Proposed 2021 health budget shrinks, neglects public health–IBON 

by IBON Media & Communications

Research group IBON said that the lower budget for the public health in the proposed national government budget for 2021 will keep health care inaccessible and expensive for too many Filipinos. The pandemic highlighted the lack of capacity in the privatized health system. IBON however criticized the merely fleeting increase in health spending and the cuts next year in important health areas.

The Department of Health’s (DOH) budget is at least Php171.5 billion in 2020, consisting of the Php104.5 billion under the General Appropriations Act (GAA) 2020, Php49 billion under the Bayanihan 1 law, and at least Php18 billion under the recently passed Bayanihan 2 (RA 11494). IBON noted that the proposed Php131.7 billion DOH budget for 2021 is Php39.8 billion or 23.2% less than this.

IBON said this indicates a merely short-term response to the pandemic and an unchanged trajectory of health privatization including allowing the public health care system to whither away. In particular, health infrastructure spending and support for public hospitals are seeing large cuts next year.

The proposed 2021 budget for the Health Facilities Enhancement Program (HFEP) covering the building of health infrastructure and purchase of medical equipment is just Php4.8 billion. This is 62.9% less than this year’s Php12.9 billion budget composed of Php8.4 billion under the GAA 2020 and Php4.5 billion under Bayanihan 2. 

The HFEP budget has actually been falling steeply under the Duterte administration in the regular GAAs even before the pandemic, IBON pointed out. It was Php30.3 billion in 2018, Php15.9 billion in 2019, then Php8.4 billion in 2020. The group also noted that the government’s Php1.1 trillion infrastructure program for 2021 only allots Php2.3 billion or one-fifth of one percent (0.2%) to the DOH, which is also a 36.7% cut from the GAA 2020. 

Health privatization-driven budget cuts for public health facilities like this have already caused public hospitals numbering 730 in 2010 to fall to just 433 in 2018.

The proposed 2021 budget for health workers and supporting the operation of DOH hospitals also falls by Php1.7 billion or a 2.6% cut, from Php64.3 billion in 2020 to Php62.6 billion next year. This is because the Php12.6 billion increase in Human Resource for Health (HRH) and DOH hospital budgets in the GAA 2021 from GAA 2020 is off-set by the discontinuing of Php13.5 billion in fleeting support under Bayanihan 2.

The government has played up how the 2021 budget for Human Resources for Health (HRH) Deployment increases to Php16.6 billion from Php10 billion in 2020 to hire 26,035 health workers. This seems urgent because the government doctor-to-population and government nurse-to-population ratios have been worsening under the Duterte administration, between 2016 and 2018 – from 1:32,644 to 1:33,909 doctors and from 1:17,269 to 1:17,769 nurses.

However, the health sector group Alliance of Health Workers (AHW) has pointed out how this increase is only temporary and does not indicate a sustained increase in health workers for the public health system. They highlight that 14,553 DOH plantilla positions will still remain vacant in 2021 with public hospitals still understaffed and government health personnel still overworked over the long-term.

AHW also points out that 23 of 66 DOH hospitals, which many of the poor depend on, will see their maintenance and other operating expenses (MOOE) budgets cut by Php4 million to as much as Php209 million. IBON meanwhile noted how the budget of two COVID-19 referral government owned- and -controlled (GOCC) hospitals will also be cut next year. The Lung Center of the Philippines sees a 2.9% budget cut to just Php405 million in 2021, and the Philippine Children’s Medical Center (PCMC) a 13% cut to just Php1 billion.

The budget of the Epidemiology and Surveillance program that is crucial in controlling the spread of diseases through timely data and research has already been cut by over 50% from Php263 million in 2019 to Php116 million in 2020. Yet despite its obvious importance in dealing with pandemics, IBON said, government proposes to reduce it further to Php113 million in 2021.

The budgets for the National Reference Laboratories (NRL) and Health Information Technology (HIT), which are vital in detecting, testing, databasing and reporting coronavirus cases and other emerging diseases, are also slashed.  The proposed allocations for NRL and HIT decrease from Php326 million to Php289 million, and Php1.2 billion to Php97 million, respectively.

The second biggest chunk of the proposed 2021 health budget, or Php71.4 billion, still goes to the Philippine Health Insurance System or PhilHealth. While noting recent corruption controversies in the agency, IBON pointed out that it is difficult to reconcile the unchanged budget with increasing health expenses of Filipinos. At the same time the group stressed that government resources are better spent on expanding and improving the public health system rather than subsidizing private health sector profits.

IBON said that the Duterte administration should increase funding for health infrastructure, personnel, and operations. Filipinos right to health and affordable health care cannot be realized if, as is happening today, more and more of the country’s health system is being turned over to the profit-driven private sector. The group stressed that this will always result in health care that is too expensive and health capacity that, as the pandemic has shown, is insufficient for public health emergencies. #

Ombudsman’s efforts hide admin corruption

by Sonny Africa

n 2016, Pres. Rodrigo Duterte famously warned government officials against corruption: “Not even a whiff or whisper – I will fire you.” 

The Ombudsman restricting access to the statement of assets, liabilities and net worth (SALN) of public officials and proposing to do away with lifestyle checks is only this administration’s latest effort to hide the growing stench of corruption. Yet with the government’s infrastructure budget bloating and the pork-filled 2021 budget being railroaded through Congress, every check on corrupt government officials is more urgent than ever.

Developments with the proposed pre-election 2021 budget make vigilance especially critical. The unprecedented Php1.1 trillion in infrastructure funds takes up almost one-fourth (24%) of the Php4.5 trillion national government budget. Infrastructure projects are notorious sources of corruption with so-called SOP (‘standard operating procedure’) of 10-40% on projects still acknowledged as pervasive. Presumbably most under scrutiny are the administration’s flagship infrastructure projects but these only account for Php158.2 billion or 14% of total infrastructure projects, implying Php941.8 billion worth of projects prone to ‘SOP’ across the country.

The Office of the President (OP) also has an equally unprecedented Php27.3 billion in potential pork barrel funds consisting of the OP’s Php8.2 billion budget and the Php19.1 billion National Task Force to end Local Communist Armed Conflict (NTF-ELCAC) recently created under it. The Commission on Audit (COA) has already lamented being unable to audit the president’s intelligence and NTF-ELCAC funds. The presidential declaration of a state of calamity until September 2021 also threatens to give legal license for public funds to be misused.

SALNs are vital tools for the public to keep watch of government officials. It is common knowledge that SALNs are routinely understated but there is just so much lying that can be done under oath so even inaccurate SALNs can be indicative. Combined with lifestyle checks on spending habits, the public can start to get an idea if public officials’ lifestyles are commensurate to their lawful income.

SALNs are weaponized because this is exactly what they are – weapons against corrupt public officials. Unlike private citizens, public officials have powers that can be abused for self-serving gain through bribes, kickbacks and malversation. Any flaws in how they are used should just be corrected because discontinuing them will favor corrupt public officials more than benefit honest ones.

None of which is to say that SALNs and lifestyle checks are currently effective in curbing corruption. The Ombudsman and Presidential Anti-Corruption Commission (PACC) are understaffed and grossly lack the resources to properly check on over 1.7 million government officials and employees. The Ombudsman and PACC are also helmed by San Beda schoolmates of Pres. Duterte – Samuel Martires and Danilo Yang, respectively – which cannot add confidence about how the office will be used especially against those close to the president.

In this context, media and the public are vital force multipliers to combat systemic and entrenched corruption in government and should be empowered. However, the Ombudsman’s retrogressive efforts significantly cripple media and the public from their vital watchdog role. The Ombudsman is also rolling back gains from the Ill-Gotten Wealth Law (RA 1379) which boldly, even on paper, put the burden of proof on government officials to show that wealth and assets not commensurate to visible sources of income were lawful.

The majority of public officials and employees are honest and do not fear SALNs. Indeed, holding public office also only becomes more honorable if public servants allow themselves to be held to a higher standard. Conversely, hiding corruption and hindering the vigilance of citizens only diminishes public office and officials. #

Budget for infrastructure towers over health, social protection, MSME support–IBON

by IBON Media & Communications

Research group IBON hit the Duterte administration for prioritizing transport infrastructure in its proposed 2021 budget over the country’s more pressing needs at the height of the pandemic crisis. The group said resources for health, social protection, and production support are more urgent areas needing attention to genuinely usher the economy to recovery but are only receiving paltry amounts.

The budget for infrastructure in the proposed 2021 General Appropriations Act (GAA) is at Php1.1 trillion, of which only Php2.3 billion or 0.21% would be used to build hospitals and health centers. Such a token allocation for health infrastructure shows how unconcerned government is about the public health emergency that the country is facing and about ensuring affordable health care, IBON said.

The group said that the need for medical facilities and equipment became obvious as the country’s health system was overwhelmed with the swelling number of COVID-19 cases . Yet the government barely increased the share of health facilities in the infrastructure budget from last year, IBON said. Of the Php989.2 billion budget for infrastructure in 2020, only Php1.8 billion or 0.18% was allotted for hospitals and health centers. The allocation for health infrastructure has been dropping significantly under the Duterte administration. In 2017, the infrastructure outlay for hospitals and health centers was Php18.6 billion.

In contrast, IBON said, the infrastructure outlay for road networks is getting much of the funds at Php404 billion or 36% of the 2021 proposed budget for infrastructure. In 2020, road networks were given Php349.8 billion or 35.4% of the Php989.2 billion infrastructure budget.

IBON also noted that the proposed Php1.1 trillion infrastructure budget towers over recommended allocations for health, social protection, and support for micro, small and medium enterprises (MSMEs).

The proposed 2021 health budget is only Php212.3 billion. The group observed that while the absolute amount is an increase from the allocation for health in the 2020 GAA, areas important to dealing with the pandemic are defunded in 2021. IBON said that it is ironic that the allotment for facilities enhancement, epidemiological surveillance, laboratories, research, information technology, and human resource capacity management, for instance, were all reduced right when the country’s public health system sorely needs a boost.

IBON also said that government’s questionable bias for infrastructure becomes all the more conspicuous when comparing its budget with social protection budget. The group criticized government’s decreasing the proposed social protection allotment to Php454.1 billion from last year’s Php534.3 billion even as millions of Filipinos are reeling from massive joblessness and collapsing household incomes due to the COVID lockdowns.

The support program for MSMEs decreased by 7.4% in 2021 compared to 2020. Even taking the Agricultural Competitiveness Fund of the Department of Agriculture (DA) and the Small Business Corporation program under the Department of Trade and Industry (DTI together, MSMEs only get Php5.1 billion in the proposed 2021 budget.

IBON added that despite government hype about focusing on the digital economy through improved internet systems, demand for which increased during the pandemic, the budget for communication networks also decreased in 2021. The 2021 infrastructure outlay for Communication Networks is just Php106 million or a 30% decrease from PHp150.8 million in 2020.

From 2017-2021, the bulk of infrastructure projects (Php364 billion) were in the National Capital Region, followed by Region III (Php94.8 billion), the Autonomous Region of Muslim Mindanao (Php79.5 billion) where Marawi is located, and Region IV-B (Php79.1 billion). In the same period, nationwide infrastructure outlays were at Php659.4 billion, while the Central Office got Php2.9 trillion.

IBON said that the 2021 budget is crucial for the country’s health system and economy to manage and overcome the coronavirus crisis. The government’s fiscal response is the key to improving the economic situation, said the group. Health and social protection even in terms of infrastructure should therefore be prioritized. Instead, said IBON, these are dwarfed by programs such as roadworks and grandiose transport projects that are not as urgent as medical services and socio-economic relief. #

It really hurts: Economic infrastructure over health

by Jose Lorenzo Lim

The Philippine economy contracted 16.5% in the second quarter of 2020 which was attributed mainly to declines in manufacturing, transportation and storage, and construction. The Duterte administration is counting on infrastructure to stimulate the Philippine economy’s recovery. To do this, the Development Budget Coordination Committee (DBCC) is allotting Php1.1 trillion for the government’s infrastructure budget in 2021.

Are the planned infrastructure projects really what the economy needs right now after everything that’s happened this year? How much of the infrastructure helps fight the COVID-19 pandemic? Or is the government just building the same road and transport infrastructure from its pre-pandemic plan?

Unchanged priorities

Long before COVID, the Duterte government’s Build, Build, Build (BBB) Program planned Php8-9 trillion in infrastructure projects from 2017-2022. This included supposed high-impact projects such as railways, urban mass transport, airports and seaports, roads and bridges, and “new and better cities”.

The government’s priority for such infrastructure projects and economic infrastructure stays, as reflected in the proposed 2021 budget. The budget for the Department of Public Works and Highways (DPWH) is Php613 billion for roads (Php59 billion), bridges (Php157.4 billion), and flood management projects (Php125.8 billion). There are also allocations for local programs (Php176.1 billion), and the convergence and special support program (Php50.2 billion).

Interestingly, Php23.9 billion of the convergence and special support program is for access roads leading to tourism destinations, Php1.9 billion on access roads to airports, and Php2.5 billion on access roads to seaports.

The Department of Transportation’s (DOTr) proposed 2021 budget meanwhile spends Php107.4 billion on railways, aviation, and maritime infrastructure programs. Of this, Php107.2 billion will be spent on railways. The Rail Transport Program includes projects from the 100 infrastructure flagship projects (IFP) such as Metro Rail Transit (MRT) 3 Rehabilitation, the Metro Manila Subway, North-South Commuter Railway System, and the PNR South Long-Haul Project. The DOTr also proposes Php1 million on aviation infrastructure and Php166 million on maritime infrastructures.

The National Economic and Development Authority’s (NEDA) 100 IFP list includes 15 infrastructure projects targeted to be completed in 2021 worth Php181 billion. Eleven of these are in the transport and mobility sector, one is in information technology, one is in urban development and redevelopment, and two are for water resources. This affirms transportation and mobility as BBB program priorities.

However, the infrastructure priorities are puzzling and the government seems to be getting ahead of itself with all that interconnectivity infrastructure.

As it is, the coronavirus still hasn’t been contained over seven months since the pandemic broke out in the country. Many businesses aren’t able to reopen and many families are still jobless or have low incomes even with lockdown restrictions eased. It is not just unclear but actually doubtful that many of the infrastructure projects proposed will help all those who will remain distressed next year.

The pandemic also exposed how inadequate the country’s public health system is. First, in containing the pandemic with insufficient mass testing, contact-tracing, isolating and smart quarantining. And, second, in treating all COVID-19 and non-COVID-19 patients needing health care.

Health neglect

What is the state of the country’s health facilities? Government data shows that there are 1,236 hospitals as of 2017, 65% of which are private-run. Privatization has resulted in there being more private hospital beds (54,317) than public hospital beds (47,371) as of 2016.

These private hospitals that dominate the country’s health system are the same ones that are now charging exorbitant rates to COVID-19 and non-COVID-19 patients to attain their desired profitability. For them, health care is about returns to investment more than returning the sick to good health.

Privatized health is also the reason why bed capacity is falling further and further behind the country’s needs. For a profit-seeking hospital, excess bed and healthcare capacity is in effect idle capital and correspondingly a drain on profits.

The Philippines has never reached the World Health Organization’s recommended ratio of 20 beds per 10,000 population. Philippine Statistics Authority (PSA) data shows that the situation has even worsened from 14.4 beds per 10,000 population in 1990 to only 9.9 beds per population in 2014. In terms of community health services, only 47% of barangays across the country had health stations in 2018.

The country is very much in need of healthcare workers as well. The PSA reports a ratio of one government physician to 33,000 Filipinos, which is far from the WHO-recommended 1:1,000 doctor to population ratio. The number of public health nurses is also concerning at a ratio of 1 to 50,000 Filipinos. Add to this how Filipino health frontliners are themselves succumbing to COVID-19 due to poor working conditions and lack of equipment, facility, and financial support. The dearth in health facilities and health care workers will persist if the government continues to neglect the health sector.

Has the government’s infrastructure program been adjusted to meet deficiencies in health infrastructure highlighted by the pandemic? The government has actually touted some health-related infrastructure to help fight COVID-19.

The latest IFP list is yet to be released. In a recent interview though, Secretary Vince Dizon, Presidential Adviser for Flagship Programs and Projects, announced that 8 projects that could not be completed anytime soon had been taken out from the 100 IFP. These were replaced by 13 projects related to the digital economy, water projects, and healthcare.

Dizon said that the most important healthcare project is the Virology Institute that would be built in New Clark City. A Virology Institute could really complement the Philippine healthcare system, if only there were enough healthcare facilities to begin with. But the opposite is true.

A look at the Department of Health’s (DOH) proposed 2021 budget shows that the Health Facilities Enhancement Program (HFEP) only gets Php4.8 billion. This is a huge cut from its Php8.4 billion budget this year and especially compared to its Php30.3 billion budget in 2018.

The proposed HFEP budget is just as much as the DPWH’s Priority Bridges crossing Pasig-Marikina River and the Manggahan Floodway Bridges Construction Project valued at Php4.8 billion, which is just one of the agency’s projects in Metro Manila.

The country needs more health infrastructure more than ever. COVID-19 and non-COVID-19 wards are overwhelmed yet the government decides to slash the budget for health facilities and still prioritize economic infrastructure in the form of roads and bridges. Many other essential elements of the health budget are also being defunded in 2021.

Time to reprioritize

The onslaught of COVID-19 exposes the insensitivity of the Duterte administration and how irrelevant the BBB program is in meeting the country’s most urgent needs. Health infrastructure clearly needs to be expanded.

Yet the priority is still disproportionately for infrastructure projects supporting the profit-making of transport contractors, foreign transport sector firms, and corporations in the service- and trading-oriented sectors of the economy.

The government has to invest much more in strengthening the public health system, in building public health facilities, and in advancing health research and development. Health care workers also need to be protected, paid decently, and supported to be able to give Filipinos the quality and affordable health care they deserve. #

Philippine health recovery not a priority for Duterte administration

by Maricar R. Piedad

Deliberations on the proposed Php4.5-trillion General Appropriations Act (GAA) for 2021 have begun. This budget will be crucial for the Philippines to fast track recovery from the worst health and economic crisis in its history because of COVID-19. But it is not at all about health recovery as the Duterte administration hypes.

In the National Expenditure Program (NEP) for 2021 submitted to Congress, the government actually defunds areas that are vital to boost the public health system in the time of a pandemic. These include those for disease surveillance, health infrastructure, and human resource capacity building. Despite the glaring health and economic needs exposed by the COVID-19 pandemic, the NEP for 2021 reflects how the government sticks to its old priorities such as transport infrastructure and defense, which are not what the situation urgently requires.

Making the health system weaker

The effect of COVID-19 on the health and livelihoods of the Filipino people is more severe compared to other nations. While countries around the world are starting to recover from the pandemic, the Philippines has the most total and new COVID-19 cases and the most deaths per million population in East Asia.

COVID-19 is stretching the health system’s capacity and the vaccine for the coronavirus is still far from the people’s reach. It is only rational and urgent to ensure that resources to further enhance and capacitate the country’s health system are made available. However, the government is not prioritizing this.

Bayanihan 2, a stimulus package aiming to cushion the effects of the pandemic, allots only Php30.5 billion for health-related responses to COVID such as tracing, treatment, support for health workers, health facilities, and pandemic research. There is also a Php10-billion standby fund for testing, which is paltry according to health advocates.

The proposed 2021 budget for the Department of Health meanwhile has been increased from Php104 billion in 2020 to Php131.7 billion in 2021 or a Php27.7-billion hike. But allotments for some of the most essential programs for health recovery have been slashed.

Selected Health Programs, 2017-2021

The budget for the Epidemiology and Surveillance program, which is important to control the spread of diseases through timely data and research, was halved in 2020 – from Php263 million in 2019 to Php116 million this year. A larger budget would clearly have helped strengthen preventive measures versus COVID-19 in the country at the beginning of the year when the first cases emerged. Yet despite the proven importance of this program, the government even proposes to reduce it further to Php113 million in 2021.

The proposed budget allocation for the Health Facilities Enhancement Program (HFEP), which ensures the maintenance and quality of public healthcare facilities, also decreases this year. HFEP is actually being allocated lower and lower budgets each year as hospitals are obliged to generate their own income to fund infrastructure-building and maintenance. From an Php8.4 billion budget for HFEP in 2020, the proposed budget for 2021 is only Php4.8 billion, or almost 50% less than its current budget.

The National Reference Laboratories are vital in detecting and testing COVID-19 cases and other emerging diseases. But the proposed budget for these decreases from the present Php326 million to Php289 million.

Even though one of the main issues during this pandemic is poor data management and reporting by the DOH, the proposed budget for Health Information Technology drops massively from Php1.2 billion in 2020 – which it failed to use properly – to Php97 million, or a 92% decrease.

The proposed budget allocation for Human Resource for Health (HRH) deployment increases, but the program that ensures that the health workforce is equipped with proper training and knowledge to deal with different medical situations is decreased. The budget for HRH Institutional and Capacity Management has been cut by Php15 million.

The DOH’s COVID-19 specific programs – the Php4.2 billion Health System Enhancement to Address and Limit COVID-19 and the Php1 billion Philippines COVID-19 Emergency Response Project – are mere drops in the country’s budget bucket.

What government cares for

The Duterte administration’s proposed budget for 2021 shows how little it cares for the health and socioeconomic recovery of the Filipino people. The biggest chunk of the proposed 2021 budget goes to the Php1.1 trillion “Build, Build, Build” program taking up 24% of the total budget. Only a tiny fraction of this goes to health infrastructure with the DOH getting just Php2.3 billion or barely one-fifth of one percent (0.2%) of total infrastructure spending.

Many of the infrastructure projects lined up – such as big-ticket railways and roads funded with China and Japan loans – are not as urgently needed as facilities for health and more direct measures to support the socioeconomic recovery of distressed households and small businesses.

The government is apparently only willing to spend Php203.1 billion on its so-called universal health care program including to respond to the pandemic – this is just 4.5% of the total proposed budget for 2021. As it is, the Php1.1 trillion infrastructure budget is almost 5 ½ times larger.

The proposed budget for the Department of Public Works and Highways (DPWH) is Php667.3 billion or over five times that of the DOH. The government will allocate Php7.6 billion for primary roads’ maintenance and repair alone which is almost three times the size of the DOH budget for the COVID-19 vaccine, at only Php2.4 billion.

The DOH’s proposed Php203.1 billion budget – even including the budget for PhilHealth – ranks only 5th among department budgets in 2021. This is because, amid the unprecedented public health emergency, the DOH’s proposed 2021 budget is only a Php25.4 billion increase from the GAA this year.

The DPWH gets a much bigger Php228.4 billion increase to Php667.3 billion, as does the Department of National Defense (DND) which gets a Php29.4 billion increase to Php209.1 billion. The military and police forces will still be receiving more funds than the health sector.

The Duterte administration’s proposed 2021 budget bares how it is not changing its priorities despite the marked worsening of the Philippine health situation. Even before the COVID-19 pandemic, infrastructure has been consistently a priority over the health sector which, if anything, is even being distorted and privatized. The people’s health and strengthening the public health system are among the most immediate areas needing attention which, apparently, the administration simply refuses to give. #

Bayanihan 2 and 2021 budget leave millions of unemployed behind

by IBON Media & Communications

The latest July 2020 labor force survey (LFS) figures confirm the inadequacy of the Duterte administration’s response to what is developing into the worst jobs crisis in the country’s history. The Bayanihan 2 and the proposed 2021 national government (NG) budget give the appearance of assistance but will leave millions of jobless and distressed Filipinos behind. The level of aid for the people is much too small for the magnitude of the crisis at hand.

This year will likely see the biggest contraction in employment in the country’s history. Employment contracted by 1.2 million in July 2020 from the same period last year, falling to 41.3 million employed according to the latest LFS. This comes after the reported 8.0 million year-on-year contraction in April 2020. For the whole of 2020, IBON estimates employment to fall by 2-2.5 million from last year. This will far surpass the previous record employment losses of 833,000 in 1980 and 821,000 in 1997.

The crisis of joblessness is unprecedented. The official unemployment rate of 10% in July 2020 brings the average of the first three rounds for the year so far to 11% which is not likely to improve much even when the October round results come out. The 4.6 million officially reported unemployed in July 2020 is already 2.1 million more than in the same period last year.

Adding 4.6 million unemployed and the 7.1 million underemployed means that the government acknowledges at least 11.7 million Filipinos jobless or looking for additional work to increase their incomes in July 2020. IBON however has long pointed out that official unemployment figures since 2005 tend to underestimate the real number of unemployed Filipinos by around 2-2.5 million annually.

Moreover, the labor department has already reported 604,403 overseas Filipino workers seeking assistance of which only a little over one-third (237,778) have been helped so far. In a press briefing today, they also said that they expect another 200,000 to need help until the end of the year.

Official figures likely underestimate the extent of the problem. However, even going by these, the inadequacy of the government’s response to directly help the people is clear.

Bayanihan 2 promises Php5,000-8,000 in emergency cash subsidies and other assistance for poor households, displaced workers and OFWs. However, only Php19.2 billion is budgeted for cash subsidies and other assistance which is just 3.8 million beneficiaries at most. The aid will also just be a mere Php37-60 per person per day for a month or even less than the official Php71 poverty threshold.

In the proposed 2021 NG budget, there is no provision for substantial emergency cash subsidies beyond existing social welfare department programs such as the Pantawid Pamilyang Pilipino Program (4Ps) and smaller programs. Indigent pensioners are not getting any increase in their pensions. Even the labor department’s Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers and Government Internship Program (TUPAD-GIP) program gets just a meager Php3.2 billion increase to Php9.9 billion.

Micro, small and medium enterprises (MSMEs) are also not getting the focused assistance that they need. There are 997,900 MSMEs employing 5.7 million workers aside from hundreds of thousands more unregistered establishments with millions more workers. Formal sector establishments had over Php21 trillion in expenses in 2018. In July 2020, the DTI said that 26% of companies they surveyed closed operations and another 52% were only partially operating. Those partially operating also said their income was down by 90 percent.

The Php77.1 billion Bayanihan 2 budget for production and enterprise support will cover only a small fraction of workers in MSMEs, and is even shared with farmers and fisherfolk. In the proposed 2021 NG budget, the MSME Development Program is even getting a Php416 million budget cut to just Php2.3 billion. The budget of the Small Business Corporation (SBC) stays the same at just Php1.5 billion.

In their press briefing today, the economic managers projected a 12% unemployment rate in 2020 (mid-point of the Development Budget Coordination Committee estimate of 11-13%) improving to 6-8% in 2021 then 4-5% in 2022. These optimistic projections cannot materialize without substantially increasing aggregate demand through meaningful cash transfers to millions of distressed households and more support to hundreds of thousands of struggling MSMEs.

Tens of millions of Filipinos and their families will continue to suffer for years without a genuine stimulus program overriding the misguided fiscal conservatism and reckless optimism of the economic managers. #

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Kodao publishes IBON articles as part of a content-sharing agreement.

PH ‘stimulus’ smallest in region

Philippine spending in response to the COVID-19 pandemic is among the smallest in the region, said research group IBON.

The narrow-minded obsession with ‘creditworthiness’ stops the government from taking the urgent steps needed to restore livelihoods and save the economy. The group said that having economic managers dominated by finance people rather than development experts is the biggest obstacle to real recovery.

According to the International Monetary Fund (IMF) Policy Responses to COVID-19 tracker, the fiscal policy response of the Philippines is equivalent to just 3.1% of its gross domestic product (GDP).

IBON noted that this is the smallest among the major economies of Southeast Asia. This is less than in Singapore (19.7%), Vietnam (13.3%), Thailand (9.6%), Indonesia (4.4%) and Malaysia (4.3%). It is also less than half of the global average of around 6.2% of GDP.

The Philippines’ ranking does not change even if the Bayanihan 2 bill recently approved by the Senate is passed into law, said the group.

The proposed Php140 billion stimulus program is worth just 0.7% of the GDP and will bring the country’s fiscal response only to 3.8% of GDP.

The IMF notes that country data are not always strictly comparable but the figures are nonetheless indicative.

IBON said that upcoming national government (NG) budgets meanwhile see the smallest post-crisis ‘stimulus’ increases in decades, further undermining economic recovery.

Department of Budget and Management National Budget Memorandum No. 136 only foresees a 5.7% budget increase in 2021 falling to an even smaller 1.8% increase in 2022, despite the country facing the worst economic decline in its history in 2020 because of the pandemic.

The budget increase in 2021 would be the smallest in a decade and in 2022 the smallest in over 30 years.

These increases also compare unfavorably with budget increases after the 1997 Asian financial crisis and 2008 global financial and economic crisis.

After the Thai Baht collapsed in 1997, the NG budget rose by 9.3% in 1998 and then by 8.0% in 1999. After the Lehman Brothers firm collapsed in 2008, the NG budget rose by 9.1% in 2009 and by 2.7% in 2010.

The economic managers have been blocking larger stimulus packages proposed by Congress since at least May, the group said.

The House of Representatives and Senate took up more meaningful stimulus measures worth at least Php1.3 trillion or more but stopped when the finance department told them to because these were ‘unfundable’ and ‘unsustainable’.

These measures would have been closer to the global average.

Among others, this also affirms that the so-called power of the purse of Congress is illusory and how the president and executive branch are actually in complete control of the country’s finances. The president can implement a bigger stimulus package if he wants to, said the group.

The obsession of the economic managers with ‘creditworthiness’ is misplaced, said IBON.

Thailand, Vietnam and Indonesia have lower credit ratings than the Philippines but are spending more to respond to and recover from the pandemic. Financing can be raised by reallocating from less productive infrastructure and debt service, and by a more progressive tax system with higher taxes on large firms and the wealth of the country’s super-rich.

The magnitude of the country’s response has to be commensurate to the crisis at hand. This should span health measures, continued cash subsidies to improve household welfare and boost aggregate demand, and support especially to Filipino and domestic market-oriented micro, small and medium enterprises, said the group. #

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Kodao publishes IBON articles as part of a content-sharing agreement.

Bayanihan 2: Too small, hinders health and recovery

by Sonny Africa

The beggarly Bayanihan 2 bill preferred by the economic managers and imposed on Congress is much too small for the magnitude of the crisis facing the country. It makes health and recovery years away and farther than ever.

The Bayanihan 2 bill passed by the bicameral conference committee and ratified by the Senate is worth just Php165.5 billion. Of this, Php25.5 billion is even just a “standby fund”, only available once “additional funds are generated”.

Every centavo spent of Bayanihan 2 is welcome. There’s no doubt about that because the extraordinary scale of the health and economic crisis demands extraordinary spending. The problem is that the Duterte administration is spending far too little for the problem at hand.

Looked at in aggregate, Bayanihan 2 pales compared to the as much as Php1.9 trillion lost in gross domestic product (GDP) in 2020 because of the pandemic. This includes not just what is lost from the economy contracting but from what it should have been if it kept on growing.

But the shortfall is even clearer looking at the details. Bayanihan 2 allots Php30.5 billion for health-related responses spanning tracing, treatment, support for health workers, health facilities and pandemic research.

Bayanihan to Recover as One Act

Yet the health infrastructure spending doesn’t even make up for huge budget cuts here since the start of the Duterte administration. There’s Php10 billion budget for testing but this is in the standby fund and made contingent on finding new funds, which the economic managers are so sparing in doing.

The provision for Php5,000-8,000 in emergency cash subsidies is necessary but only Php13 billion is allotted for this. This is paltry compared to how the lockdown-induced recession has already displaced anywhere from 20.4 million to as much as 27 million of the labor force (43-57% of the labor force), according to IBON’s estimates.

Bayanihan 2 will help just 1.6-2.6 million beneficiaries at most and, even then, not by much. At Php5,000-8,000 per household, it will only give the equivalent of a token Php37-60 per person per day for a month. This paucity is little changed even if the Php6 billion budget for social welfare department programs, Php820 million for overseas Filipinos, and Php180 million for national athletes and coaches is added.

The budget for the transport programs includes Php5.6 billion for displaced public utility vehicle (PUV) drivers especially jeepney drivers. But this isn’t even enough to compensate them for the now five months that the government has kept them out of work and driven into poverty.

Much more substantial cash assistance is needed to improve household welfare in these difficult times. This also has macroeconomic benefit of boosting aggregate demand and stimulating a virtuous cycle of spending and production. Economic activity is impossible and production support will be futile if too many are jobless and have nothing to spend.

There’s Php77.1 billion for production and enterprise support. This includes Php24 billion for agriculture which gives the sector an emphasis in Bayanihan 2 that it is due. There is also Php39.5 billion for government financial institutions (GFIs) to support lending, Php9.5 billion for transport programs, and Php4.1 billion for tourism programs.

The total amount is however only going to help a few of the 997,900 micro, small and medium enterprises in the country employing 5.7 million workers – and probably none of the hundreds of thousands more informal and unregistered enterprises. If available, the additional Php15.5 billion under the standby fund for low interest Land Bank of the Philippines (LBP) and Development Bank of the Philippines (DBP) loans will help but still not be enough.

The Php8.9 billion for education is critical to keep the youth educated and eventually productive. But the budget is a mere fraction of the tens of billions of pesos needed to ensure that schools are safe and have internet connectivity, and to help parents keep their children in school. There are some 70,000 elementary and secondary schools and around 2,000 higher education institutions in the country.

The remaining Php3.5 billion for local government units (LGUs) will also certainly help the recipients but, measured against the scale of the intervention needed across the breadth of the economy, are almost tokenism.

The economy will rebound somehow but this will be slight and Bayanihan 2 is too small to hasten real recovery. The government is the only entity in a position to implement the huge stimulus program the economy needs and there needs to be more boldness to spend and, especially, to raise money for this.

The Duterte administration can raise the money needed if it really wanted to. In the short-term it can realign from infrastructure projects and at least some of the debt servicing to development agencies and friendly official creditors.

Big-ticket infrastructure projects that are no longer economically or financially viable, or are too import- or capital- intensive, can be put off or shelved. Debt service to development banks and the like can be restructured on the argument that there are more pressing uses for scarce government funds.

The government can actually wield its creditworthiness to borrow if needed on favorable terms. The best way to pay for any additional debt is not from more consumption taxes on the people but from higher income and wealth taxes on the country’s super-rich. The huge accumulated wealth concentrated in the few is more than enough for all the stimulus the country needs and can be the foundation of a credible medium-term fiscal plan.

A much more progressive tax system with higher direct taxes is the most rational and sustainable source of government revenues. This most of all means a wealth tax on the country’s super-rich (raising Php240 billion annually from just the 50 richest Filipinos), higher personal income taxes on the richest 2.5% of families (Php130 billion), and a two-tiered corporate income tax scheme (Php70 billion).

The economic managers’ obsession with creditworthiness is the binding constraint to fighting COVID-19 and the economic misery in its wake. This self-imposed fiscal straitjacket is misguided. Spending less, not spending more, is keeping the country off the path to health and recovery.

The country is grossly short-changed by Bayanihan 2. It’s all the people are getting not because it’s all the government can afford but rather because it’s all the Duterte administration wants to give.

Beyond capacity and overwhelming incompetence

by Maricar R. Piedad

The Philippines has been in varying intensities of community quarantine for 124 days—a world record in terms of the longest lockdown response to COVID-19. But the fight against the virus is still far from over, and now it seems like the country is back to square one—overwhelmed hospitals, rising number of cases, and overall chaos. All those days in lockdown have been wasted because of the Duterte administration’s louche decisions and inaction on building up the healthcare system’s capacity for COVID-19 response.

The government, more than ever, should acknowledge the graveness of the crisis. It should prioritize implementing solutions to flatten the curve rather than push business-as-usual measures towards so-called recovery when the imminent threat of the pandemic continues to stare every Filipino in the face.

So far, the measures it has taken—lockdowns, limited triage testing, and waiting for a vaccine from other countries—have been passive.

On the verge of collapse

The current healthcare system is now operating close to its maximum capacity with cases exceeding 63,000; already reaching the projection of cases 60,000-70,000 by the end of July and cases is increasing by almost 1,000 daily. Still, government has no clear and concrete plan to expand testing triage and capacity.

The sluggish COVID-19 testing is prolonging the country’s fight against the virus. Only a small portion of asymptomatic cases are being detected because of the absence of mass testing. Compared to the rest of the world, the Philippines has a low number of asymptomatic cases. But this is mainly because less than one percent of the country’s total population has been tested for COVID-19, almost six months after the first reported case. As of writing, only 1,009,511 individuals have been tested.

According to the adjusted estimates of the University of the Philippines (UP) as of July 13, the mean number of hospitalized patients is 23,747 and it can reach up to 28,024. As of now, the total hospital bed capacity is at 15,548, with 1,661 ICU beds, 10,410 isolation beds, and 3,477 ward beds. There are only 1,938 mechanical ventilators available. This means that hospitals may need to double their total number of beds before the end of July to accommodate these patients.

However, hospital bed capacity only increased by about 2,019 beds since last month’s total bed capacity of 13,529, according to the Department of Health (DOH). There was also no significant addition to the mechanical ventilators available which are important to treat critical cases. There was also no notable increase in the COVID-19-dedicated ward and ICU beds. Considering that more suspected and probable cases will be needing hospitalization, the influx of patients seeking medical attention will be beyond the country’s healthcare capacity. The exponential increase in the number of confirmed COVID-19 cases will overwhelm the healthcare system in no time and hospitals will be forced to deny patients due to the lack of facility.

The ICU bed occupancy rate, which is a huge indicator of critical care capacity, is already at 41.2% as of the latest DOH data drop. Ward beds are at 57.1%, and isolation beds are at 48.4% occupancy. Majority of the ward and isolation beds occupied are also located in private healthcare facilities. This is despite public hospitals having more COVID-19-allocated beds. This could mean that majority of COVID-19 patients are compelled to receive treatment from private institutions charging higher hospital bills and out-of-pocket expenses due to limited benefit packages from the Philippine Health Insurance Company (PhilHealth).

Out-of-almost-empty-pocket

Ballooning COVID-19-related expenses of Filipino patients is another major issue that the government should address. The medical bills of some COVID-19 patients have ranged from hundreds of thousands to millions of pesos, depending on the severity of the case. For instance, the bill of one recovered patient reached Php1.312 million for a 15-day confinement. According to the patient, a huge chunk of the medical bill were charges for laboratory tests, doctors’ professional fees, intubation, and the ventilator and respirator she used throughout her admission. Though all her medical expenses were fully covered by PhilHealth, this is no longer the case for COVID-19 patients admitted in accredited hospitals from April 15 onwards.

At the start of the pandemic, the Duterte administration assured the public that it has individuals infected with COVID-19 covered. However, PhilHealth announced in early April that it would no longer shoulder all expenses and would instead implement case rate packages for confirmed and probable cases effective April 15. According to PhilHealth Circular 2020-0009, patients with mild pneumonia can avail of a maximum coverage of Php43,997, while moderate and severe pneumonia patients can have a maximum amount coverage of Php143,267 and Php333,519, respectively. Critical patients, on the other hand, can access a Php786,384-worth maximum benefit.

But PhilHealth computations for these packages contradict the government’s assurances and may not be enough to cover the numerous medical procedures COVID-19 patients must undergo. Medical expenses in excess of the case rates will be paid out-of-pocket, and the amount could be considerable. If the patient with the Php1.312 million medical bill for example had been confined after April 15, PhilHealth would have just paid the Php333,519 maximum coverage for severe pneumonia patients. The remaining Php978,481 or almost 75% of the patient’s total medical bill would have to be paid out-of-pocket.

The abrupt economic shutdown resulted in most Filipinos losing income and struggling with the recent rise in the cost of living, especially the poor and vulnerable. Many of them can ill-afford to pay for medical expenses and may no longer consult doctors despite having symptoms.

Burning Out

Aside from the health infrastructure, the government also needs to reinforce the country’s human resource for health. Even before the pandemic, Filipino doctors and nurses were already treating patients beyond their capacity.  According to the Philippine Health Review 2018, there are 3.9 doctors and 8.6 nurses for 10,000 people. This medical worker to patient ratio is a far cry from the World Health Organization (WHO)-recommended 10 doctors and 20 nurses for every 10,000 population.

A Philippine Institute of Development Studies (PIDS) study also noted that, in a 24-hour set-up, 1 doctor and 2 nurses will be needed to treat 6 ward patients. Critical care patients will need 1 doctor and 1 nurse each as well as other special healthcare workers such as a pulmonologist, intensivist, infectious disease specialist, and mechanical ventilator technicians.

The available healthcare workers in the country will not suffice. With no significant addition to the health workforce, the country’s doctors and nurses will be overwhelmed and exhausted. There will also be a greater risk of infection for medical workers since having more patients could mean more exposure to COVID-19. There are already 3,805 healthcare workers infected and 35 of them have already died. 

The DOH decision to reassign physicians under the Doctors to the Barrios program is another sign that there are not enough doctors in COVID-19 treatment hospitals and reinforcements are urgently needed. However, only 5,216 health workers have so far been hired to fill the DOH-approved 9,297 slots for emergency hire. This slow hiring means medical frontliners continue to work beyond their capacity to treat the piling number of COVID-19 patients. The DOH itself has also noted the difficulty in hiring health workers because many of them have private services that they cannot leave. It also does not help that the entry level salary for healthcare workers is low. For example, a medical laboratory technician—which is under salary grade 6, can only earn up to Php 15,524 per month.

The country’s shortage of personal protective equipment (PPE) is also contributing to the huge number of infected health workers. According to the WHO, the global shortage of PPEs is affecting healthcare workers worldwide. This shortage could have been eased if the country had the means to manufacture its own PPEs, such as a local textile industry. But the country is reliant on imported PPEs. The Philippine Exporters Confederation Inc. (PhilExport) stated that despite factories’ willingness to produce PPEs, they cannot simply do so because of the lack of fabric and other materials. Had there been a Philippine industry for essential health protection needs, infection among front liners and in general would have been minimized.

Overcoming incompetence

The Duterte administration’s failed COVID-19 strategy in ending the current health crisis exposes its incompetence and lack of sensibility. The 124 days spent in lockdown and the opportunity costs incurred during this period have been wasted because the government failed to effectively intervene and keep the healthcare system from collapsing. It should now set its priorities straight and put all hands on deck to amplify health responses.

The government is not prioritizing funding for the healthcare system and social amelioration but it is pushing for ill-timed programs that will allegedly help in the country’s economic recovery. A concrete example is the continuation of the Duterte administration’s “Build, Build, Build” program despite the more pressing need to reallocate more funds for COVID-19 response.

The Philippine Program for Recovery with Equity and Solidarity (PH-PROGRESO) of the government shows that it is more inclined to save big businesses first before the Filipino people. The huge budget allocated for private corporations’ benefit should be realigned to help the overwhelmed healthcare structure. Fiscal measures for health and economic recovery should go hand in hand instead of pitting one against the other since overall economic performance is very much reliant on the well-being of the Filipino work force.  

Inadequate and relaxed response to COVID-19 hinders the Philippine economy from fully opening. It has only been two months since the gradual operation of businesses and since workers returned to their respective workplaces but the government is already losing control of the situation. Aside from the uncontrollable spread of the disease, hospitals are now reporting that they reached their maximum critical care capacity. Forty-eight hospitals already reported that their ICU beds are now full, and it is alarming that 50% of these hospitals are located in the National Capital Region (NCR). Meanwhile, Cebu City—which is the new epicenter of the disease in the country, is also nearing the danger zone in its critical care capacity. If the population of the Philippines’ major economic hubs keep on getting sick, then it will be much harder for the economy to recover its losses.

The government must protect first the Filipino people from the COVID-19 threat. Majority of Filipino workers are at risk of contracting the disease. The economy cannot recover without a healthy workforce to power it. According to UP’s analysis, half of the Philippines’ major economic contributors are considered high risk spreaders of COVID-19, such as construction workers, security guards and commercial drivers. Many of them are minimum wage earners lacking adequate social benefits and protection. This makes them more vulnerable to infection and with limited means to pay for expensive COVID-19 treatment.

The government should speed up the efforts in broadening and building up testing and hospital capacity.  More than ever, it should make healthcare accessible and affordable for every Filipino. This includes making COVID-19 testing and treatment free for all. The pandemic will not be over as long as infected Filipinos are not isolated and treated due to the lack of facilities and expensive healthcare.

In the end, the entire Philippine economy will suffer if Filipinos are not protected from this disease. The economic downgrade will be far greater if the coronavirus crisis lasts longer. The government cannot afford another lockdown since it will not only endanger the economy but will also bring intense hunger and more hardship. It must act now and prevent the health system from collapsing and the Filipino people from succumbing to both the pandemic and to poverty. #

The unbelievable indifference of the Duterte administration

By Sonny Africa

The Duterte government insists that it is successfully responding to the COVID-19 pandemic. The reality is a little bit different – it hasn’t done enough, and is planning to do even less.

The coronavirus is spreading faster than ever. It took over three months to reach the first 10,000 confirmed cases but less than a week to add the last 10,000, at over 57,000 to date. University of the Philippines (UP) researchers forecast between 100,000 to 131,000 cases by the end of August.

Characteristically, the government’s containment measure of choice was a military lockdown – among the fiercest and longest in the world. It justified this as harsh but necessary, repeating a favored talking point used to justify all sorts of sins.

The effect on the economy and the people was certainly brutal.

The country was plunged into the worst crisis of mass unemployment in its history with 14 million unemployed and a 22% unemployment rate in April 2020, by IBON’s reckoning. The combined 20.4 million unemployed and underemployed are over two-fifths (40.2%) of the presumed labor force. These correct for serious underestimation in officially released figures.

The joblessness and collapse in livelihoods are expected to ease as restrictions are relaxed. But whatever improvement will still not be enough to return to a pre-pandemic state.

The country’s gross domestic product (GDP) is projected to contract by 2.0-3.4% for the whole of 2020, according to the government’s Development Budget Coordination Committee (DBCC). The World Bank has a slightly more optimistic projection of -1.9% while the International Monetary Fund (IMF) and Asian Development Bank (ADB) see it worse at -3.6% and -3.8%, respectively.

This will be the worst growth performance in 35 years since the -7.3% (negative) GDP growth in 1983 and 1984. But if the low estimates materialize, it will also be the biggest decline from positive growth ever recorded.

As it is, the economy is well on the way to its fourth straight year of slowing growth. It already contracted at -0.2% growth in the first quarter of 2020 with just two weeks’ worth of lockdowns. The second quarter figures that will come out in August will be much worse.

Unhealthy response

No one is likely to have thought that the worst public health crisis and economic decline in the country’s history would be enough to spur the Duterte administration to reform its anti-democratic and anti-development ways. It didn’t.

The government’s military-dominated COVID-19 response team has proven unfit for purpose and the steeply rising cases today point to the protracted lockdown being squandered. Yet the rise in reported cases do not even give the complete picture.

To date, there’s a validation backlog of over 15,000. The positivity rate of 12.4% meanwhile indicates that testing is still, months into the pandemic, far below the levels needed. Local transmission is still gaining momentum even as other Southeast Asian countries have already stopped theirs.

The hazy picture is a poor starting point for the contact tracing, isolation and selective quarantines needed. But the rise in COVID-19 cases is sufficient to show how social distancing and other precautionary measures can’t go far enough.

Assuming all pandemic-related deaths are accounted for, the 1,534 reported deaths are still relatively few and the number of daily fatalities fortunately fewer than the peak in March. This may however soon change as the virus spreads in the coming weeks and as the health system becomes overstretched even just by those who can afford it.

Hospital capacity hasn’t been beefed up so much as portions of it carved out at the expense of non-COVID-19 cases. The National Capital Region (NCR) and Cebu are the pandemic’s epicenters in the country. As much as 19 NCR hospitals are at or nearing their capacity of ICU beds for COVID-19 patients – 14 of which were acknowledged by the Department of Health (DOH) last week – while Cebu’s hospitals are already overwhelmed.

Hyped assistance

The inadequacy of the health response is more disturbing in how the time for this was bought with lost incomes, small business closures, joblessness and hunger. Tens of millions of Filipinos even suffered more than they should have because of similarly inadequate emergency relief.

At the start of the lockdowns, 18 million beneficiary households were promised Php5,000-8,000 in monthly cash subsidies for just two months. That right there is an immediate problem – the lockdowns are running on four months now, since mid-March, with only partial easing in June.

Emergency subsidies reportedly reaching 19.4 million beneficiaries under various programs of the departments of social welfare, labor and agriculture sounds impressive.

However, the aid was very slow in coming. Most beneficiaries had to wait 6-10 weeks before getting their first monthly tranche.

The aid is also very stingy. Taken altogether, the first tranche of the cash subsidy programs only amounts to an average of Php5,611 per beneficiary family. Over the last four months this comes out to just Php11 per person per day.

The government has even recanted and said that only 12 million beneficiaries will get the second tranche. But the number of those who will actually get this second tranche may be even less than that. The government is invoking bureaucratic difficulties to explain why only 1.4 million of the 12 million have received this tranche to date.

These emergency cash subsidies are also much lower than the latest official poverty threshold of Php10,727 monthly for a family of five. Yet this miserly relief will even seem generous in the period to come because little more is forthcoming. The official government policy was succinctly put by the presidential spokesperson recently: “We cannot afford to give ayuda (aid) to keep everyone alive.”

Business as usual

The Duterte administration’s lockdowns precipitated what may be the greatest economic collapse in Philippine history. The lockdowns per se are of course temporary – indeed, as too the pandemic, even if this will linger for at least another year or more.

Though temporary, the simultaneous demand and supply shock to the Philippine economy, other countries, and the global economy as a whole is unprecedented in the modern era. The world economy is said to be undergoing its worst recession since the Great Depression.

Yet apart from a momentary surge in emergency relief and despite lip service to the economic crisis, it bizarrely still seems to be business as usual for the economic managers. There are a couple of reasons for this.

The most basic is how the economic managers – and most of our political leaders – are blinded by the free market dogma imbibed over four decades of neoliberal globalization. There is a rigid faith that market forces will be enough to meet the pandemic-driven economic challenge. This is matched by an inability to grasp that responsible state intervention is needed not just to deal with the crisis but for long-term national development.

But there is also an extreme narrow-mindedness common among many afflicted by that dogma – that ‘creditworthiness’, ‘competitiveness’ and ‘investor-friendliness’ are not just a means to but actually ends of development. The people who make up the majority of the economy are peripheral and ever in the margins.

These go far in explaining the lack of urgency and, apparently, seeing the current crisis as an inconvenient but minor speed bump on the highway to free market-driven progress.

Fragments of a response

Genuine attention would start with immediately coming up with a plan fitting the vastly changed pandemic-driven crisis conditions. Nearly six months into the pandemic, all that the people have are fragments – including fragments which are self-evidently exaggerated to give the impression of substantial action.

The economic team came up with a “4-pillar strategy” in April that was eventually rebranded as the Philippine Program for Recovery with Equity and Solidarity (PH-PROGRESO). Supposedly worth Php1.7 trillion or an impressive 9.1% of GDP, this figure was grossly bloated by double-counting of interventions and their sources of financing, by conflating actual spending with merely foregone tax and tariff revenues, and by including additional liquidity from monetary measures.

The Inter-Agency Task Force Technical Working Group for Anticipatory and Forward Planning (IATF-TWG for AFP) released its We Recover As One report in May. This seemed more detailed, comprehensive and forward-looking. There are some relevant health and education measures.

But some very important measures are missing – expanding the public health system, social protection to help everyone in need, and protecting jobs, wages and workers’ rights. Trade, industrial and agricultural measures also seem oblivious to unsound fundamentals, the global crisis, and accelerating protectionism. On the other hand, unfunded feel-good platitudes are aplenty.

The economic managers started working with Congress on a Bayanihan 2 bill in June. This replaces the Php1.3 trillion package that Congress originally proposed but which the finance department summarily shot down ostensibly for lack of funds. The Bayanihan 2 proposal is now just one-tenth in size at Php140 billion.

At present, the stinginess of the economic managers is the biggest binding constraint to addressing the pandemic, alleviating economic distress of poor households, and economic recovery. The Php140 billion is much too small compared to the magnitude of the crisis at hand. At the same time, the sweeping insistence on infrastructure as a magic bullet and on sacrosanct debt servicing means continued unproductive spending rather than on what would have the greatest development impact.

A Philippine Economic Recovery Plan was supposed to be made public at the pre-SONA forum of the economic and infrastructure cluster on July 8. But this was not presented and is still strangely kept secret. Neither the Department of Finance (DOF) nor the National Economic and Development Authority (NEDA) websites share this with the public, and a direct request was declined.

It’s five-and-a-half months since the first confirmed COVID-19 case in the Philippines, and about four months since declaring a public health emergency, a state of national emergency, and the start of lockdowns. The Duterte administration has throughout portrayed itself as doing everything it needs to.

In reality, it seems to be doing as little as it can. A new anti-terrorism law was apparently even seen as more urgent than clinching a stimulus program. This languid COVID-19 response is bringing us to the edge of the precipice on both the health and economic fronts. #

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Kodao publishes IBON articles as part of a content-sharing agreement.