GOV'T RESPONSE AKIN TO PACQUIAO FIGHT
The government response to the economic downturn is akin to a 12-round fight of Senator Manny Pacquiao where "the government's ability to sustain the fight depends on our fiscal stamina."
This is how Finance Secretary Carlos Dominguez III described the government preparations before the Covid 19 pandemic hit the country citing the first semester contraction in the economy of 9 percent as an early-round phenomenon that could be hurdled with the economic stimulus packages being readied.
“When Senator Pacquiao trains for a fight, he prepares for 12 grueling rounds. As there can be no knock-out punch that cuts our fight short before a vaccine is developed, the government’s ability to sustain the fight depends on our fiscal stamina. We have the resources necessary to endure this challenge, but we must also conserve our resources for succeeding rounds of this fight,” he said.
Dominguez said the government has “the resources necessary” to endure the challenge of COVID-19 and its adverse economic impact, following the first-semester contraction by 9 percent of the economy, which he added will improve in the second half of 2020 if all sectors work together to shore up consumer confidence and the public cooperates in curbing the spread of the coronavirus pandemic.
Metro Manila and other urban centers were on strict lockdown in the three months leading to June to prevent the spread of COVID-19, which has unleashed an unprecedented health and economic crisis across the globe.
Dominguez reported that without continued and increased public-sector spending, especially on infrastructure, public health and social protection, the first-semester gross domestic product (GDP) would have shrunk by a total of 11.5 percent, 2.5 percentage points more than the actual 9 percent.
Government expenditures during the first semester of 2020 was up by 27 percent year-on-year (YOY), increasing to P2.01 trillion compared to P1.59 trillion during the same period last year.
Among the country’s credit-rating peer group, first-semester numbers show contractions among the economies of Italy by 11.6 percent, Mexico by 10.2 percent and Indonesia by 1.2 percent.
“We are not alone in our struggles, although the unique fiscal and macroeconomic strengths with which we entered 2020 will continue to provide us with solid footing as we confront our economic challenges,” Dominguez said during the press briefing of the Development Budget Coordination Committee (DBCC) to discuss the Philippines’ GDP growth in the second quarter.
Dominguez said the government’s three-pronged strategy against COVID-19 involves a fiscal stimulus package, a recalibrated national budget for 2021, and continued massive investment in infrastructure.
The Congress’ Bayanihan to Recover as One measure or Bayanihan 2, which includes targeted support for unemployed individuals and the hardest-hit strategic industries, hurdled second reading in the House of Representatives this week.
The proposed P4.506-trillion “Reset, Rebound and Recover” budget for 2021, as briefly presented by Budget Secretary Wendel Avisado during the DBCC briefing, focuses on priority spending areas that will strengthen the economy’s recovery from the pandemic.
These include further buttressing the healthcare system, ensuring food security, enabling a digital government and economy, and helping communities cope and prevail in these challenging times.
Dominguez, however, also emphasized the need to ensure that the country has enough fiscal resources for a protracted fight against COVID-19.