As the 14th President of the Philippines, Gloria Macapagal Arroyo took office with high expectations, especially due to her background as an economist and academic. Her presidency, however, was marked by significant economic challenges, both within the country and globally. Despite these hurdles, Arroyo implemented several policies that had a notable impact on the Philippine economy, though the long-term effectiveness of these policies remains a topic of debate among experts.
To understand the economic conditions during Arroyo’s presidency, it’s important to consider the context in which she governed. Arroyo took over after President Joseph Estrada during a time of crisis, and her tenure saw the country through the tail end of the 1997 Asian Financial Crisis and the 2007-2009 global financial crisis. Despite these difficulties, the Philippine economy managed to achieve an average growth rate of 4.5 percent during her time in office.
One of the key policies of Arroyo’s administration was the Expanded Value Added Tax (EVAT) Law, which raised the value-added tax from 10% to 12%. This policy was intended to address fiscal deficits by increasing government revenues. While it faced opposition from some sectors concerned about its potential to cause inflation and burden low-income households, the EVAT Law was instrumental in stabilizing the national budget and helping the country navigate the global financial crisis.
Another important policy was the Micro, Small, and Medium Enterprise (MSME) Law, or Republic Act 9501, which provided financial support to small businesses. This law helped the Philippine economy remain resilient during the global financial crisis by supporting the growth of small enterprises. Additionally, Arroyo’s administration made progress in reducing poverty and unemployment. According to World Bank data, the poverty headcount ratio decreased from 33% in 2000 to 26.3% in 2009, and unemployment rates remained below 4% for most of her presidency.
Arroyo also introduced initiatives like the Comprehensive Livelihood and Emergency Employment Program, which aimed to create jobs for over 375,000 unemployed, displaced, and vulnerable workers. The government allocated 13 billion pesos to public workers and enterprise development projects, which helped alleviate poverty and reduce unemployment.
Infrastructure development was another focus of Arroyo’s economic strategy. Despite various controversies, her administration’s infrastructure programs were praised for boosting the economy. Data from the Philippine Senate shows that public spending on infrastructure made up about 25% of total government spending between 2001 and 2007, resulting in an average annual infrastructure investment of around 100 billion pesos.
In terms of social policies, Arroyo’s administration increased investments in healthcare, improving access to medical services for many Filipinos. The National Health Insurance Program was expanded to move towards universal healthcare coverage, and the Cheaper Medicines Act of 2008 was passed to reduce the cost of essential medicines.
However, one area where Arroyo’s presidency faced criticism was in the implementation of land reforms. The Arroyo government aimed to enhance agricultural productivity and income through land reform, but the results were mixed. The Comprehensive Agrarian Reform Program Extension with Reforms Law, enacted in 2009, sought to accelerate land distribution and provide support services to beneficiaries, but the impact of these efforts was limited.
Arroyo’s presidency also saw the country through several crises, including natural disasters like the 2006 Guinsaugon landslide, Typhoon Ketsana in 2009, and Typhoon Haiyan in 2010. Additionally, her administration dealt with the global financial crisis from 2007 to 2009. In response, Arroyo implemented the Economic Resiliency Plan in early 2009, which included fiscal stimulus packages, infrastructure spending, and social protection measures. This plan, including a 330-billion peso ($7.1 billion) stimulus package, helped prevent a severe economic downturn in the Philippines. As a result, the country’s economy grew by 4.3% in 2008, 1.4% in 2009, and a robust 7.3% in 2010, despite global challenges.
However, the economic challenges did not go away entirely. Unemployment, although relatively low, spiked to 7.3% in 2009 due to the global crisis. Inflation was also a concern, peaking at 8.2% in 2008 before the government’s stabilization efforts brought it down to 1.1% in 2009. On a positive note, the country’s external debt-to-GDP ratio improved from 62.2% in 2001 to 28.3% in 2010, and the fiscal deficit also decreased during her term.
In conclusion, Gloria Macapagal Arroyo’s presidency was characterized by a proactive approach to economic development, which led to several positive outcomes despite the challenging circumstances. Her administration implemented key policies like the EVAT Law, MSME Law, and focused on infrastructure development, which contributed to the growth and resilience of the Philippine economy. However, her legacy is complicated by controversies, including allegations of corruption and criticisms of some economic policies. While her administration made strides in economic growth and poverty reduction, these achievements must be weighed against the broader challenges and issues that marked her time in office.
Despite the economic successes, Arroyo’s presidency was not without significant controversies. For example, the Northrail project, which aimed to connect Manila to Clark International Airport, became a focal point of criticism due to its high cost of $503 million for a 32-kilometer railway—a price considered exorbitant at the time. Furthermore, the EVAT Law, while successful in raising government revenue, was also a source of public discontent due to its impact on everyday Filipinos, particularly those with lower incomes.