Shifting to MGCQ a short-sighted and desperate move without containing pandemic

By IBON Communications

Research group IBON said that lifting COVID-related restrictions to boost the economy is a short-sighted and desperate move amid continuing failure to contain the pandemic. The group agreed that the government’s excessive quarantine restrictions since last year are behind the economy’s unprecedented and continuing collapse. IBON however said that easing restrictions will not spur recovery without a real fiscal stimulus while risking the more rapid spread of COVID-19.

Economic planning secretary Karl Kendrick Chua recently advised Malacañang to put the entire country under modified general community quarantine (MGCQ). The ‘less restrictive’ MGCQ will supposedly allow the resumption of business activities previously limited under the pandemic lockdown.

IBON pointed out that the proposal to ease restrictions comes while the number of COVID-19 cases has been increasing since the start of the year. The 9,161 cases in the first week of the year increased to 10,741 so far in the week February 4-10. Data for this most recent week may even still be incomplete because of delays in reporting. The group asked where the optimism that the coronavirus is contained is coming from.

IBON stressed that the administration needs to greatly improve its measures to contain COVID-19 instead of relying on its favored blunt instrument of protracted community quarantines. The group enumerated the measures needed as better testing, more aggressive contact tracing, selective quarantines of possible cases, and speedy isolation of confirmed cases. With the number of cases still increasing, easing restrictions without these measures in place risks COVID-19 spreading even faster.

At the same time, IBON added, shifting to MGCQ may not even spur the economy all that much because the government still refuses to spend on any real fiscal stimulus. The group stressed that significantly higher levels of government spending are needed to make up for the lockdown-driven collapse in consumption and investment. This is more so given the now record joblessness and widespread loss of incomes and savings.

Government first of all needs to contain the pandemic better, IBON said. On top of this, it simply has to spend more to help households and small businesses cope with record jobs and income losses and to recover from the economic shock, stressed the group.

The group pointed out how the record 9.5% contraction of the economy in 2020 was substantially due to how the Philippine government refused additional spending last year. In the first 11 months of 2020, its disbursements only increased by 11.6% which is not just below the originally programmed 13.6% increase for the year but even lower than the average 12.9% increase in spending over the period 2017-2019. 

IBON also highlighted how spending even slows this year with the Php4.5 trillion 2021 national budget just a 9.9% increase from the 2020 budget. As it is, the Philippine COVID-19 response is the smallest of the major countries of Southeast Asia at just 6.3% of GDP according to the Asian Development Bank (ADB).

IBON proposes the following to address people’s urgent needs and stimulate the economy:

  1. Php10,000 monthly emergency cash subsidies to 18 million poor and low-income families (poorest 75% of families) or Php10,000/month for up to three months or Php5,000 for six months. This amount comes to Php540 billion.
  2. Php100 emergency wage relief for workers (towards eventual implementation of a Php750 national minimum wage). Micro, small and medium enterprises (MSMEs) can be supported to give this for three months with a Php101 billion fund.
  3. Php40.5 billion cash-for-work programs for the unemployed.
  4. Php78 billion financial assistance (zero/low interest rate and collateral-free loans) for informal earners.
  5. Php200 billion in financial assistance (zero/low interest rate and collateral-free loans) prioritizing Filipino-owned and domestically-oriented MSMEs.
  6. Php220 billion in agricultural support to increase the productivity of farmers and fisherfolk.
  7. Php200-billion COVID-19 health response and Php113-billion distance education to ensure quality education.

The group also stressed that the government can finance these if it really wanted to. IBON identified a universe of at least Php3.9 trillion in funds from which realignments can be made, Php1 trillion in emergency bonds and other government securities, Php391.9 billion in immediate revenues from progressive taxes especially a wealth tax, and at least Php333 billion more from a land value tax. #

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