State must fund urgent Filipino health, social needs now, say economists

Manila lockdown
A nearly empty road in Manila after the government imposed an enhanced community quarantine against the rising numbers of Covid-19 coronavirus infections. Image: Philippine Star

Week one of the wide-ranging quarantine measures in the Philippines has already rattled medical frontliners, law enforcers, national and local government authorities and economic officials tasked with keeping the country afloat. Jeremaiah M. Opiniano backgrounds the impact of the Covid-19 crisis.

President Rodrigo Duterte requested national legislators last Sunday to grant him emergency powers and let the Philippines government handle critical public and private services given the Covid-19 coronavirus pandemic.

But an economics school said more was needed, not just emergency powers.

The Economics Department of Ateneo de Manila University believes the Philippines’ enhanced community quarantine (ECQ) regime in many parts of the country will see “significant segments of the economy… going to stop”.

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And given the urgency of the situation, the university’s 23 economics faculty members of called on the government to “set aside its growth targets” and address the urgent and months-long economic and social impacts of the ECQ.

Health worker needs and providing social protection measures for vulnerable and poor Filipinos are more important at this time, the economists wrote.

Ramping up adequate health services and fully protecting medical workers who are in the frontline is of utmost priority, Ateneo’s economics department wrote.

“Government is the only organised institution that can ensure the critical availability of health and medical services,” the department wrote, even as four Filipino doctors (as of this writing) have died already from complications brought about by Covid-19.

Among recommendations
Among the things recommended by the economists are:

  1. Large-scale procuring of personal protective equipment (PPE) for health workers, and even incentivising local clothing manufacturers to produce PPEs;
  2. Ensuring adequate Covid-19 testing kits and equipment, ventilators, life support and medical supplies; and
  3. Giving P50 million (US$0.976 million) to each of the country’s 69 hospitals —for a total of P3.5 billion (US$68.3 million)— under the auspices of the Department of Health (DOH).

The economists also called for providing massive social protection interventions to the vulnerable Filipino population like the unemployed and those minimum-wage workers.

Social protection here covers interventions — like employment assistance or social services during natural disasters — that bring the poor out of poverty and try to elude those out of the poverty line from returning there.

The Philippines budgeted some P36.5 billion (US$713 million) this year for unconditional cash transfers (UCTs), and the Ateneo economists called on government to double the amount “for those not part of the Pantawid Pamilyang Pilipino Programme or 4Ps” (the country’s decade-old conditional cash transfer programme).

The 2020 budget for the 4Ps is P108 billion (US$2.1 billion). The UCT budget, meanwhile, came from proceeds from the implementation of the country’s Tax Reform for Acceleration and Inclusion Act (TRAIN), or Republic Act 10963 beginning in 2018.

Supply chain chokes
Given also current chokes in the food supply chain, the economists called on government and the private sector nationwide (not just Luzon) to coordinate closely at this time and “guarantee food supply throughout the year”.

In the immediate term, government (the economists said) can ration food supplies — that which is being piloted in some cities and municipalities. Also needed are logistics and movers

who can move food, medicines and frontline medical staff around; the economists said the government “should fund this initiative” by logistics firms and movers.

The price tab for the suggestions related to immediate social protection? It is P50 billion (US$976 million), or a fourth of the country’s agricultural output, the economists estimated.

A third major set of measures the economists recommended is addressing the economic costs of the ECQ. Ateneo’s economists recommended:

  • Deferring income tax deadlines further, to July 31 (instead of May 15, as pronounced earlier by the country’s tax bureau), and waiving all penalties;
  • Debt relief for small businesses, bank loans, housing mortgages and consumer loans through extending due dates — without penalties — until this July;
  • Tax credits for closed businesses that continue paying employees during this ECQ; and
  • Government assuming four months of households’ electricity and water bills from March to June —this costing P2,000 per household (US$39.07) or “roughly P50 billion” (given an estimated 24,750 Filipino households).

Recession ‘not unimaginable’
The Philippines, since 2010, has been enjoying more than five percent of macro-economic growth; the government is targeting at least a 6.5 growth this year.  But with Covid-19’s impact on the country, “an economic recession for 2020 is not unimaginable,” the economists wrote.

Within week one of the ECQ, economists polled by the national newspaper BusinessMirror  think gross domestic product would be reduced to as “low as 5.5 percent this year”.

The Philippines has three major island groups, with the biggest one Luzon (on ECQ until mid-April or after Easter Sunday) contributing over-70 percent to the nation’s economic growth efforts.

At the time of the Ateneo economists’ statement, it was reported by Rappler that national legislators “plan” to approve a P275 billion alignment to the 2020 national budget, worth P4.1 trillion (US$78.1 billion) when legislators convene a special session.

That alignment, says Congressman Joey Salceda of Albay province (south of Luzon island), may include P8,000 for some 17.9 million Filipino households.

The government, on March 12, announced a community quarantine on the entire Metro Manila (the Philippines’ capital region and center of government, finance and commerce). Four days later, an “enhanced community quarantine” order covered the entire Luzon island and its 30 provinces and eight administrative regions.

As of March 22, the Philippines has 380 Covid-19 cases, 25 deaths and 17 patients who have recovered.

On Sunday night, Duterte transmitted President’s Proclamation 933 to both chambers of Congress to grant government “emergency powers.”

If granted, Duterte’s government will try to “meet the current national emergency” and “provide ample latitude to use appropriate funds to strengthen governmental response” against Covid-19, the proclamation wrote.

Some P1.495 trillion of the P4.1 trillion national budget (36.5 percent [US$29.2 billion]) was allotted for the social services sector (education, health and social protection), says the Department of Budget and Management.

Jeremaiah Opiniano is an Assistant Professor with the Faculty of Arts and Letters at the University of Santo Tomas (UST) in Manila, Philippines.

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