If the country can reduce poverty by 1.5 percent annually, it can achieve its target poverty incidence of 9 percent only by 2028, or at the end of Marcos Jr.’s presidency. Achieving 1.5 percent yearly reduction in poverty is ‘easily doable,” says Socioeconomic Planning Secretary Arsenio Balisacan.
“If we aim to reduce poverty incidence by nine percentage points in 2028 or over six years, we must observe at least a 1.5 percentage point reduction each year,” Balisacan said at a recent forum of business journalists.
Using government’s three-pronged approach, he said, the 9 percent goal is achievable and this entails: bringing growth to a higher level; improving the quality of growth through job creation in the formal sector and enhancing social protection system to prevent those who lost their jobs to become poor. These strategies are easier said than done, and if we have full control of factors like inflation here and abroad; rising interest rates and growing protectionism, and global political stability, which obviously we have no control over.
He said the country saw an impressive reduction in poverty incidence to 16.7 percent in 2018 from 23.5 percent in 2015 because of strong growth and low inflation.
“Inflation is so critical,” he said, adding inflation remains a challenge to reduce poverty, especially as food constitutes a more significant proportion of the expenditures of poorer households. Food and beverage alone account for nearly 60 percent of total household expenses of the poorest 10 percent of the population. “Rapid increases in food prices can very well dampen the effect of economic growth on poverty reduction,” Balisacan said.
Last month, the country’s inflation rate hit 6.4 percent, the highest in nearly four years amid faster increases in prices of food items and transport.
For the January to July period, the country’s inflation rate averaged 4.7 percent, higher than the 2 to 4 percent target range of the Bangko Sentral ng Pilipinas for the year.
If the inflation rate was at seven percent or eight percent, Balisacan said it would be right to question the possibility of achieving the target.
Addressing food inflation must not use price controls which is counterproductive. But to use, no matter how small, the resources to target the very vulnerable, particularly the poor groups through 4Ps or cash transfers, which are ongoing programs.
But Ateneo Prof. Leonardo Lanzona Jr. opined that crucial to getting more people out of poverty is to address the needs of those affected by the pandemic through job creation and providing for their necessities, not just through ayuda but programs to restore their employment. A targeted program to bring back their livelihood before the pandemic, he said.
Productive employment programs should be promoted in the poorest regions since these are the areas with the greatest potential for growth. We must develop growth areas and put investments in these poorer and more dispersed regions will have greater return, Lanzona said.