s economic performance during President Noynoy Aquino’s time. “We’d like to believe that we set a very high standard in terms of the macroeconomy. The economy grew at an average of 6.3% per year for the duration of the Aquino administration,” says the past and future NEDA chief. “I was looking at the numbers then, it was the highest six-year average in the last 40 years. We never had that kind of sustained growth. The economy was performing very well.” 

Balisacan likewise mentions the growth of the manufacturing sector during PNoy’s term. This sector’s success proved to be a key driver of poverty reduction in developing economies. “Our manufacturing, for decades, before 2010 was very sluggish. It was losing its luster. In fact, many local manufacturers moved to other countries, so the capacity of the manufacturing sector to provide employment shrunk rather than increased,” he recalls. “But between 2010 to 2016, I observed that the rate of growth of investment in industry and manufacturing was much better than in the previous periods. So that was very encouraging.”

Balisacan says the state of the macroeconomy during the PNoy years was very stable and the country was able to sustain its rapid economic growth. “We were able to contain inflation. We’re able to reduce our debt to just about 39% fo the GDP by the time we left [our tenure]. The government deficit was also substantially reduced. In other words, the situation when the Duterte administration came in was very favorable, compared to the situation that this next administration would be facing.”

What was it like working under PNoy? 

One thing’s for sure: a member of the NEDA Board would not dare go in a meeting with the president unprepared. Aquino was the type to ask a lot of questions. “It was for a good reason: he wanted to make sure that the projects that we approve would achieve the objectives that were set, that the benefits justified the cost of the project,” says Balisacan. “He wanted to make sure that there was proper vetting of the project, that all the issues were covered, and that put the different agencies, particularly the secretaries, always on alert.”

There would be tension in the air if a project or proposal presented by a cabinet secretary turned out to be half-baked or not well thought out. “You would see the disappointment [in PNoy’s face] and the kind of questions asked,” Balisacan recalls.

NEDA being an evidence-based policy-making body had to ensure there was enough proof to substantiate a proposal. This was especially true for big-ticket projects or policies of national significance. “If NEDA has done its work very well, the president and the NEDA Board would have an easier time approving projects,” he says.

Arsenio Balisacan
Balisacan graduated with a BS Agriculture degree at Mariano Marcos State University in Ilocos Norte.

Humble beginnings

Looking at Balisacan’s rich credentials, one would think the man has always primed himself to be an economist. The Solsona, Ilocos Norte native comes from a family of tenant farmers. This orientation led him to a Bachelor of Science degree in Agriculture.

“One of my early jobs was going around the country, surveying the condition of farming and farmers, why they do or do not adopt certain technologies,” he recalls. Moving around the Philippines, particularly in Luzon, exposed  Balisacan to the plight of farmers. “I was asking farmers why they are poor, why their income is so low. It was obvious that my agricultural training was not enough to answer my questions,” he says, looking back.

This led the guy to take up graduate courses in economics. “That’s when I became interested in poverty, equality, why are some nations poor and others are rich.” But he never took his eyes away from agricultural problems. He focused his research work on the challenges of rural population and transformation. He wanted to know the answers to the big-ticket questions: Why does poverty persist? Why is there so much inequality?

Arsenio Balisacan
He earned his PhD in Economics at the University of Hawaii.

Balisacan rose from very humble beginnings. His parents were unable to finish high school. His father worked as a farm tenant in a remote town in Ilocos Norte. Thinking their family would have brighter prospects in Laoag City, the Balisacans moved there, where the future economist’s father eventually worked as a janitor.

Balisacan’s parents knew and understood the value of education. They did all they could to send their young Arsenio and his siblings to school. Through the help of a relative, he was able to study at Divine Word College of Laoag, which was run then by the SVD missionaries. “I suppose that was also where I acquired an awareness of social issues—poverty, inequity,” he says.

The Balisacans would later find out they were squatting in a land not their own. They were evicted from their Laoag residence so it was back to the tiny remote village in Ilocos Norte. At that time, there was no irrigation development in their area so farmers could only plant during wet season. During the warmer months, some of the village farmers would go to Cagayan to harvest rice in order to augment their family’s income.

Arsenio Balisacan
Balisacan worked as an economist at the World Bank in Washington, D.C.

When Arsenio was in third and fourth year high school, he would join those migrant workers so he would have available resources for the upcoming school year. “That’s when I realized that farming is a very difficult [job]. That motivated me to study hard and get out of that kind of life,” he says.

A scholarship allowed Arsenio to finish a BS Agriculture degree at Mariano Marcos State University in Ilocos Norte. He later earned his Master’s in Agricultural Economics at UP Los Baños and his PhD in Economics at the University of Hawaii. Five out of the six Balisacan siblings finished their college degrees.

Now 64 years old, very well-accomplished, and with nothing more to prove, he’s been advised not to accept the NEDA post. The challenges he will be facing, after all, are no joke. He would be very busy at work and would see his family less. “I know. It took a while for me to accept it. Why do I want another headache?” he says, laughing.

Arsenio Balisacan
During his stint as a Research Fellow at the East West Center in Honolulu.

But the guy is an economist at heart—it’s what he’s committed his life to. “I don’t run away from challenges, especially if these are consistent to what I prepared for,” he tells us, referring to the time and effort he’d invested in mastering the field. “Since my advocacy has always been [helping the nation overcome] poverty and inequality, when I am asked to render service, I find it difficult to say no.” 

Balisacan knows there are many uncertainties ahead. But he also knows there’s so much at stake. He decided taking on the challenge was the most reasonable thing to do. “I wouldn’t want to have any regrets in life,” he says, “when I was asked to help and I did not.”

Photos courtesy of Mr. Arsenio Balisacan