IMF exposes the lie in PH poverty reduction

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THERE’S a quiet but real debate going on between the International Monetary Fund (IMF) and the Aquino government about the real poverty situation in the country.

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At one end, there is President Aquino and Neda director-general Arsenio Balisacan, who claim that the government has succeeded in reducing poverty incidence through its policy of inclusive growth.

At the other end, there is the IMF and its country representative here, who believe that the government’s poverty reduction boast is at best a case of fudging the numbers, by employing a change of formula in computing poverty figures.

In his 2014 State of the Nation Address (SONA), President Aquino made the extravagant claim that three million Filipinos were taken out of extreme poverty in one year. He cited data showing that the poverty rate had been reduced from 27.9 percent in 2012 to 24.9 percent in 2013.

The magical anti-poverty solution, it turns out, is an official change in the computation of income data from the Family Income and Expenditure Survey (FIES) conducted every three years to the Annual Poverty Indicators Survey (APIS).

Economists say that data from these different formulas can’t be compared, because it would be like comparing apples and oranges.

Comparing figures using two different formulas resulted in an instant three million reduction in the number of poverty-stricken Filipinos.

The IMF, in its country assessment report of the Philippines, contends that, contrary to government claims, there has been little inclusive growth in the country and little poverty reduction.

The report says that, with the new formula in use, between 2013 and 2014, poverty rose again by around one percentage point.

The IMF believes that the jobs situation lies at the bottom of Philippine poverty.

“More than a third of the country’s jobs are in the low wage and low skill services sector,” it said.

“The overall lack of more and better jobs is the result of relatively slow economic growth and the country’s incomplete structural transformation, characterized by stunted agriculture and manufacturing, two sectors which typically create substantial number of jobs, in particular for the poor and less-skilled.”

The IMF said the stagnation in real wages in the country has made it difficult for the poor to take advantage of their most valuable asset, their labor, as a means to get out of poverty.

“As a result, out of the 1.15 million annual labor market entrants, as many as 200,000 find a job overseas,” it added.

The IMF report, however, indicated that if the current trend of high growth and poverty reduction continues, the government’s poverty target of 18 percent to 20 percent by 2016 would be attainable and poverty could be eradicated within one generation. “In the Philippine Development Plan (Midterm Update), the [Aquino] government seeks to reduce official poverty incidence to 18 percent to 20 percent by the time its term ends in 2016,” it said.

The IMF was kind enough to say that while Aquino’s target is ambitious, it is not unrealistic.

The IMF noted an encouraging momentum on poverty reduction saying that in 2013, corresponding to the significant decrease in poverty, the bottom 20 percent of the population saw a larger increase in their income, compared to the rest of the population.

“Part of what explains this is the massive growth of the domestic transfers component (which includes conditional cash transfer program) of their total income, which increased by almost 30 percent, compared to only four percent for the rest of the population,” it said.

The IMF said achieving the poverty targets by 2016 would require sustained economic growth at above six percent, while further scaling up and improving poverty-focused programs.

All this goes to show that the Aquino government really has only two weapons thus far in the fight against poverty:

First, the conditional cash transfers (CCT) that are administered by the Department of Social Welfare and Development (DSWD), and have reached stratospheric levels under Aquino after being introduced by then president Arroyo.

Second, the use of a formula shift in computing poverty figures.

In the first, direct government dole outs are used to help families inch out of poverty.

In the second, the government directly massages the numbers so they become more respectable and more manageable.

A great deal more needs to be done to wrestle down the poverty problem. The IMF country assessment report should be must reading for everyone running for president in the 2016 election.

Who knows, they might find there the poverty-reduction program that is absent in their policy agendas today.

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11 Comments

  1. Mariano Patalinjug on

    Yonkers, New York
    09 September 2015

    I have only sympathy for President Aquino and his economic “brain trust” who in the last 5 years or so tried their very best to redeem President Aquino’s vow to slay the cruel dragon of Poverty, mainly through their CCT program to which they have already thrown the humongous sum of over-P200 billion!

    Sad to say, that poverty-reduction program has been a disastrous FAILURE–although, understandably, President Aquino and his economic “brain trust” insist that it has been a success.

    The International Monetary Fund [IMF] has just put the lie to their claims–and the IMF has no “axes to grind,” political or what not.

    How explain this disastrous failure?

    The main “culprit” is the country’s population which continues to explode at a rate which doubles it every 35 years or so, virtually frustrating all efforts to make the country’s GDP to absorb even only a major portion of the number of Filipinos who yearly enter the already-bloated Labor Pool.

    MARIANO PATALINJUG
    Lakandula1927@yahoo.com

    REPLY

    If you kill all the poor Filipinos, you will have no population problem. In the end that is why people like you and Kissinger really weant, Mr. Patalinjug.

  2. After years of non-stop drumbeating about his administration’s accomplishments and massaged statistics, it seems that the people have come to accept as truth every word that PNoy and and his propagandists have said to the point that if he were allowed to run for another term, he’ll win. Where shall the votes come from? Mostly from the downtrodden sector of below-the-poverty-line people who know no better and believe every word he and his propagandists say. Everytime something goes wrong, they heap the blame on the previous administration(s).
    PNoy and his think-tank thought about going for another term knowing that with majority control of the Lower House and the Senate there was a very good chance that the Constitution can be amended. But a good many of the literati voiced their outrage and opposition to this plan and PNoy demurred. He still dreams of getting a Nobel Peace Price Award and keeps batting for the approval of the BBL which most Filipinos abhor.
    You can deduce the aspirations that this President has from all the pronouncements he’s made since he assumed the presidency and up to now.

  3. SAdly the love of power greed and selfishness have overcome our humanity . this Administration has bungled our money time and resources leaving the middle class on its way to poverty and the poor totally helpless.
    We continue to lie about our failures instead of addressing the major issues.

    • There can be no doubt that real poverty exist You would have to be blind; ;deaf and dumb not to see it …..

      Has the government done enough? ;

      Of course not –

      Governments.in the past have been like the famous lord Nelson —

      Who looked at the ships approaching ..and clapped a telescopic to his blind eye and said “Ships -What ships i see no ships”

      Poverty is something that we have to address; In a very real way –From education to medical care –

      It has to be done in an intelligent caring way

      ..That old adage “Give a man a fish he will eat for a day –Teach him how to fish he will not go hungry again” …Seems very apt

      We have to have, our leaders approach poverty in a dynamic;steadfast way..

      Not have people who’s only interest is to take as much money as they can for themselves and their families..Leaching the system dry

      If we look back at the past –We see huge amounts of money have gone into the pockets .of corrupt officials …Who even when caught laugh at us.

      A portion of what was stolen –could of set up a great education system –where there was more equality –Even funded a better medical care program too …

      One wonders how much longer can we close our eyes to this situation ,,

      About two decade ago , I am told that this countries economic performance –was third of forth highest in the region …Now what as happened,,

      Seems like

      WE DON’T CARE AND IT SHOWS.COM ! HAS TAKEN OVER

      I remain
      your humble
      servant

      David M Meyer (PhD psych}

  4. Well mr Aquino has an amateur cabinet members and a clowns of advisers who are agree with him for the last 5 years. Anyone who disagree with Aquino’s opinion will be treated as “kalaban”. Now for them to stay in position just follow the flow…giving what he wants to hear. Jobs in manufacturing and agriculture are the most important for the growth to be inclusive. Because if I am not mistaken 80 to 90 percent of products consume everyday are imported. So the Philippines is a consumer economy not industrial economy.

  5. Leodegardo Pruna on

    It is not unusual for the so called technocrats and experts of P-Noy to craft success stories to the extent of devising formulas to suit their acts in blaming or claiming credit to a program which are photostatic copies of previous administrations. They have no originality of their own. God bless the Philippines.

  6. Long term indicators strongly suggest that the philippines is heading for significant economic problems, with the accompanying continued social deprivation, poverty, and inequality.

    A few oligarchs are making hay, and excess profits, whilst the sun shines under BS aquino’s incompetence and corrupt administration, but the storm clouds are gathering.

    OFW’s are being sold overpriced rabbit hutches as the developers do nothing to solve the nations housing problem but simply continue to erect high rise monstrosities and garner overpriced government contracts

    The cash cow of call centers is beginning to dry up as the fundamentals of business processes change – and india and vietnam now both outrank the philippines in the growing and more lucrative field of knowledge process outsourcing.

    “For us in the future it is not the things we do differently, it’s the things we don’t have to do at all,” Eric Keane, FedEx senior VP for operations IT, “People, organization, processes, technology, platforms — everything that we were doing is being reset to zero.”

    The brain drain accelerates with the brightest and best going to countries of opportunity, diversity and inclusion, where they are appreciated, developed, and rewarded

    The politicians, propagandists, and uninformed cling to the meaningless GDP figures, and PSE indices when it suits them ( both of which are currently starting to look sick), or in massaging the figures.

    They conveniently ignore the metrics of FDI, Gini, innovation index, hot money outflows, patent registration, number of new companies, quality & type of graduates

    And, unlike many of its competitors in ASEAN, the Philippines is completely devoid of any tactical solutions or strategic initiatives – a fundamental reason why foreign investors remain unimpressed and vote with their money elsewhere.

    There are 3 things which eradicate poverty – jobs, jobs, and jobs. And not just any old jobs, and certainly not low value, low paying jobs which are akin to slave labor and perpetuate a policy of low cost labor through call centers at home or sending OFW’s abroad.

    The principles are simple:
    New companies create jobs
    Ideas create new companies
    Investment in people is the foundation stone
    An Innovation economy is the way forward
    Self reliance not co-dependence is critical
    Manufacturing and agriculture has been ignored
    Chasing easy short term money will never resukt in genuine change or progress

  7. the government directly massages the numbers so they become more respectable and more manageable.
    ——————————

    There ya go, Aquino’s liberal party answer to reducing poverty (lie about it).

  8. Once again the findings of the IMF exposes the attempt of the PNoy administration to fool the public with their sinister attempt to change everything in order to have something to talk about as an “accomplishment.” Why Balisacan changer the poverty formula to make PNoy happy does not auger to his position of neutrality and truth. I used to admire this Balisacan when he was working under the Arroyo administration but lost trust in this man since he accommodates all the lies of this present administration.