Macro-fiscal foundation vital amid pandemic—NEDA

Published June 21, 2021, 2:17 PM

by Chino S. Leyco

The National Economic and Development Authority (NEDA) said a strong macro-fiscal foundation is vital for economies to weather shocks, such as the coronavirus pandemic.

During the virtual 2021 Asia-Pacific Economic Cooperation (APEC) Structural Reform Ministerial Meeting, Socioeconomic Planning Secretary Karl Kendrick T. Chua said economies need to strengthen their macro-fiscal foundation to prepare them for the “rainy days ahead.”

“When building a house, we first need to ensure its structural integrity, or else its walls, roof, and windows will be blown away when a storm comes, and its dwellers will become vulnerable,” Chua said.

“In the same way, economies need to strengthen their macro-fiscal foundation to prepare them for the rainy days ahead, such as the COVID-19 pandemic,” he added.

The NEDA chief explained that the Philippines’ experience demonstrates this very well.

“We entered the COVID-19 crisis with a solid macroeconomic foundation. Our resolve to save lives from the virus and improve our health system capacity led to the imposition of community quarantines, which temporarily disrupted our growth momentum,” Chua said.

The government’s progress in its 10-point socioeconomic agenda contributed to the poverty incidence falling by around seven percentage points between 2015 and 2018, the biggest decline in the country’s history.

Parts of the government’s socioeconomic agenda include the Comprehensive Tax Reform Program, the Ease of Doing Business law, the Universal Health Care law, the Rice Tariffication law, and the Philippine Identification System (PhilSys) act.

With these reforms, Chua said the Philippines was also on track to becoming an upper middle-income country by 2020 prior to the pandemic.

With a strong macro-fiscal foundation, the country almost doubled, as a share of gross domestic product, the fiscal space for infrastructure and human capital development between 2010 and 2019.

Prudent management of fiscal resources and the reforms that were undertaking prior to the crisis served as insurance during the pandemic, Chua said.

“They have enabled us to maintain our sovereign credit rating amid a sea of downgrades, access unprecedented financing cheaply, and provide to households and businesses a range of measures to support their particular need for recovery,” he added.

Chua also shared that the experience of the country during the pandemic included “overcoming several challenges that hindered our microeconomic response.”

For instance, to counter the difficulty in identifying beneficiaries for social protection programs and the lack of bank accounts for the efficient distribution of subsidies, the Philippine government accelerated the implementation of the PhilSys or national ID program.

“From zero registrations in April 2020, over 36 million individuals have taken the initial step to be registered and some 3.7 million household heads applied for a bank account,” Chua said.

“Our goal is to register at least 50 million individuals and achieve 100 percent financial inclusion at the family level by the end of 2021,” he concluded.

 
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