OF SUBSTANCE AND SPIRIT
Two columns ago, we referred to noted book author Yubal Noah Harari’s contribution to Financial Times published in February which argued that “while science has turned (epidemics) into a manageable challenge,” we reaped death and poverty during this pandemic “because of bad political decisions.”
We failed to dance with the virus. Its tempo and even its cadence were just too spirited for our public policymakers to keep pace.
The new strain felled life and business with uncharacteristic speed. With the science of lockdown failing in the Philippines and several bad political decisions behind us, we are now seeing the collateral damage in our weakening economic future.
In January 2021, the IMF downgraded our economic prospects from 7.4 percent to 6.6 percent. The April 2021 edition of the World Economic Outlook issued Tuesday evening in Manila upgraded the forecast slightly to 6.9 percent. On the direction of its revision, the Fund may find itself in the minority.
For instance, the ASEAN + 3 Monitoring and Research Office (AMRO) reduced its forecast on the economy from 7.4 percent to 6.9 percent.
London-based Capital Economics observed that “the economic outlook in the Philippines has gone from bad to worse over the past month. The main headwind is a renewed surge in virus infections, with the country now reporting more than 10,000 new cases of COVID-19 each day.” The virus upsurge made economic recovery even more uncertain while the rest of the world is slowly recovering. The Fund called this “divergent recoveries.”
Both Fitch and Moody’s shared pessimism about the country’s economic prospects. They blamed the country’s failure to contain the virus last year, and it appears it would be unable to manage it this year. Sustained weak economic activity is the inevitable result.
But we are not about to give up on this country whose community quarantine enforcers could not even tell whether “lugaw” or rice porridge is essential or not. One thing we know is that “lugaw” is food and food is essential, always and forever.
This is unequivocally provided by the Omnibus Guidelines of the IATF as amended last April 3, 2021 under Section II that defined essential goods and services.
We don’t think we have a hundred choices to consider if we are to make something out of this latest lockdown. Extended scarring in the labor markets and corporate performance promises further hollowing. There is very little meaning in allowing essential activities during ECQ in full capacity when there is generalized fear and self-quarantine remains rampant. It is equally bad policy to tolerate some cornering of pandemic-related business opportunities, and profiteering. It is unconscionable to leverage on society’s misery. If we do, we shall be contradicting our previous declaration to the global community that vaccines are public good and by extension, any medical solution to this health crisis. Keeping the markets open is always the best route.
We said it before and we say it now, sustained fiscal policy support should be the new game in town. Liquidity and interest rate games are over. Financial stability issues may emerge soon while domestic inflation is gaining momentum. It is only the Palace that can motivate economic activities during this lockdown. It is crucial for the government to maximize time and resources to execute its BBB Program with all its multiplier effects. Outside the pandemic mitigation, this is the fastest counterweight to another recession. After all, the IATF allows critical government projects to continue even in an ECQ environment. If necessary, all contractors, workers and relevant government staff should be exempted from the lockdown and the curfew. We can all avoid the horrendous traffic during normal times, both day and night.
Infrastructure is as essential as “lugaw.”
For its infrastructure flagship projects alone, 42 out of 104 identified projects worth P4.1 trillion are still work in progress with only 4 completed projects. With practically just a year to go, it is beneficial for the Duterte administration to go full throttle on these.
What are the pending projects?
Some 70 projects will have to be implemented in transport and mobility; 12 under water; two under power and energy; 10 under information and communication technology; nine under urban development and renewal and only one under health. One can visualize, for instance, a new Manila International Airport with 200 million passenger capacity with four runways. Or the Metro Manila Subway Project running 35 kilometers from north to south.
What does it profit the Palace to open up new battlefronts? The former military generals may be repurposed from health to infrastructure hopefully to put discipline in the execution of the low-hanging but strategic projects. We need to close the large infrastructure gap and fuel economic recovery. In the next 14 months, the Filipino people should benefit from a single-minded execution of these projects on a 24/7 basis with satellite and physical monitoring. With good distribution of these projects in Luzon, Visayas and Mindanao, regional poverty could be reduced by creating at least a million jobs a year.
That is many times more useful to society than wasting this crisis running in circles and aiming for a different outcome. It’s about time we dropped the default mode.