1 hour ago
2
Upgrade to High-Speed Internet for only ₱1499/month!
Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.
Visit Suniway.ph to learn
Cesar Virata, who died on October 2 at age 95, was a familiar presence at big events of the UP School of Economics, attending in his wheelchair.
That is the extent of my personal acquaintance with him. I did not know him closely, and I leave the intimate recollections to his family, friends, and colleagues.
He may well have been as wise and kind as those who knew him remember. On Facebook, I saw an outpouring of condolences from my friends for whom Virata was a tito (uncle/respectful title for an older person), ninong (godfather), mentor, friend. Those qualities deserve their place in the tributes and obituaries.
But Virata’s long service to the Marcos dictatorship deserves equally serious attention.
The fact is that Virata headed the finance department/ministry from 1970 to 1986 and served as prime minister from 1981 until the dictatorship fell. These were positions at the very heart of a government that, in the end, impoverished Filipinos and left the country with debts that outlived the regime.
How should we remember a capable technocrat who helped keep such a government going?
Lending Marcos credibility
In my 2023 book False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them, I discussed how Marcos’ technocrats helped make the regime’s massive foreign borrowing possible. Virata was a central figure in that group.
To the uninitiated, technocrats are officials whose authority rests on specialized expertise. Under Marcos, they included economic managers with advanced degrees and international connections, people who could speak the language of bankers and development institutions.
This mattered enormously for the Marcos dictatorship. Borrowing requires lenders willing to believe that you can repay. Officials like Virata helped present the Philippines as a country whose economy was being managed competently—even as political power became increasingly concentrated in the hands of the dictator and his cronies.
The technocrats’ credibility helped the regime obtain money from foreign banks and institutions such as the World Bank and International Monetary Fund (IMF). The backdrop is that the economic managers were confronted with the task of maintaining a fixed exchange rate and maintaining an ample supply of dollars. The borrowings, totaling more than $25 billion over the Marcos years, helped finance the government and prolonged its ability to operate.
In the book, I described this as effectively “deodorizing” the Martial Law regime. Technical competence gave international creditors reasons to keep dealing with a dictatorship.
Of course, the technocrats and Marcos’ cronies were often at odds. They were characterized once as separate if opposing spokes in a wheel, connected by the hub that was Marcos. Political scientist Teresa Encarnacion Tadem’s research documents how crony interests undermined Virata’s group, even as its relationships with international financial institutions strengthened its position within the government.
Those conflicts show the limits of the arrangement. Marcos retained the power to accommodate his cronies and disregard technical advice, while continuing to benefit from the credibility lent by his economic managers. Both groups could serve the same regime while disagreeing bitterly about its policies.
Eventually, some technocrats left one by one. Gerardo Sicat, for instance, left his position as director-general of the National Economic and Development Authority in 1981, just as the economy was tumbling into decline and crisis. Virata remained to hold the fort.
Many years later, Sicat would write a tome of a biography for Virata, titled: Cesar Virata: Life and Times Through Four Decades of Philippine Economic History. Published in 2014, it offers a sympathetic account of Virata’s predicament as the chief technocrat during the crisis years. As Hal Hill’s review explains, it portrays a reformer battling Imelda Marcos and the cronies, attempting to restrain spending, and eventually offering a resignation that Marcos refused.
But this defense leaves important questions unanswered. The disappearance of congressional opposition after Martial Law may have made economic reforms easier to implement. It also removed democratic checks on the borrowing and spending that helped bring the country to ruin. Economists should count those costs to our institutions as well.
As well, the unsuccessful offer to resign doesn’t erase the consequences of remaining in office. Virata’s credibility continued to help Marcos obtain foreign financing even as the regime’s abuses and economic failures became increasingly evident.
Behest loans
Truthful reminiscences of Virata’s life and times must acknowledge the fact that technocrats like him were crucial in propping up the dictatorship and the crony capitalism that flourished at that time.
Consider an admission by Virata himself that I quoted in False Nostalgia, drawing on economist James Boyce’s account. In 1984 Virata admitted, “We were quite liberal in guaranteeing loans,” referring to “behest loans” or loans that were granted by president Marcos to select friends and family members, obtained from government financial institutions.
Virata explained that some companies had been interested in making money from equipment purchases rather than operating the businesses those purchases were supposed to support. He called this “one of the major faults in our system.”
A loan guarantee is a promise to pay if the borrower cannot. It can help a worthwhile project obtain financing, but it also exposes the guarantor to losses. When public institutions extend guarantees too freely, as Virata admitted to doing, private business failures can become public financial obligations.
That is why Virata’s admission matters. It points to a gross failure in how the Marcos regime assessed and assumed financial risks. The public was left exposed to projects whose supposed developmental benefits might never materialize.
Indeed, state-owned banks like the Development Bank of the Philippines, and even the old Central Bank, were left with deteriorating balance sheets as it became impossible to collect the behest loans that they gave out to cronies. Rescuing crony businesses in the 1980s weakened the institutions financing them, which themselves needed rescuing. The costs, in short, spread far beyond the favored borrowers.
Debt moratorium
Then there’s the 1983 debt moratorium. In October that year, not long after senator Benigno “Ninoy” Aquino Jr. was killed on the tarmac, Virata and then-Central Bank governor Jaime Laya had gone to New York to seek a 90-day moratorium on principal payments to private creditors. By that time, the country could no longer meet its debt obligations as scheduled.
The same government that had borrowed so heavily was now asking for more time to pay.
Sure, the Philippines faced a hostile international environment: higher global interest rates and the international debt crisis also battered other developing countries. Virata alone did not cause the Philippine crisis, and negotiating relief was necessary once the country was in trouble.
But decades of bad domestic decisions had made us weak and vulnerable. Foreign borrowing came with repayment obligations, and politically favored projects could fail to generate the income needed to meet them. In hindsight, therefore, economic managers must be assessed on the risks accumulated during their tenure alongside their efforts to manage the eventual collapse.
It didn’t help that Virata was tone-deaf about people’s increasing economic hardships. In a controversial interview in the June 1, 1984 issue of Mr & Ms Special Edition, Virata was quoted as saying, “Well, I do not know what they mean by crisis… They never had it so good.”
They never had it so good.
He argued that basic needs were being supplied and that people should not mistake the absence of luxuries for a crisis. Recall that this was months after the debt moratorium, amid an economic crisis aggravated by crony capitalism and reckless borrowing. In effect, Filipinos were paying for the failures of a government whose prime minister was assuring them that life had never been better.
Whatever his disagreements with Marcos behind closed doors, Virata was on record publicly defending the regime’s economic record. His own words complicate the picture of a technocrat merely trying to contain the damage.
Sanitized legacy?
There is a familiar defense of officials who stay under an abusive leader: they are supposed to have restrained the damage from within.
Sure, sometimes they do. But that defense still leaves a difficult question: How much did their continued service help the government survive and carry on with the very practices they opposed?
For economists like me, this is an uncomfortable question worth asking. Expertise gives us influence, but things get complicated when we lend that influence to institutions and political leaders with dodgy reputations. Technocratic competence can make a government more credible even when its use of power deserves public resistance. Recently, we’ve seen that play out as well in the dictatorial regime of Rodrigo Duterte—the subject of my second book, Twin Plagues.
In Virata’s case, complicity lies in his sustained role in financing and administering the dictatorship. He didn’t necessarily steal public money or order an abuse, but nobody can deny the responsibilities he held and the regime his work helped to sustain.
People can remember his kindness and generosity, and we sympathize with the family and friends. But the country as a whole must also never forget what happened under the government Virata willingly served for so long.
There have been stringent efforts to memorialize Virata in past years, like a biography written by Sicat as well as the 2013 renaming of the UP Diliman College of Business Administration (CBA) into the Cesar E.A. Virata School of Business or VSB (a highly contested move until now; many students and faculty still insist on calling their college the CBA rather than the VSB).
At any rate, Virata’s passing should at least prompt a fuller reckoning with his record as a public servant. His personal virtues belong in his obituary—but so does his complicity in the Marcos dictatorship. – Rappler.com
Jan Carlo “JC” Punongbayan, PhD, is an associate professor at the University of the Philippines School of Economics. His professional experience includes the Securities and Exchange Commission, the World Bank Office in Manila, the Far Eastern University Public Policy Center, and the National Economic and Development Authority. JC writes a weekly economics column for Rappler. He is also co-founder of UsapangEcon.com and co-host of Usapang Econ Podcast.
His first book, False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them, was published by Ateneo de Manila University Press in February 2023. His second book, Twin Plagues: How Duterte and COVID-19 Wrecked the Philippine Economy, was published by Penguin Random House SEA in June 2026. Follow him on Instagram (@jcpunongbayan).
Below are In This Economy pieces you may have missed:
Click here for other In This Economy articles.
