Political Governance,
Economic Policy Reforms, andAid Effectiveness: The Case ofthe Philippines/Lessons fromthe Ramos Administration
By Dante B. Canlas
Professor
School of Economics
University of the PhilippinesOutline• Introduction• Political Governance• Economic Policy Reforms• Aid Effectiveness• Outcomes of the Reform Process• NEDA’s Role1

Introduction• Tools for creating opportunities andexpanding human choices under Ramosadministration– Political governance– Economic policy reforms– Aid effectiveness

Political Governance: Challengesand Responses• Challenges faced by the Ramos administration– Political instability– Internal and external insecurity– Judicial activism in economic policymaking• Responses– Coalition building in Congress– Amnesty and peace talks with rebels– Judicial appointments and reforms– Legislative-Executive Development Advisory Council– Multisectoral People’s Summit

2Economic Policy Reforms• Setting the stage: overcoming a power
shortage• Macroeconomic stabilization• Long-run industrial restructuring• Social reform agenda

Overcoming a Power Shortage• Electric Power Crisis Act: 5 new powerplants• Amended BOT Law: 15 BOT power plants• Outcomes– 770 MW of new capacity in Luzon– Brownouts gone by December ‘933

Macroeconomic Stabilization• Responsible deficit reduction– Spending cuts
– Tax enhancers• Excise tax on cigarettes• Comprehensive Tax Reform Act of 1997
• Privatization• Outcomes– Increased tax effort– Consolidated public sector surplus in 1996

Macroeconomic Stabilization• Monetary and exchange-rate policies– Independent central bank
– Inflation targeting– Flexible exchange-rate system• Outcomes– Low inflation rate
– Sustained real GDP growth4

Long-term Industrial Restructuring• Industrial policy• Deregulation and privatization• Import liberalization and tariff reduction• WTO accession• Financial-market liberalization

Industrial Policy• Raise agricultural productivity– Expand access to modern seeds– Increase investments in rural infrastructure• Raise investments in industry and services– Enact Land Lease Law– Ratify MIGA ratified– Trim Negative Lists in Foreign Investments
Act5

Deregulation and Privatization• Mandate interconnection among telecom
companies• Oil Industry deregulation• Privatize Petron, PNB, MWSS, etc.
• File bill on retail-trade liberalization

Import Liberalization and Tariff
Reduction: Getting Global• Executive Order 470 on tariff reduction• Removal of quantitative restrictions onimports• Accession to the WTO, AFTA-CEPT, andAPEC

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Financial-Market Liberalization• Liberalize bank branching• Allow entry of 10 new foreign banks• Allow entry of 10 new insurancecompanies• Merging of two bourses (Makati andManila)

Social Reform Agenda• Embodies anti-poverty and equitable
growth program• Affirmative action for disadvantagedgroups• Social Reform Council: precursor toNational Anti-Poverty Commission (NAPC)

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Aid Effectiveness• Set up Presidential Task Force on Rightof-Way Acquisition• Protect budget cover of ODA-fundedprojects• Set up Flagship Committee• Start Credible ODA Review Process• Raise utilization rate and absorptivecapacity

Outcomes of the Reform Process• Reliance on markets and price signals• Sustained real GDP growth• Single-digit inflation rate
• Resiliency amid 1997 Asian financial crisis

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NEDA’s Role
• Complete staff work through NEDA BoardCommittees– Investment Coordination Committee (ICC)– Development Budget Coordination Committee(DBCC)– Infrastructure Committee (Infracom)– Social Development Committee (SDC)

NEDA’s Role
• Project monitoring• ODA programming and monitoring• Secretariat to LEDAC

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