(Eagle News)–The Department of Finance gave the assurance the Philippines has enough resources for a “drawn-out struggle” against COVID-19 despite the 9 percent contraction of the economy in the first quarter.
“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,” Finance Secretary Sonny Dominguez said, as he pointed out the experiences of Italy, which saw an economic contraction in the first semester by 11.6 percent, Mexico by 10.2 percent and Indonesia by 1.2 percent.
According to Dominguez, the economy 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.
The government for its part, he said, continues to increase public sector spending especially on infrastructure, public health and social protection, without which 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.
According to the DOF, government expenditures during the first semester of 2020 were up by 27 percent year-on-year (YOY), increasing to P2.01 trillion compared to P1.59 trillion during the same period last year.
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 aims to provide support for unemployed individuals and the hardest-hit strategic industries, was also passed on second reading in the House of Representatives this week.
The proposed P4.506-trillion “Reset, Rebound and Recover” budget for 2021 focuses on priority spending areas that will strengthen the economy’s recovery from the pandemic.
He acknowledged that while the two-week MECQ in Metro Manila and most of Calabarzon this August would negatively affect livelihoods, production and household consumption in the short run, if the government and its private sector partners manage to use the timeout to beef up healthcare resources and prevent further COVID-19 spread, it would yield positive results in the long run.
“As I have said earlier, the whole world is learning how to dance with this lethal virus: two steps forward and one step back,” he said.
“The economy is in good shape to mount a strong recovery soon enough, given the positive metrics such as benign inflation, a peso that is the strongest currency in Asia, and high-investment grade credit profile that has enabled us to borrow money here and abroad—at relatively lower cost—to fund our programs for COVID-19 response and other requirements,” he added.
