THE Duterte administration is implementing a four-pillar socioeconomic strategy in its coronavirus disease 2019 (COVID-19) response, containing fiscal and monetary actions with a combined value of P1.17 trillion or around five to six percent of the country’s gross domestic product (GDP).
A document sent by Carlos Dominguez, Department of Finance (DOF) secretary, to reporters last week showed the four pillars include emergency support for vulnerable groups and individuals; marshalling resources to fight COVID-19; fiscal and monetary actions to finance emergency initiatives and keep the economy afloat; and an economic recovery plan to create jobs and sustain growth.
The first pillar, which includes an emergency subsidy program for 18 million low-income families, and wage subsidy for employees of small businesses, among others, requires P305.22 billion, equivalent to 1.6 percent of GDP.
“Last week, we announced that we are working on a program to assist the employees of micro, small, and medium enterprises (MSMEs), and next week we will announce the details,” Dominguez told reporters in a Viber message yesterday.
Asked if the government’s assistance to MSME workers is the P35 billion wage subsidy program, the finance chief said: “It will be considerably more.”
The second pillar, which focuses on health insurance coverage for all COVID-19 patients; providing special risk allowance, hazard pay, and personal protective equipment for frontline health workers; and increasing testing capacity, among others, has a combined value of P35.72 billion, our roughly 0.2 percent of GDP.
The third pillar includes P610 billion worth of available financing from various sources, and P220 billion of liquidity infusion, or a total of P830 billion, or 4.5 percent of GDP.
The last pillar focuses on designing the bounce-back plan for post-quarantine scenario, conducting a nationwide survey to assess the damage to industries, and continuing investment in social and infrastructure programs to help revive and sustain economic growth.
In a statement released by the DOF yesterday, Dominguez said the Philippines is “financially able” to meet the challenges brought by the pandemic.
“We are confident that we have the financial capability to bridge this problem that the COVID-19 has brought us,” Dominguez said in a televised briefing Thursday last week.
“We want to assure all our citizens that at this point we have the money. Although, we have to realize that our funds are not endless so we need to spend it correctly, and not on wasteful expenditures,” he also said.
If the P1.17 trillion worth of monetary and fiscal actions are not enough to fight COVID-19, Dominguez said the government is ready to tap the commercial markets for additional funds.
“We have a good credit rating, it rose, we are now ‘BBB Plus’ — the highest we have ever achieved,” he said.
With the economy taking a hard hit as a result of the COVID-19 emergency, Dominguez said the President’s economic team projects GDP growth to dive to zero to negative 0.8 percent this year, and the budget deficit to rise to 5.3 percent.
“With a bigger deficit, this means we will be spending more than we will be collecting. But we are spending more in order to save the people and make sure that they have food on the table during this time,” Dominguez said.
Around 1.2 million workers could be temporarily rendered jobless because of the pandemic, but this is in comparison with the lowest unemployment rate ever in the country, Dominguez said.
He added the country’s debt-to-GDP ratio will also rise to about 46.7 percent of GDP, but noted that this is still very low and will enable the government to borrow more money from multilateral institutions to support the economy and fight COVID-19.
