23M Filipinos still ‘poor’; gov’t claims substantial gains

Midway through the Duterte administration, poverty incidence is on a decline, household incomes are rising, and unemployment continues to ease, according to the Philippine Statistics Authority (PSA).

One in every five Filipinos, however, still live below the poverty threshold—or the amount “needed to meet both basic food and nonfood needs of a family of five in a month.”

According to the PSA, which releases poverty statistics every three years, the incidence rate fell by 6.6 percentage points to 21 percent in the first half of 2018, thanks to robust, sustained economic expansion and rising incomes. It means 23.1 million are still considered poor but fewer than the 28.8 million three years ago.

A family of five must have P10,481 per month to meet their needs, it said. The monthly poverty threshold during the first half of 2015 was lower at P9,453.

The National Economic and Development Authority (Neda) attributed the “substantial” decline in poverty during the past three years to “sustained economic growth and critical and broad-based reforms and investments that have translated to employment generation and social protection.”

It also helped that employment had shifted to other sectors aside from agriculture, Neda Undersecretary Adoracion Navarro said in an interview in April.

“Importantly, growth in per capita income of the bottom 30 percent of households picked up significantly to 29.2 percent in the 2015-2018 period from only 20.6 percent in the 2012-2015 period. This implies an increase in real incomes of the poor, which has helped in reducing poverty among Filipinos,” Navarro said.

Subsidies, pension hike

Government subsidies to poor families also contributed to households’ higher incomes. The P1,000 increase in pension from the Social Security System, which was released in March 2017, also helped.

In April, President Duterte signed into law Republic Act No. 11310, which institutionalized the Pantawid Pamilyang Pilipino Program (4Ps) while also providing more cash subsidies to beneficiaries.

Under the 2017-2022 Philippine Development Plan (PDP)—the administration’s medium-term socioeconomic blueprint—the government wants to cut the poverty incidence rate to 14 percent by 2022. It is currently reviewing the targets and adjusting them to reflect 2012 prices.

Still, the elevated inflation episode last year likely slowed the government’s poverty-reduction efforts amid a higher take-home pay credited to lower personal income tax rates under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

To recall, headline inflation averaged a decade high of 5.2 percent last year due to domestic food supply bottlenecks, especially of rice, skyrocketing global oil prices, and higher excises slapped on consumption under the TRAIN law that took effect in 2018.

Inflation was mainly to blame—tagged a “spoiler” by the country’s chief economist, Socioeconomic Planning Secretary and Neda chief Ernesto Pernia—for the three-year low annual gross domestic product (GDP) growth of 6.2 percent posted last year.

The government quickly moved to bring down food prices by easing food importation through administrative orders issued by Mr. Duterte.

Inflation at 22-yr low

In February, the President also signed RA 11203 or the rice tariffication law, which liberalized rice importation.

Finally, after several months of neck craning, rice prices began to help temper inflation, which fell to a 22-year low of 2.7 percent year-on-year in June.

And yet another problem arose: As lawmakers squabbled over pork, the P3.7-trillion 2019 national budget took a hit.

The government operated using reenacted 2018 appropriations during the first four months and underspent P1 billion a day on public goods and services. The national budget was signed only in April.

As a result, quarterly GDP growth declined to a four-year low of 5.6 percent in the first quarter, below the government’s downgraded 6-7 percent full-year target range.

The economic team has already rolled out a “bold” spending catch-up plan, under which major infrastructure agencies, such as the Department of Public Works and Highways and the Department of Transportation, would have to speed up this year implementation of projects worth P803 billion.

The catch-up program is expected to jack up economic growth to above 6 percent for the entire 2019.