29 June 2016

H.E. BENIGNO S. AQUINO III
President of the Republic of the Philippines
1000 Jose P. Laurel St., San Miguel, Manila, Metro Manila

Dear Sir,

I write for the final time on this letterhead to congratulate Your Excellency on what has been a successful 6 years as President of the Republic of the Philippines.

I also write to express my deepest gratitude for the opportunity of a lifetime heading your economic team. It has been my life’s greatest honor serving in your cabinet as we ran the relay race of governance along Daang Matuwid.

In your inaugural address almost exactly 6 years ago, you hoped when you eventually leave office, “everyone can say that we have traveled far on the right path, and we are able to bequeath a better future to the next generation.”

Today, there is no doubt that hope has come alive and is being realized—be it in the economic figures we watch over or in the increased optimism our country is experiencing. The Philippines has emerged from the margins of Asia and is now sure-footedly taking its rightful place in the global stage; no longer the sick man, the archipelago is now Asia’s bright star.

The last 6 years proved that indeed, good governance produces great economics. I write this letter hoping that you may keep this as both a personal and public reminder that while we have much farther to run as a country, we have traveled millions of miles from where we came, owing to your principled leadership.

It is perhaps fitting that the last GDP growth rate announcement under your term—Q1 2016—was one of our best showings yet. At 6.9%, we outpaced China for the first time in 27 years to be among the world’s fastest. In fact for much of the 6 years, we raced past the rest of the world when most were struggling with uneven recovery paths and volatile crises. Our 6-year average of 6.2% is highest in 4 decades, in stark contrast to the 4.5% average from 2001-9 and the 3.8% average from 1995-2010. Yet most of the time, reactions were tempered with markets having priced the news in and people expecting more, a sobering yet encouraging reminder of how much the bar has irrevocably been raised.

I am also happy to report that we are now on our most fiscally sustainable path yet at the end of your term, with debt as a share of GDP at a historic low of 44.8% in 2015, compared to 54.8% in 2009 and the 74.4% record-high recorded in 2004. With foreign debt at its lowest share in the portfolio at 34.8% in 2015 and low interest rates at 5.2% (compared to 6.3% in 2010), we are funding a more resilient future for future generations of Filipinos.

I always say that we were granted our first ever investment grade in 2013 only because the international community saw how we walked our talk. Now, with 24 positive credit ratings actions on our belt at the end of your term, we stand as the world’s most upgraded sovereign. This would not have been possible without your vision for the public finance reforms that I had the chance to execute together with Secretary Butch Abad and the rest of the cabinet.

Due to a better credit standing, the government was able to lower interest payments to 13.6% of 2015 expenditures from 19.6% of 2009 expenditures. As a share of the budget, interest payments fell from 29% in 2004 and 19% in 2010 to just 15% of the latest 2016 budget, reflecting savings of at least P140 billion from 2011-14 alone. In the private sector, strengthened confidence meant combined annual corporate and consumer interest savings of around P30-40 billion—enough to complete a one-two punch of greater investments from both the public and private sectors of the economy.

Revenue reforms further expanded our fiscal space, with tax revenues reaching P1.8 trillion in 2015 from just P982 billion in 2009. Government Owned and Controlled Corporations (GOCCs) shaped up to remit a total of P164.3 billion under your administration, compared to P84.2 billion in the administration prior.

For all these reasons, the past 6 years has been unquestionably the most intensive period of investment the nation has enjoyed in decades, if not its entire history. Our investment in education went up by 125%, from 2.5% of GDP to 3.4%. Meanwhile, health spending leapt by 336% from 0.34% of GDP to 1.5% of GDP, and the social services budget grew by 166% from 5.2% to 6.2% of GDP. In 2016, we finally hit our infrastructure investment goal of 5% of GDP up from just 1.8% in 2010, taking up a quarter of a budget from a mere tenth 6 years prior.

These numbers meant that we were able to build 89,720 classrooms during your presidency, 418% more than the period prior, and that we were able to expand PhilHealth coverage from 47.07 million Filipinos to 93.45 million Filipinos on our way to universal health care. These are just some of the irrefutable figures of the tangible gains the great economics of the past 6 years has reaped.

We end with a record 5.8% unemployment in Q1 2016, from 7.3% the same period in 2010, coupled with record high consumer optimism. In a heartening nod to our will to hope and hunger for change, our standing in various international rankings has likewise dramatically improved, jumping 38 notches in the World Economic Forum Competitiveness Report from 85th to 47th , while climbing 39 and 45 places in the Heritage Foundation Index of Economic Freedom and World Bank Ease of Doing Business Report, respectively.

All this I write as a proud record of good governance under your leadership. The long night cast by the vicious cycles of doubt is over; in its place the dawn of virtuous cycles of confidence. Today I echo President Ronald Reagan speaking of the Unites States in the late eighties with joy: it’s morning again in the Philippines.

Reaching this place wasn’t easy. In numerous instances, I have seen you put people over politics, prudence over popularity, as you refused to let electoral games get in the way of our responsibility to the Filipino people. Time and again, I have seen you face down the difficult choice between the judgment of history on the one hand and the treatment of the headlines on the other—always making a dignified decision for the former no matter the immediate repercussions.

The character of your conviction is one that takes the long view, one that understands how change is always an ongoing process in a continuum, and how we run but a small leg of a never-ending relay race for the betterment of our people. They say power corrupts but with you it seems as though, perhaps bearing the abiding pain of history—at once both personal and national—the presidency always maintained a knowingly careful and responsible relationship with power. Yours is a presidency that deeply understood the weight of consequences each decision carried, no matter how far-reaching or long-enduring such consequences are.

This is perhaps why you have demanded much from all of us in government. Throughout the past 6 years I have learned from your leadership how the Filipino is indeed worth fighting for each and every day. As the curtains close, I hope that I, along with the rest of your team in the Cabinet and all the civil servants in government have made you proud just as surely as you have made your parents and the nation that we serve, proud.

We are leaving the Philippines better than when we found it. I think Your Excellency’s legacy will best be remembered, however, for empowering Filipinos to believe that we can do and be better. The Philippines rises more confident and more optimistic than ever after your presidency. A new gold standard of leadership and governance has emerged—yours.

Sincerely,

CESAR V. PURISIMA
Secretary of Finance
Republic of the Philippines