The Duterte administration’s former socioeconomic chief has criticized the government for its slow response to and stingy spending on the coronavirus disease 2019 (COVID-19) pandemic.
Ernesto Pernia, former National Economic and Development Authority secretary, said in a virtual forum organized by Stratbase Albert del Rosario Institute the government is “conservatively spending” for its COVID-19 response.
He said in his presentation yesterday the Philippines has the “sorry reputation” of having the highest COVID-19 caseload in this part of Asia vis-à-vis population, despite having the world’s longest continuous lockdown, and the economy is seen as the slowest to recover among Asean countries.
“The government has been rather stingy in spending for COVID-19 response which has impacted our health system capacity as well. The Philippines is spending the least among five Asean countries at $21.65 billion, whereas the other countries had big spending at the start of the pandemic,” Pernia said.
“And the reason for that I think is we are trying to preserve our credit rating. And so relative to GDP (gross domestic product) and relative to population, our spending has been rather pathetic even compared to Vietnam which has a lower income per capita than the Philippines,” he added.
Pernia said despite sharply ramping up COVID-19 spending response in 2020, the five Asean countries he cited, specifically Indonesia, Malaysia, Singapore, Thailand and Vietnam, maintained their respectable credit ratings based on 2019 and June 2020 deficits and debts.
Pernia thus said that the fear of being downgraded if the Philippines raises the debt-to-GDP ratio is” unfounded.”
“Credit rating agencies have adjusted their rating norms, owing to the pandemic, and the Philippines could markedly ramp up its COVID response spending and still keep its likewise respectable credit ratings,” Pernia said.
“We’ve been trumpeting that the Philippines has a high credit rating but we are just middling. What is really a source of wonder is Singapore, which has a high debt-to-GDP ratio, also Malaysia, they are hitting AAA or A-. So what is the worry about being downgraded if we spend more? There really is nothing to crow about regarding our credit rating,” he added.
Pernia also pointed out that in this pandemic, given the Philippines’ poor health system capacity, intervention should have come very early, with lockdown imposed and eased or lifted in a timely manner as health system capacity improved.
“Unfortunately, government started late, moved slowly and was conservative in spending vis-à-vis our Asean neighbors, South Korea and Taiwan,” Pernia said.
“Considering that we have a large population, next only to Indonesia, and in terms of population-to-resource ratio, we have a very low ratio. We have the highest inequality and poverty in Asean. So that’s why I think it’s not a good thing to be conservative in COVID spending,” he added.
Meanwhile, Pernia projects the economy to contract by 5 percent for the fourth quarter, and for the whole of 2020, a decline of 8.5 percent.
“This is more or less in the ballpark of the projection of other experts/organizations,” Pernia said.
“So it is not likely that we will be going back to pre-COVID situation in 2021. At the earliest, perhaps in the second half of 2022, we can probably begin to recover in terms of getting back where we were before,” he added.