Nation’s strong financial position ‘will help weather pandemic’
The Philippines is in a strong financial position to weather the coronavirus disease 2019 (Covid-19) crisis, the government’s top financial official said.
“We are, prior to Covid, one of the fastest growing economies in the world with an average growth rate of 6.6% from 2016-2019. We have low and stable inflation and among the lowest ever rates of unemployment, underemployment and poverty,” said National Economic and Development Authority (NEDA) Acting Secretary Karl Chua during the “Business as Usual Under the New Normal” online forum organised by Manila Times.
Chua attributed the robust fiscal position to a revenue of 16.1% of gross domestic product (GDP), falling debt-to-GDP ratio and high gross international reserves.
“We have been very conservative and responsible in managing the fiscal position not only this administration but the preceding ones,” he said. Chua noted that The Economist had ranked the Philippines sixth among emerging economies in the world and the best among those from Southeast Asia in terms of economic, fiscal and financial management.
But that was before the country took a big hit from “three unexpected shocks of increasing magnitude” — the eruption of Taal volcano, the Covid pandemic and the decision to impose strict quarantine protocols.
Economic managers project the economy to contract by 2.03.4% this year and the potential impact of the Covid-19 crisis on the GDP to hit P2.0tn.
The government has revised the expected revenue collection to P2.61tn or 13.6% of GDP.
Disbursements for this year are estimated at P4.18tn, which is equivalent to 21.7% of GDP.
The deficit for 2020 is projected to reach P1.56tn or 8.1% of GDP. Chua said while the crisis had battered the economy, the economic team was pushing for several bills that will help the country get back on its feet.
He added that the Covid -19 crisis “provides us the window of opportunity to provide significant changes that will make a lasting difference in the country.” Chua said part of the recovery programme was to prioritise the food value chain from agriculture to food manufacturing, logistics, and food trade; and to restart the government’s big-ticket ‘Build, Build, Build’ infrastructure projects.
Support to micro, small and medium firms would also be provided. These include credit guarantees and wage subsidies, he said. Big companies will get equity support to match bank lending, Chua added.
The Corporate Recovery and Tax Incentives for Enterprises Act, the second package of the tax reform, seeks to immediately lower the corporate income tax from 30% to 25%.It also seeks to provide targeted and timebound tax incentives to investors who would locate to the countryside in support of the “Balik Probinsya, Bagong Pag-asa” programme, Chua said. Meanwhile, Cabinet Secretary Karlo Alexei Nograles cited the need for the government and the private sector to work together to develop and promote “health resiliency” as the country moves to adapt to the “new normal.”
Speaking on at the Virtual Forum on “Shaping Business Resiliency 2020: The Private Sector’s Response to the New Normal” organised by the Philippine Disaster Resilience Foundation, Nograles said that “health resiliency” should be a part of the country’s policy vocabulary.
“I think the new normal necessitates resilience in terms of the health aspects. We now have to consider health resiliency as one of the new things we have to really factor in moving forward,” he said.
Nograles, a co-chair of the government’s Inter-Agency Task Force for the Management of Emerging Infectious Diseases, said that the Covid-19 pandemic showed that there were still gaps in the country’s ability to deal with a health crisis.
“I think that is where innovation, research and development, and science come in. So focus has to be given to these components, not only on the part of government, but that of the private sector, which has to come in and also take a look at increasing investments in research and development, science, and innovation,” he said.
Nograles also pointed out that the pandemic “also shows us that there is a need to revisit our laws and our current legislation that may no longer be applicable.” “We need to improve certain legislation that we have in order for us to deal with this new normal,” the Palace official said.
“The private sector can help us in government take a look at what sort of legislation we need to review and need to amend –– or any other new legislation we have to enact; the private sector has to come in and help us in this regard,” he added.