Intensify mass struggles amid peso devaluation and rising prices

Communist Party of the Philippines

September 28, 2022

The broad masses of workers, peasants and the rest the Filipino people must firmly advance their urgent socioeconomic demands and intensify their national and democratic mass struggles in the face of increasing possibility of a sharp economic decline in the coming months. The steady devaluation of the Philippine peso is set to further worsen their conditions of high fuel and food prices, low wages, rural bankruptcies and widespread unemployment and cause the accelerated deterioration of the people’s living conditions.

The international capitalist system currently stands at the precipice of another explosive financial crisis, with rising fears of major capitalist countries falling into another round of recessions one after another, and backward economies suffering from increasing costs of commodity imports and the burden of unpayable debts.

Last week, for the fourth time this year, the US Federal Reserve raised interest rates by 75 basis points (bps), bringing the total increase to 300-bps since June and pushing further the value of the dollar to its highest levels in 20 years. The US central bank has resorted to these measures in the face of threats of stagflation (rising inflation and low growth) caused by sharp increases in fuel prices and other commodities. However, by taking these measures, the US is risking to force a slow down and pull itself into a recession. So far, US attempts to pull down inflation has failed.

The rising value of the dollar has resulted in the devaluation of currencies around the world. The British pound fell to a 51-year low last week, while the Japanese yen is at a 24-year low, the Korean won at a 14-year low, and the Euro fell to a one-to-one exchange with the dollar for the first time. Currency devaluations are putting pressure on central banks to resort to pushing up interest rate, increasing the risks of recession. The United Kingdom is now officially in recession and will likely not be the last to declare so. It is also increasing risks of debt defaults of at least 20 highly indebted countries.

Over the past few weeks, the value of the Philippine peso against the dollar has been dropping to record lows almost everyday. Since the start of the year, the peso’s value against the dollar has slid by more than 15 percent from ₱50.9 to ₱58.9 to the dollar. There are estimates that the peso will further tumble to between ₱65 and ₱70 to the dollar before the end of the year.

The devaluation of the peso relative to the US dollar has grave consequences on the local economy and livelihood of Filipinos. Combined with rising prices of petroleum products and other commodities, and increasing dependence on imported food supplies, the peso’s devaluation is pushing up the costs of imports and, as a consequence, raising domestic prices. With the peso sliding further, Filipinos face the threat of sharp increases in the prices of food, petroleum products, as well as other basic commodities in the coming months.

Rising fuel prices has resulted in the rapid rise in the country’s trade deficit, with the 7-month (January to July) gap already at $35.75 billion, more than 45% higher than the $24.6 billion trade deficit for the entire 2021. The country’s widening trade gap will weigh down heavily on the economy especially with the devaluation of the peso. The country’s balance of payments deficit during the first half of the year widened by 63.1% to $3.1 billion compared to the same period last year, due to rising shortfall in the current accounts which is expected to hit $20.6 billion this year. The country’s dollar reserves have steadily declined over the past six months to $99 billion, a two year low.

These drastic consequences of the peso devaluation on the Philippine economy and the socioeconomic conditions of the Filipino people are a result of the country’s dependence on imported commodities, especially capital goods, equipment, manufactures, consumer products, and increasingly on food supplies. As a result of the destruction of local productive forces over the past 40 years, the country is now practically importing everything (including salt), making it vulnerable to currency devaluations. Local production remains largely backward, agrarian and non-industrial. Manufacturing is limited to assembly of import-dependent components (including semiconductors), the demand for which has sharply declined.

Marcos Jr and his economic managers have no plan to end the country’s over-dependence on imported commodities. Instead of addressing the need to raise the country’s capacity to produce food and other manufactures, they are bent on perpetuating dependence on imports, foreign investments and foreign debt-infusion. The previous Duterte regime dealt the country’s economic sovereignty a triple blackeye with the amended Public Service Act (RA 11659), the Foreign Investments Act (RA 11647) and the Retail Trade Liberalization Act (RA 11595).

Marcos’ recent declaration before the United Nations General Assembly that “we will swing the doors even wider” bodes of plans to further the neoliberal policies of the past four decades which have resulted in the massive devastation of local agriculture and manufacturing. Marcos’ plan to push all-out neoliberal policies will pave the way for foreign capitalist exploitation of labor and plunder of the country’s resources (expansion of plantations, mining, land reclamations) which contribute to worsening climate change.

In a desperate bid to stem the fall of the peso, the Bangko Sentral ng Pilipinas last week raised interest rates by 50-bps to 4.25%, which can at best, temporarily stop the peso from further sliding, but risks further slowing down domestic production and worsening unemployment. Further rate increases are expected in the coming weeks and months, even as government technocrats are hinging their hopes on an increase in dollar remittances from overseas Filipino workers in the coming months.

Marcos and his technocrats are not addressing the underlying causes of the Philippines’ overdependence on imports which results in chronic trade deficits, wage repression, rural dislocation, environmental plunder and other social and economic ills. Nor are they putting into place measures to assist workers, peasants and millions of unemployed Filipinos who are gravely suffering from rising prices, low wages and lack of social services. While Marcos’ technocrats push to provide tax incentives to foreign capitalist investors, they declare that giving economic subsidies to people is unproductive. Filipino are being left by Marcos and his technocrats to fend for themselves.

A large majority of Filipinos continue to live in a state of poverty. State agencies themselves disclosed that around 19 million Filipino families do not have cash savings and live constantly on the brink of destitution. The throngs of people who desperately line up for cash assistance is a manifestation of the magnitude of poverty in the country.

The Filipino people must stand firm and advance the fight for their national and democratic interests, specifically their demand for land reform and national industrialization. The outstanding clamor for various forms of state subsidies or assistance are just and should be asserted alongside urgent demands for jobs, lower prices, higher wages, expansion of free education, health and other social services and affordable or free use of public utilities (water, electricity, transportation and telecommunications). They must heighten the demand to reverse neoliberal policies of import liberalization, deregulation and privatization.

The toiling masses must intensify their efforts to get organized and form and strengthen their unions and various forms of organizations in factories, communities, schools, offices, and across different classes and sectors. There should be a strong propaganda and education movement to raise the people’s anti-imperialist and antifeudal consciousness and understanding of their fundamental social and economic problems. The history of neoliberal policies of the past four decades, IMF-World Bank economic imposition and interference, and subservience of the past successive regimes to foreign capitalist interests must be thoroughly exposed.

Only through organized efforts and carrying out collective actions such as strikes and various forms of protest actions, can they effectively advance their aspirations. In particular, there must be a concerted and concentrated effort to build the organized strength of workers and peasants who form the majority of the toiling people, and to amplify their voices and bring their demands to the center of the national discourse.

At the same time, the Filipino people must resist political repression and fight back against the agents of state terrorism and fascism. The suppression of the people’s democratic rights aim to perpetuate the people’s state of poverty and allow multinational corporations, big bourgeois compradors, big landlords and bureaucrat capitalists all the freedom to continue accumulating profit through oppression, exploitation and plunder.

Advancing the urgent socioeconomic demands of the Filipino people is firmly linked to their demand for national democracy and put an end to the semicolonial and semifeudal system. These are linked specifically to their demand for genuine land reform and national industrialization. Land reform or the free distribution of land can be completed in a couple of years and, with state support, mass organized efforts and in combination with industrialization, will immediately transform the countryside to become productive and progressive. At the same time, there must be a program to build steel and other basic and strategic industries, combined with intermediate industries for the manufacture of consumption goods. This program will lay the ground for socialist revolution and construction.

The worsening socioeconomic crisis marked by worsening poverty, spiralling prices, low wages and lack of public service, is clear evidence of the moribund state of the semicolonial and semifeudal system. Thus, while the people advance their democratic mass struggles, the Party must also mobilize the people to wage revolutionary struggle, especially armed struggle, and advance along the strategic line of protracted people’s war, to fight for genuine national freedom and democracy, as key elements to building a progressive and modern economy.