With the economy taking a hit due to lockdown measures, the government has to come up with solutions to bring the country back on track. Department of Finance (DOF) Secretary Carlos Dominguez III recommends five measures to accelerate the nation’s recovery:
- Restart infrastructure modernization program Build, Build, Build once mobility restrictions are lifted as it is “the best driver for economic growth.” The project was said to have “multiplier effects” in terms of employment and shared prosperity.
- Manufacture of products with “strong and inelastic demand” from businesses in food production and logistics to uplift consumer spending and demand.
- Support whole value chain food production, which includes the establishment of food markets where farmers can directly sell produce to consumers for ease in distribution.
- Mass hiring of contract tracers, and therefore offsetting the 1.5 million job losses caused by the pandemic, to halt the transmission and contraction of COVID-19.
- Passage of the Corporate Income Tax and Incentives Rationalization Act (CITIRA), which was already approved by the House of Representatives in September 2019 and now awaits the Congress’ mandate. Once passed, “flexible tax and non-tax incentives” included in the act will aid the government in targeting specific investors for the Philippine economy.
“The Duterte administration’s economic team and our legislators are finalizing an economic recovery program that will help us combat the pandemic and provide industries, especially micro, small, and medium enterprises (MSMEs), the assistance they need to get back on their feet and our fellow Filipinos back to work,” says Dominguez, noting that there’s no point in providing business relief if demand is weak and consumers have no means of spending.
The Economist ranked the Philippines sixth among 66 emerging countries with the highest level of financial strength in facing the COVID-19 pandemic, the best in Southeast Asia. Leading the list is Botswana, followed by Taiwan, South Korea, Peru and Russia. The ranking was made on the basis of public and foreign debt, cost of borrowing and reserve cover.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno says this ranking reflects the country entering the global health crisis in a position of strength. According to the International Monetary Fund, emerging economies need $2.5 trillion to dampen the effects of the global health crisis. Dominguez sees the assessment of the Philippine economy as proof of the confidence of the international community in the country, which will greatly aid in financing the government’s COVID-19 measures.
The Philippines was also able to secure a BBB+ sovereign credit rating, the highest in the country’s history, which labels it as a “very worthy borrower” in the world and allows the government to borrow cheaply from a broader range of resources.