The country’s hugely correct monetary and fiscal national policies are not going to jumpstart the economy. Only business confidence aided by a resolute vaccine distribution system will do the trick.
The country’s setback in trillions of pesos (due to COVID-19) cannot be remedied by just mere changes in economic policies. Interest rate and reserve requirements adjustments downwards, repurchase agreements and provisional advances and injecting over P 2 trillion into the financial system will not be the magic formulae.
Bayanihans1 and 2 combined will not do it either. An all-time high national budget (General Appropriation Act) P4.7 trillion will help a bit but it is no silver bullet.
Of course, when a country’s economic managers are good, they, too, can get quite lucky. The country started with a 40% debt-to-GDP ratio that allowed it to fiscally maneuver. The TRAIN (2019) also enabled the nation to shore state taxes 50 percent better than it should have.
But in the Covid-19 period, the economy still slid downwards to negative territory, nonetheless, despite all these. It is because the economy will only move if businesses start their machines moving again, hiring back people and ordering from their supply chain.
It will free the nation’s “frozen” assets into productive ones.
This means being able to collect their long-gestating receivables, move the mothballed inventory, push the work-in-process into completion, rehire people and being confident again to sell on credit. Only then will the business joints be re-oiled into action again.
That takes genuine, from-the-gut business confidence. In the efficacy of the vaccines and the normalization of public transportation as most Filipinos still travel in this mode. As well, the banks must have a mechanism in place to manage their NPL (non-performing loans) – so as not to distract them from their main business of granting loans and running after deposits again.
Simultaneously, the country must equip itself with the shield to fight back effectively the next pandemic which will surely come again as surely as the sun rising in the east.
As the “fragile” health care system has perennially been used as the reason why various forms of lockdowns had to be implemented all over the country, then that health care system must be fortified, too. Lockdowns have caused the nation’s economic machine to grind to a halt.
In various stages of sophistication, there are currently only 476 public and 960 private hospitals -many of which are in bad financial straits. The latest available figures show that the NCR (National Capital Region) has only 13.5 hospital beds per 10,000 people. The other regions are faring much worse with a range of 3.8 to 8.9 hospital beds per 10,000 population.
The country has produced 130,000 licensed doctors but only 70,000 of them practice their profession here as they are only paid a fraction of their foreign counterparts. Thus, the country only has 6 doctors per 10,000 population compared to the developed countries of 25 doctors per 10,000 people.
The PhilHealth insurance company is littered with holes of inefficiency and corruption that government recapitalization may be necessary as an interventionist policy. The state only pays $138/per capita in health benefits compared to Japan’s $4,200/capita, South Korea’s $2,300 and
As the vaccination program accelerates approaching the “herd immunity” levels, there may be no longer any need to budget for contact tracing involving 270,000 contact tracers (estimated budget P3.6 billion).
Perhaps such budget and manpower can be marshaled into a giant nationwide tree-planting program that will still hire these contact tracers and help jumpstart the economy. As American President Franklin Roosevelt did in the 1930 recession years in the USA.
For nine years, the government hired 3 million Americans just to plant seedlings through Executive Order 6101 and using the Civilian Conservation Corporation and planted 3 billion trees in that span of 9 years. That country now has hundreds of natural forests, parks and conservation projects that served them in good stead through the years.
Not only will this raise employment here but in the future allow Filipinos to travel anywhere in the Philippines and have oxygen from freshly-grown trees like they have even in highly urbanized cities like Singapore and Hongkong. In contrast, the Philippines’ forest cover has dwindled from 12 million hectares in 1960 to only 5.7 million hectares currently.
Finally, in the field of tourism, resorts and hotels can learn much from the pandemic where it has been proven that people can really work and children can really study without leaving home. This is the opportunity for hotels and resorts to create that consumer demand to unlock their dormant state by offering long-staying packages- with affordable meals, tie-up with low-cost airlines where families can stay for days and weeks in the resorts and still meet their individual obligations.
For certain, the economy will have a new face after the COVID-19 crisis.
(Bingo Dejaresco, a former banker, is a financial consultant, media practitioner and book author. He is a Life Member of Finex. However, his views here are personal and do not necessarily reflect those of Finex. [email protected])