Government unveils P27-billion stimulus, but some say it’s not enough

THE GOVERNMENT has rolled out P27.1 billion in funds to help contain the spread of coronavirus disease 2019 (COVID-19) and aid affected sectors, with $1 billion more in financing under negotiation, the Department of Finance (DoF) said.

In a statement late Monday, Finance Secretary Carlos G. Dominguez said the Economic Development Cluster (EDC), which he chairs, agreed to roll out the funds to support those in the front line of battling the disease and help ease the burden on affected people and sectors.

“As directed by President [Rodrigo R.] Duterte, the government will provide targeted and direct programs to guarantee that benefits will go to our workers and other affected sectors. We have enough but limited resources, so our job is to make sure that we have sufficient funds for programs mitigating the adverse effects of COVID-19 on our economy,” Mr. Dominguez was quoted as saying.

Mr. Dominguez said separately on Tuesday that authorities are negotiating a $1-billion loan for additional funding as the government ramps up efforts to contain the spread of the virus.

“Our negotiations for $1-billion loans for combating COVID is still in process,” he told reporters via Viber, adding that the source of funds — whether this will be a partner country or a multilateral lender — will be disclosed once negotiations concluded.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said “doing simple math and using 2019 GDP estimates at around $350 billion (2019 estimate) or P17.5 trillion, this P27.1-billion economic stimulus package is nowhere near their (the government’s) own estimated GDP losses.”

The additional P27.1-billion funding package translates to 0.15% of the country’s gross domestic product (GDP), which compares to an initial estimate of a 0.5%-1% drop in 2020 GDP growth by the National Economic and Development Authority (NEDA), assuming that disruptions due to the outbreak will last until June.

NEDA chief Ernesto M. Pernia said they are still working on updated projections for the economic impact of the “enhanced community quarantine” imposed on Luzon that started Tuesday.

SECTORS SUPPORTED
Of the P27.1-billion package, 51.66% or P14 billion was allotted to support the tourism sector. Mr. Dominguez said so far, this was the sector “most affected” by disruptions caused by the virus, like travel bans and canceled flights.

The package also includes P3.1 billion in additional funding for efforts to slow the spread of COVID-19 and buy test kits. The funds were sourced from Philippine Amusement and Gaming Corp., Philippine Charity Sweepstakes Office and the Asian Development Bank.

Some P3 billion from Technical Education and Skills Development Authority’s Scholarship Programs will fund the “upskilling and reskilling” of temporarily displaced workers, while P2.8 billion from the Agriculture department’s Survival and Recovery Aid Program will provide zero-interest loans to small farmers and fisherfolk.

“This initiative includes a one-year moratorium without interest on payments of outstanding loan obligations of small farmers and fisherfolk borrowers under the Agriculture-Agricultural Credit Policy Council Credit Program amounting to P2.03 billion,” the statement said.

The Labor department has also allotted P2 billion for its social protection programs for “vulnerable” workers, which will be used for wage subsidy or financial support for affected workers and establishments.

The package also includes P1.2 billion from Social Security System (SSS) to cover unemployment benefits and another P1 billion for loans to affected micro, small, and medium enterprises (MSMEs).

Leonardo A. Lanzona, Jr., professor at the Department of Economics of the Ateneo de Manila University, said the majority of these funds should be used to improve the country’s health system and the government’s response to the spread of the disease.

“Now that we have lockdown, the virus will be dormant but will spring back to life as soon as this self-quarantine ends. What we are doing essentially is to prevent hospitals from being overwhelmed. This problem will be prevalent because this virus is endemic and will stay with us for years to come. But so far, I have not heard anything about enhancing our hospitals,” Mr. Lanzona said in an e-mail response.

UnionBank’s Mr. Asuncion said the funding “may not be enough” to boost the economy but “at this juncture, P27.1 billion is better than no stimulus package at all.”

He noted that the P108-billion economic rescue package proposed by Marikina Representative Stella Luz A. Quimbo could help pump-prime the economy. The proposal allots P43 billion for tourism sector, P15 billion for displaced workers and P50 billion for assistance to affected firms.

Ateneo’s Mr. Lanzona also warned that the longer the lockdown, “the deeper…the recession.”

Mr. Duterte on Monday evening placed the entire Luzon under “enhanced community quarantine” until April 12 to slow the spread of COVID-19 by implementing strict home quarantine and limiting movement to access to basic necessities and health services.

The order suspended classes, public transportation and work in government offices and allowed some to operate with a skeletal force. It also asked the private sector and establishments to halt operations or adopt work from home policies, but exempted those providing basic necessities from the quarantine, including groceries, stores, pharmacies, clinics, hospitals, restaurants with delivery service, banks, power, water and telecommunications, among others.

There were 187 confirmed COVID-19 cases in the country and 12 deaths as of Monday. — Beatrice M. Laforga