More and more countries are realising that, besides the need to beef up health systems, economic recovery should be driven by fiscal stimulus. Governments ought to actively, strategically spend to make sure that their economies do not collapse while responding to the pandemic.
But it is painfully clear that the Philippine government’s fiscal response is not just wanting in size but also focused on the wrong things.
There is an urgent need to pass Bayanihan 3 that will authorise massive economic aid, specifically cash transfers to the most vulnerable sectors of society, jobs assistance for the unemployed and wage subsidies for small businesses
The Philippines has spent too conservatively relative to the extent of its economic crisis. According to the International Monetary Fund, last year Singapore dedicated about 18 percent of its GDP to its fiscal response, followed by Thailand (9.6 percent), Malaysia (4.9 percent), Indonesia (3.8 percent) and Vietnam (3.6 percent). The Philippines, by contrast, budgeted a measly 3.1 percent.
Duterte’s scrimping is also painfully evident in the misguided priorities in the 2021 budget: there is no substantial funding for aid and economic relief, like the cash transfers granted last year. Instead, the government set aside nearly a quarter of its ?4.5 trillion ($93bn) budget for infrastructure, particularly patronage-driven projects, like local roads and multipurpose buildings, that will likely figure in next year’s general elections. In short, it is a business-as-usual budget, and poor Filipinos continue to be the least of the government’s worries.
In the pre-State of the Nation Address (pre-SONA) forum in April, government officials also emphasised the continuation of their infrastructure project called “Build, Build, Build”, and highlighted measures that will mainly help corporations and big business. In particular, they trumpeted a trio of trickle-down economic policies which will lower corporate income tax rates, help banks offload bad loans, and address the liquidity and solvency problems of firms.
Some lawmakers are pushing for a new stimulus package, called “Bayanihan 3”, that will give massive economic relief to low-income households, disadvantaged workers, farmers and fisherfolk, among others. But the economic managers have thumbed it down for months, claiming that the government ought instead to spend the 2021 budget and leftover funds from the two stimulus packages passed last year.
Such unreasonable scrimping has not just produced watered-down and ineffective quarantine measures – leading to infection spikes that overwhelm the country’s health system – but also a dearth of economic relief, pushing more and more Filipinos into poverty. The Duterte government also failed to address another pandemic (African swine fever) which has recently stoked food inflation and worsened economic misery.
No wonder private-sector volunteers all over the nation have banded together to organise community pantries, and taken food and aid distribution into their own hands. Although celebrated as a modern-day incarnation of the revered “bayanihan” or Filipino community spirit, these community pantries are also a damning indictment of the president and his cabinet’s failure to lead in this time of crisis.
Give more aid
This package must also make sure that beneficiary families are able to pay for expenses and debts they incurred over the past year or so.
Vaccine procurement and administration also need to be fast-tracked, with a focus on effective diplomacy to secure adequate serious link vaccine supply.
The Philippines is desperate for an economic rebound, but considerable uncertainty still hangs in the air. Absent a significantly ramped-up health system, the economy will continue to stumble. For millions of Filipinos – especially living hand to mouth daily – the future looks as bleak as ever.
