FVR’s continuing legacy and learning curve


Five years ago in 2017, the Philippine Star published an interesting piece entitled “Debt, Deprivation and the Spoils of the Dictatorship,” written by Camille Diola, reporting that there were attempts to institutionalize the idea that the Marcos’ years were the Philippines’ golden years. In what came to be called the “prosperity myth,” the story could not have been true because the Philippines was pushed into deeper debt and more severe deprivation, as it was not exclusively driven by external shocks in the 1970s and 1980s, or the political crisis following the assassination of the late Senator Ninoy Aquino.

University economists alike shared the view that “while the Philippines experienced more or less the same external shocks as other developing countries, there is a residual variation in its performance and response which makes it fall below the average for countries in its class.”

This residual variation, to Diola’s piecing together the various accounts of the times, consisted of institutions bowing to corruption, red tape, inefficiency, and political cronyism. External factors and the Aquino assassination simply exposed the economy’s peaking vulnerabilities.

If ever there is anything most historic that former President Fidel V. Ramos (FVR) left behind, it must be his participation in the 1986 EDSA revolt. For the next six years, he would be defending the Republic against seven coup attempts both by various groups within the Armed Forces and those loyalists who were deposed in the February 1986 uprising. And for the period 1992-98, FVR was to nurture the economy into a generally resilient one as its 12th head of state.

It was a beautiful journey for FVR, having fought for democracy and freedom in Korea by enlisting as a member of the 20th Battalion Combat Team of the Armed Forces of the Philippines, and in the hills of Pampanga against the Huks. But during the military regime, he was its face being the head of the Philippine Constabulary, and later vice-chief of staff. He never attempted to recant his story, or collaborated to perpetuate the urban legend that deceived a whole generation of youngsters and oldies alike. He shed all the military in him and embraced his role as a father to the nation during his presidency and even long after that until his departure. His story is one of tenacity and constancy to the cause of the nation that was very taken with his thumb up and his Filipino slogan “kaya natin ito!” (“We can do it!”)

It was a beautiful journey for FVR, having transitioned from an easily irritable man in uniform to Cory Aquino’s armed forces chief of staff and later defense secretary. As Philippine Star’s Ana Marie Pamintuan wrote: “…when he secured President Cory’s endorsement, he changed overnight. Perhaps he recognized the role of the press in the attainment of his vision for the nation.” The media would be receiving his faxed annotation of their pieces on him, or on his policy pronouncements. Perhaps, it was more his cabinet members who dreaded receiving those faxes at four in the morning when they had hardly read the news. By that time, almost every morning, FVR had already formed a good sense of what was in the papers and what to say to the media in ambush interviews. That advantage must have eased his nerves and lengthened his understanding of the press.

It was a beautiful journey for FVR, the quintessential salesman of the Philippines. But unlike a salesman, FVR sold products of his own making. We recall joining those fund-raising exercises in Asia, Northern America, and Europe for both the National Government and some government corporations. With a hollow economy, volatile consumer prices, and weak public finance, selling bonds was a tall order. It was likely to be undersubscribed. Ours were junk bonds with stiff risk premia, which means it was very expensive to borrow from abroad. But we found a good messaging, all ostensibly because of a single unifying element: FVR. He was instrumental in EDSA, he fought for democracy, he defended it against seven coup attempts, he was serious in ensuring democracy and pursuing economic growth in a “big” nation of 65 million, then our population in 1992.

We talked of the past, and there was very little to talk about, and there was work in progress, and there were so many in the pipeline. As the International Monetary Fund (IMF) itself described it, the Ramos administration embraced a “comprehensive reform strategy” that ranged from opening up the economy to international trade and investment, addressing the so-called macroeconomic imbalances, and managing structural rigidities especially on the supply side and the labor market.

We would return to Manila with the good news of oversubscription of the country’s global bonds. FVR was an excellent selling point.

Of our economic prospects, we would always argue that we did not repudiate the old system to exchange it for another. The folded sleeves of the President and his unlit tobacco should convince our investors that we meant business. FVR’s open arms policy towards the secessionist movement in Mindanao and the communist movement demonstrated his broad-minded approach to long-lasting peace that should be music to the ears of foreign investors. Based on his many initiatives in the oil, telecommunications, power, and banking industries, FVR’s focus on political governance and institutions should be able to count for something in terms of the durability of reforms and the promise of good macroeconomic performance.

As rightly pointed out by former NEDA Secretary Dante Canlas, in his lecture before the National Graduate Institute for Policy Studies in Tokyo in 2007: “Political institutions and good governance have now joined economic factors like savings, investments in human and physical capital, and technological progress as key determinants of growth.”

In the six years of Ramos, we experienced a dramatic turnaround in our economic performance. There were only two IMF programs that were initiated under his watch. The first was the Extended Fund Facility of June 24, 1994 to March 31, 1998 amounting to $791 million, while the second was the Standby Arrangement of April 1, 1998 to Dec. 31, 2000 worth $783 million. With good performance after the Asian Financial Crisis, the Philippines decided not to draw the entire amount.

This could only result from implementing sound macroeconomic policy. The FVR government pursued a good fiscal consolidation program without compromising economic growth. Prudent spending and new revenue measures supported an active pro-growth demand management policy. Congress enacted the new BSP Act giving the central bank more fiscal autonomy and independence with a focused mandate of price stability. The BSP started to pursue an independent float of the peso, benefiting from its automatic stabilizing features. Industrial restructuring was also pursued by the FVR government. Import liberalization and tariff reduction began to re-orient industrial direction. The Philippines also acceded to the World Trade Organization during this time. To help provide more credit and liquidity support to the growing economy, FVR also asked Congress to liberalize the banking industry.

FVR will therefore be remembered by his singular contribution in putting the Philippines on the radar of foreign investors and the global markets. The country became more integrated with the global economy through more open trade in goods and services as well as investments. Over time, this has allowed us to reap the benefits of global competition and greater economic productivity and efficiency.

In Ramos, because he decided based only on complete staff work within a reasonably short period of time, there was no need to look for the off-switch. He did not overthink, or overanalyze. Armed with the guidance of his cabinet backstop, like a combatant, he would decisively act. His trust in his people never wavered nor changed. His life ethics should make future leaders’ learning curve much shorter.


Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.

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