The greatest task at hand for the government of President Gloria Macapagal-Arroyo is to stimulate the economy to sustained growth and reduce poverty by ensuring that the benefits of development are evenly distributed. In order to achieve this, government must manage its huge budget deficit and the national debt, and both the private and public sectors must reduce unemployment by attracting more foreign investors or generating employment locally through entrepreneurship. The new president is an economist by training, and it is believed she can inspire confidence in investment. By 2001, forecasters were revising upward their predictions of GDP growth from 2.7 percent to 4 percent.
In May 2001, voters will elect 13 senators, 209 representatives, 53 party-list representatives, and 79 governors and vice-governors. The outcome of the elections is crucial to the political and economic stability of the country. Any perception of election irregularities such as vote-buying or cheating will diminish investor confidence. In fact, most foreign investors are postponing business decisions until the outcome of the elections is known. In addition, it is crucial that the candidates of the current administration win a majority of the positions in order to affirm its mandate and ensure the smooth passage of its priority bills in both the Senate and the House of Representatives.
Some of the existing problems that can cause destabilization are the remaining pockets of Communist insurgency, the continuing struggle by Muslim separatists, and the feeble, but divisive, attempts of the former president to regain the presidency. The precarious state of the country's environment and natural resources can also hurt political stability and economic growth. In 2000, the government was severely criticized for not being able to effectively address the crisis in waste management. Dozens of slum dwellers living near the Payatas dumpsite were buried alive under mountains of trash that collapsed on their houses after continuing rains. A temporary shutdown of the dumpsite resulted in the accumulation of uncollected garbage in Metro Manila and added to public perceptions of the government as incompetent and ineffective. The continuing degradation of the environment is negatively affecting health and livelihood. The heavily polluted air in Metro Manila is the primary cause of respiratory illnesses, which harms labor productivity. Water pollution disrupts marine-dependent livelihoods, as well as the country's source of food. Although initiatives for resource conservation and environmental protection have gone a long way, there is still much to be done in terms of strict implementation of the laws and instilling respect for the environment.