WHEN we speak of transitions, it is not only the BARMM that is transitioning until 2025, it is actually the whole country.
The transition of the Philippines from a recipient of aid to an upper middle-income country in 2025 would indeed have significant policy implications and practical impacts on the state management of financial resources and the capital market.
Our country is presently classified as a lower middle-income country (LMIC), with a per capita gross national income (GNI) of US$3,622, it is very close to reaching the threshold of US$4,046 required to be categorized as an upper-middle income country (UMIC), falling short by only US$400. In 2022, the country experienced a remarkable economic growth of 7.6%, the highest in four decades, which positions it on a trajectory to achieve UMIC status by 2025.
In anticipation of the forthcoming phase of economic advancement, President Ferdinand "Bongbong" Marcos, Jr., certified House Bill No. 6608 creating the Maharlika Investment Fund . He certified the bill as urgent at the House of Representatives and got 279 votes in favor, six against, with no abstentions. However, the Senate is still finalizing its version of the Senate Bill 2020 which has the same objective of HB No. 6608.
If all goes well as planned by the President come 2025, this may mean that we will no longer qualify for aid, the government will need to rely more heavily on domestic financial resources to fund its economic and infrastructural goals. This implies a greater emphasis on mobilizing internal revenue through taxation, domestic borrowing, and attracting private investments. However, the government will have to formulate effective fiscal policies to ensure sustainable revenue generation and efficient allocation of funds.
Moreover, given the limited availability of government funds, there will be a growing need for the government to engage in strategic partnerships with the private sector through Private Public Partnerships (PPPs). Collaborating with private entities can help leverage their expertise, resources, and efficiency in delivering infrastructure projects. But the government will need to establish transparent and effective frameworks for PPPs, ensuring that public interests are protected while attracting private investments.
The transition away from aid dependency will require a redefinition of the government's role in the economy. The emphasis may shift from direct service provision to creating an enabling environment for economic growth. This could involve regulatory reforms, enhancing governance structures, and providing targeted support to sectors that require assistance in transitioning to a market-driven economy.
Lastly, the reduction in aid may initially pose challenges in achieving socio economic goals. Thus, the government will need to ensure that the transition does not disproportionately impact vulnerable populations. It will be essential to implement social safety nets, invest in human capital development, and promote inclusive growth strategies to mitigate potential disparities and promote equitable access to opportunities.
Adapting to this new reality will require careful planning, effective governance, and a proactive approach to ensure sustainable and inclusive development. Is the Bangsamoro also ready to face reality in 2025?