Determining the economic stimulus we need

Published June 13, 2020, 12:00 AM

by manilabulletin_admin



Senator Sonny Angara
Senator Sonny Angara

It is now painfully obvious that it will take no insignificant time for our country to recover from the COVID-19 pandemic. Just as the virus can ravage the patient’s body, the pandemic itself has seriously hit the Philippine economy. Who among us here have not heard of a shop or restaurant that is permanently closing due to the financial stress of the quarantine? Even worse, this trend is ongoing, as various establishments are still closing, even now as we relax our quarantine guidelines.

The numbers paint a difficult picture. According to the Department of Labor and Employment (DOLE), around 2,000 companies have closed, with over 69,000 workers unemployed.  The Philippine Statistics Authority (PSA) estimated that the unemployment rate in April stood at 17.7 percent, whereas it was at 5.5% the year before. This translates to around 7.3 million jobless Filipinos, many of whom were working in the entertainment, food, hotel, information, communication, and construction industries. To make matters even more complicated, 321,000 OFWs around the world have lost their jobs. Many have come home, emphasizing the need for an effective solution to the economic situation as it is shaping up now.

During these difficult times, a decisive fiscal push from the government is needed to help our economy recover, as well as to strengthen and make it more resilient. This is why before the Senate went on recess last week, we worked doubly hard in the Committee on Finance to pass the “Bayanihan to Recover As One” Act.  Also known as Bayanihan 2, this measure aim to not only extend the validity of the RA 11469, the first Bayanihan Law, which granted certain emergency powers like budget flexibility to the executive for another three months. It also endeavored to extend and expand the scope of current COVID-19-related government assistance programs, as well as provide an initial economic stimulus, especially for affected sectors like tourism, transport, agriculture, and the creative industries.

Unfortunately, no certification of urgency was issued, which would have allowed Congress to swiftly pass the measure for the President’s signature before the session was closed. This means that any proposed assistance for sectors that did not receive any aid or emergency subsidies in previous tranches, like part-time teachers, online freelancers, and workers in the informal sector, have been momentarily put on hold.

On the other hand, this pause has provided the opportunity for even deeper discussions on what kind of economic stimulus should be enacted. At this point, it would be prudent for us to look at how other nations have addressed their own economic problems arising from the pandemic.
Other countries in the region have addressed the situation in different ways. Indonesia has in its last stimulus package the equivalent of $9.9 billion in additional financing, which includes support for credit guarantees for the private sector. Thailand’s government, on the other hand, covers the interest for the first six months, and guarantees up to 70% of the loan worth $10.9 billion. Myanmar and Vietnam have similar lending programs in place, with reduced or no interest rates.

A well-planned economic stimulus package can serve to soften the economic blow to our country. Indeed, an Asian Development Bank brief for May, 2020, recognizes that proper government response can reduce the economic effect of the pandemic by 30% with a short containment scenario, and 40% for long-term containment.  And it is not only in the planning, but also in how much we are willing to commit to the stimulus package. As of May 19, Thailand’s $67-billion stimulus package was equal to 12% of the country’s Gross Domestic Product, Malaysia’s package was equal to 15% of their own GDP, Singapore’s was at 13%, and Indonesia’s was at 3.8%.

We are taking the lead on ongoing discussions on how to address the economic needs of the nation. Our aim is to find the right components for a stimulus package that will encourage economic revival and growth, and then allocate funds that will make these measures work. The COVID-19 pandemic may have battered our economy, but that does not mean we are down for the count. If anything, we should consider this a challenge, for us to strengthen and improve our country’s economy, to make it more resilient against similar future events.

Email: [email protected]| Facebook, Twitter & Instagram: @sonnyangara

Senator Sonny Angara has been in public service for 15 years—9 years as Representative of the Lone District of Aurora, and 6 as Senator. He has authored and sponsored more than 200 laws.  He is currently serving his second term in the Senate.