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More funds sought to soften economic fallout from pandemic

Authorities have rolled out monetary stimulus and a P2.7-billion package to help Filipinos cope with the economic fallout from the coronavirus disease (COVID-19) pandemic.

But these are not enough, 32 business organizations said in a statement issued on March 20, 2020.

The business groups, which include the different chambers of commerce in the country, said the government can afford to spend up to P281 billion that will bring the deficit-to-GDP ratio to 5%, which is still acceptable in the global investment community.

There is a move in Congress, on the other hand, to push for the realignment of funds amounting to P275 billion. Of the amount, P144 billion is proposed to be given to Pantawid Pamilya beneficiaries at P8,000 each. This is seen to benefit 17.9 million Filipino families.

Senator Imee Marcos, who chairs the Senate committee on economic affairs, is going further by proposing a nearly P750-billion “all-heart, all-out” fund to combat the pandemic.

Marcos, in a statement on March 22, said she will introduce this proposal for an emergency fund on March 23, 2020.

In their statement, the 32 groups warned that the public health problem caused by the COVID-19 pandemic has become a hunger issue that “may trigger violence and longer term social tensions”.

They stressed that they support the lockdown in Luzon and in several other areas in the country, as indicated by the willingness of big companies to immediately set aside funds to help their employees tide over the crisis.

“Many companies are doing what they can to keep their employees paid despite their inability to work and drastic declines in sales. But they can only do so much compared with the millions who are vulnerable to the downturn,” the groups said.

They said the lockdown has hit hardest the informal sector who have lost their source of livelihood and the employed workers who risk losing their jobs because their employers are suffering from lost or falling revenues.

“The impact of the ‘lockdown”’ on millions of workers — both informal workers who are barred from making a living, and regular workers who may be laid off as companies respond to falling or disappearing sales — is literally a matter of life and death for them and their families,” the said.

“A health issue is now also a hunger issue and may trigger violence and longer term social tensions,” they added.

The business groups said Congress must hold a special session to approve a supplemental budget that would finance the proposed massive fiscal stimulus package.

Assuming the country’s economic growth slows down to 4.5%, or a gross domestic product (GDP) of about P20 trillion, a 5% deficit-to-GDP ratio will be around P1 trillion. Subtract from this the programmed deficit of 3.6%, which is equivalent to about P720 billion, there is still room for a fiscal stimulus program of about P281 billion.

Assuming GDP growth slows to 3%, or P19.7 trillion GDP, a 5% deficit would be P987.5 billion. A 3.6% programmed deficit would then be equal to P711 billion. Subtract this from the P987.5 billion 5% deficit, there would still be room for a roughly P277 billion to stimulate the economy.

“This massive stimulus will save lives and protect our society but will not trigger alarm bells in the credit rating and global investment community as the Philippine debt/GDP measure is only likely to rise from 41.5% to 44.2%. It was almost 70% about 15 years ago,” the 32 groups added.

The groups lauded the P27 billion set aside by the government’s economic team, but stressed that “a more forceful action on the fiscal front” is needed to reduce damage to the society and economy.

They said the stimulus package must provide the following:

  • Additional funds for CCT (conditional cash transfer) recipients, who are by definition the most financially vulnerable sector and will suffer greatly if/when they lose their livelihood during this time;

  • Additional funds to support DOLE and other programs to support workers affected by quarantine, whether directly or through companies, including when companies have advanced this;

  • Other measures to transfer funds or food to low-income families;

  • Additional funds for temporary hospitals and quarantine areas to ensure health system can cope with surge in patients;

  • Funds to support businesses — especially MSMEs — when COVID-19 is under control, with a focus on hiring;

  • Targeted subsidies to the health, tourism and transport industries as in Malaysia and Italy;

  • Increased public investment spending as in Germany; and

  • Deferment of penalties related to interest payments.

The 32 groups said these may be financed from savings or mandated savings of government agencies, except the Department of Health, local government units and other frontliners in the crisis.

Savings from government-owned and controlled corporations may also be used.

The business groups issued the call for a fiscal stimulus package a day after the Monetary Board slashed interest rates by half a percent, or 50 basis points, and eased some regulations to encourage more lending by banks and pump prime the economy.

The groups that signed the statement are: Philippine Chamber of Commerce and Industry, Federation of Filipino Chinese Chambers of Commerce and Industry Inc., Makati Business Club, European Chamber of Commerce of the Philippines, American Chamber of Commerce of the Philippines, Australian-New Zealand Chamber of Commerce Philippines, Canada Chamber of the Philippines, German-Philippine Chamber of Commerce and Industry Inc., Japanese Chamber of Commerce and Industry of the Philippines, Employers Confederation of the Philippines, Philexport, Institute of Corporate Directors, IT and Business Process Association of the Philippines, Philippine Franchise Association, Association of the Filipino Franchisers Inc., Philippine Retailers Association, Bankers Association of the Philippines, Rural Bankers Association of the Philippines, and Chamber of Thrift Banks, Federation of Indian Chambers of Commerce Phils. Inc., Semiconductor and Electronics Industries in the Philippines Inc., and Philippine Association of Multinational Companies Regional Headquarters Inc. and CCI France Philippines, Philippine Institute of Certified Public Accountants, Management Association of the Philippines, Microfinance Council of the Philippines Inc., Investment House Association of the Philippines, Shareholders’ Association of the Philippines, GoNegosyo, Foundation for Economic Freedom, Institute for Solidarity in Asia, and Philippine Association of Legitimate Service Contractors.

Meanwhile, Marcos called her proposed fund Pag-ASA: Alaga, Sustento at Pag-Angat, which seeks immediate and sustained protection of health workers, provision of food and cash aid for marginalized communities, and a stimulus package to ease the impact of the pandemic on industries employing millions of workers.

Possible sources of the first P300 billion of the Pag-ASA emergency package are the unused funds from the 2019 budget, calamity funds in the 2020 budget, intelligence and social funds of the Office of the President, PhilHealth’s emergency reserve fund, and contingency funds from the Departments of Education, Agriculture, Labor and Employment, Social Welfare and Development, and Public Works and Highways, Marcos said.

“Ilokana man ako, hindi ito ang tamang panahon para mag-kuripot ang gobyerno. Itodo na ang tulong kung talagang tutulong para sa proteksyon ng mga mga health workers, pagkain sa mahihirap, at sustento sa mga nawalan ng trabaho,” Marcos said in her statement.

She warned that LGUs might run out of funds in two weeks.

The entire Luzon is under an enhanced community quarantine that has suspended public transportation systems and mandated its more than 50 million residents to stay at home. Only one person per household is allowed to go out for a supply run.

Other LGUs in the country have also imposed localized quarantine in a bid to delay the epidemic peak of COVID-19 in the country.

As of March 22, 2020, the Department of Health said it has recorded 380 cases, with 25 deaths. COVID-19 is the respiratory disease caused by the novel coronavirus, formally known as SARS-CoV-2.

Globally, the World Health Organization said the coronavirus has infected 266,073 people as of March 20, 2020. A total of 11,184 people have died. (Ventures Cebu)

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