Between Populism and Reform: Facing the Test of May 1998

Summary

If it were possible to somehow quantify the degree of a nation's economic literacy and plot it on a graph, 1997 would show a sudden upward climb for the Philippines. This was the year when populist resistance to the pro-market economic policy reform package began to visibly dissipate, when fiscal discipline was finally appreciated, when the need for adept monetary and economic management was understood, when the correctness of trade- and investment- led growth was accepted, and when the constituency for the reform package finally emerged as a decisive factor on the political terrain.

1997 was, of course, the year of the great currency crunch that swept through the entire region like a terrifying, uncontrollable, and incomprehensible plague. The currency crunch and the improvement of public economic literacy in the Philippines are not unrelated occurrences. Nor are their simultaneous incidence ironic. The region-wide currency crunch, with all its terrible repercussions, was an overpowering calamity that demanded explanation. It was a great storm that raked through every aspect of the people's lives — and therefore required clarity in the popular imagination.

Five years of frantic and compelling market-oriented reforms have turned the Philippine economy around. From being the “sick man of Asia”, the country had become a convincing tiger cub, deserving of its place in a region of “tiger economies”. Five years of escalating economic growth changed the physical and psychological landscape of Philippine society: as buildings rose to scrape the skies, so did popular expectation of ceaseless economic expansion. To say that the Filipino people recovered their optimism after a long bout of economic mismanagement would be an understatement. Filipinos had come to expect constantly rising growth which would eradicate poverty, provide homes for all, and even absorb the large labour force deployed abroad. Any moderation of that growth, it seemed, would be interpreted as a failure on the part of a government that sought support precisely on the promise of securing that growth and ensuring its “sustainability”.