Research group IBON said that raising taxes on imported oil products will push prices up and burden many poor households already struggling with jobs and income losses amid the COVID-19 pandemic.
The group said that government should instead look to better sources of response funds such as taxing the super-rich.
The Duterte administration recently issued an executive order increasing taxes on imported crude oil and refined petroleum products to 10 percent. This is supposed to fund government’s COVID-19 response.
IBON said this oil tax increase will ultimately be passed onto consumers, especially the poor, through higher prices. Some 18.9 million working people and their families are already dealing with mass unemployment, income losses and delayed and insufficient social amelioration.
The oil tax hike comes on top of additional oil excise taxes already from the government’s regressive Tax Reform for Acceleration and Inclusion (TRAIN) program.
The TRAIN law hiked oil excise taxes by Php6 per liter of diesel, Php5.65 per liter of gasoline, Php5 per liter of kerosene, and Php3 per kilogram of liquefied petroleum gas (LPG).
The additional oil tax will make socially-sensitive products more expensive as well as increase the general price level.
Instead of pursuing this grossly insensitive revenue measure, IBON said that government should instead impose a wealth tax on the country’s super-rich.
The Philippines’ 50 richest have Php4.1 trillion in combined wealth, which is more than what the poorest 71 million Filipinos own put together, the group said.
A tax of 1% on wealth above Php1 billion, another 2% above Php2 billion, and another 3% above Php3 billion will raise Php236.7 billion from these 50 richest individuals alone.
The wealthy can well afford to pay more taxes and this will not have any effect at all on their already extremely high standards of living, said IBON.
Tax revenues from this can then be prioritized towards fighting the COVID-19 crisis and providing sufficient social amelioration for poor and vulnerable Filipinos, the group said. #
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Kodao publishes IBON articles as part of a content-sharing agreement.
https://kodao.org/wp-content/uploads/2020/05/gas.jpg10001500Kodao Productionshttps://kodao.org/wp-content/uploads/2014/11/kodao.pngKodao Productions2020-05-12 07:06:462020-05-12 07:06:48Oil tax hike insensitive and will make poor Filipinos suffer more
From the outset of the Duterte government’s military lockdown as its response to the spread of the coronavirus, it has directed the continuous flow of food commodities, along with medicines and other essentials. Food is inarguably essential to people’s survival during a pandemic and in its socioeconomic aftermath.
Government’s response however has fallen short in ensuring food production and supply. In fact, the military and authorities have controlled even the movements of the direct producers, both in tending their farms and selling their produce to the markets. Even activist volunteers who endeavored to bridge the farmers’ produce to urban consumers and to deliver relief goods to the farming families were detained and accused of violating quarantine rules and inciting to sedition.
The thing is, government has erased “food self-sufficiency” from its agricultural planning principles, now totally unheard of in the Philippine Development Plan 2017-2022. It has instead focused on “economic opportunities” anchored on “market orientation”. The country’s lack of food self-sufficiency has made government’s coping with crises such as COVID-19 utterly chaotic. It is the economy’s sinkhole that will make us fall deeper into a COVID-aggravated economic crisis.
Yet, eight weeks into the military lockdown, while it continues to wrestle with its insufficient health response, the Duterte government is talking of a “new normal” in agriculture. A closer look at the plan, however, reveals it to be a bunch of old habits that have hampered Philippine agriculture from achieving even the most basic goal of food security, much more self-sufficiency.
Pre-COVID crisis
Only eight weeks ago, the country’s “normal” agriculture was having its worst crisis in decades. The sector lost 1.4 million jobs in 2017-2019, the highest number in a three-year period in the last two decades. Its average annual growth rate of 2.1% in the same period is also lower than the 3.5% average in the last 70 years. The sector has also reached its smallest share in history at just 7.8% of the country’s gross domestic product.
In the first quarter of 2020, agriculture posted a 1.2% decline in output, finally collapsing after a momentary recovery from a decline in 2016 and a three-year slowdown thereafter.
Neoliberal policies that government has recklessly implemented are the culprit in agriculture’s near demise. Starting off with the evasion of free land distribution to tillers and rampant land conversions to favor finance capital, government has oriented agriculture towards commercialization, high value cash crops, inorganic chemicals dependency, paid-for irrigation, imported machinery, and trade liberalization. Agriculture is not a government priority, which is putting it mildly when the figures clearly manifest state neglect. The 3.5% average share of agriculture and agrarian reform in the 2017-2020 budgets is the lowest in two decades. In 2018, the Duterte administration delivered the coup de grace with the liberalization of rice imports.
Landowners and merchants have exploited this “normal” – that is the classic story why our food frontliners are the most destitute and hungry in Philippine society. And like adding insult to injury, the government points to farmers’ lack of capacity and technology (and interest to carry on) as the reason why food self-sufficiency is not feasible.
Government gross neglect
Then, COVID-19 happened. Government agencies could not even provide a full picture of our food buffer stocks. The Philippine Statistics Authority has stopped updating the rice inventory, for instance. This showed that, as of March 1, our rice stocks were enough for only 65 days, quite below the 90-day buffer. Vietnam’s announcement that it would implement a rice export ban added to Filipinos’ anxieties – Vietnam accounts for about 38% of Philippine rice imports.
A day before the declaration of a lockdown, euphemized as ‘enhanced community quarantine’ (ECQ), the Department of Agriculture (DA) made assurances that there was enough food for everyone in Metro Manila. The stocks of rice, vegetables and root crops, poultry and meat products, fish, and eggs were sufficient. It took time before some local government units started distributing relief foods, and even then mostly unhealthy canned sardines.
Farming has been disrupted. IBON estimates about 2.5 million farmers, farm workers and fisherfolk economically dislocated by the ECQ. The ECQ guidelines specifically allow establishments engaged in food production and trade but are painfully quiet about the farmers. Farmers’ organizations have said it succinctly – there is no work from home for them. They are subsistence farmers who will go hungry if they are not allowed to farm.
The Duterte government’s COVID response for agriculture under the Bayanihan to Heal as One Act is to provide Php5,000 cash assistance each to only 591,246 beneficiaries under the Financial Subsidy to Rice Farmers (FSRF). But as of 28 April 2020, seven weeks into the lockdown, the Duterte government has served only 266,284 rice farmers.
Farming families may have been given cash assistance through the social amelioration program of the Department of Social Welfare and Development (DSWD), which even then has only served 57% of its target 18 million beneficiaries as of 1 May 2020.
Granting that the rice farmers have indeed received subsidies, IBON estimates these to be equivalent to only Php80-119 per day over 49 days of lockdown, or less than one-fourth of the already low official poverty line of Php353 per day for a family of five.
Government’s meager and much-delayed response to the pandemic is pushing the poor and vulnerable farmers and fisherfolk deeper into poverty and hunger, which gets more and more morally unacceptable at this point in our crisis.
Photo by Lito Ocampo
Neoliberal inertia
The DA is among the first agencies to talk of a new normal. We should rethink and restructure our policies and practices, said DA secretary William Dar. But the DA’s emphasis on the continuation of neoliberalism especially under a global economy that is about to plunge into a grave depression cannot be missed. The Duterte government cannot fake a new normal narrative when its transition plan remains neoliberal.
The budget priority for the DA to transition to its “new normal” remains for cash assistance instead of production support. This is under the Rice Farmers Financial Assistance (RFFA), which is in line with the implementation of the Duterte administration’s rice liberalization law. The RFFA targets to provide Php5,000 to rice farmers who are tilling 0.5-2 hectares. The FSRF is in addition to RFFA and is packaged as the COVID-19 response, which targets rice farmers who are tilling one hectare and below. The total target beneficiaries of both packages are 1.2 million rice farmers nationwide, but there are 2.5 million rice farmers in the country who are definitely dislocated by rice liberalization.
The program priority is a food resiliency action plan that is aimed at an unhampered flow of food and agri-fishery products. It is anchored on the aforementioned cash assistance as consumption stimulus and market links such as the Kadiwa program, market satellites and market on wheels. In short, it is anchored on trade, again not so much on strengthening farmers’ production. The plan is also about popularizing urban and backyard gardening, which is overly focusing on individual consumers to go on survival mode instead of improving the production and conditions of farming communities in the real spirit of bayanihan.
The DA has proposed to implement nationwide the “Ahon Lahat, Pagkaing Sapat (ALPAS) Laban sa Covid-19” or what it dubs as Plant, Plant, Plant program to “increase the country’s food adequacy level”, with an approved Php31-billion supplemental budget. But this will be done by intensifying the use of quality seeds, inputs, modern technologies – which have been proven from experience to only add to the farmers’ debt burdens. The DA unfortunately has perennially acted as a marketing agent and endorsed the sale of seeds, inputs and farm machinery of big agribusiness to Filipino farmers, while it has shunned the promotion of agroecological practices.
The Duterte government still emphasizes that in order for agri-fishery to grow and cope with emergencies such as pandemics, the sector needs to attract more investments and resources and partner with the private sector. And there we are back on the neoliberal road.
Photo by RB Villanueva
Build the momentum
Surely, food self-sufficiency can be our new normal. But first in the face of a pandemic, farmers need fast and sufficient relief assistance, both for their daily needs and health services and as production subsidy. In the same manner that urban consumers should be relieved of paying their bills during COVID-19, farmers should have been long ago condoned of their mounting debts from unpayable land amortizations, loans from unscrupulous traders, and even from availing of government lending programs. Then, farmers and fisherfolk should be allowed to go to their farms and on fishing trips and deliver their produce to the markets.
But in the long-term, food self-sufficiency is about the assertion of an entire range of human rights. The state should recognize the right to food, the right to produce food, the right to till the land, and to have control of the land that farmers have been tilling for generations. Farmers have the right to choose their own production system, so as not to be dictated by the whims of the market and made vulnerable to market vagaries. We can envision an agriculture that is moving away from the profit-oriented concept of value chain that disregards the small producers and their environment, and move towards sustainable farming practices.
In the end, we can build the momentum for food self-sufficiency only from the farmers’ struggle and movement for genuine agrarian reform. And that should be our new normal. #
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Kodao publishes IBON articles as part of a content-sharing agreement.
https://kodao.org/wp-content/uploads/2019/11/c3.jpg537800Kodao Productionshttps://kodao.org/wp-content/uploads/2014/11/kodao.pngKodao Productions2020-05-09 09:40:292020-05-09 09:40:31Why can’t food self-sufficiency be our new normal?
The Philippine economy was already weak coming into the COVID-19 crisis, research group IBON said. Growth will remain slow if the government does not acknowledge pre-existing weaknesses that the pandemic merely intensified.
The group said that recognizing the problem is the first step to the bold measures needed for long-term growth and development.
The Philippine Statistics Authority (PSA) reported -0.2% growth in gross domestic product (GDP) in the first quarter of 2020, marking a significant drop from the 5.7% growth in the same period last year.
The National Economics and Development Authority (NEDA) attributed this to the Taal volcano eruption in January, decrease in trade and tourism due to COVID-19 in February, and the eventual lockdown in March.
IBON said however that the economy was already slowing for three consecutive years and headed for its fourth such year even before COVID-19 came into the picture.
Official figures show annual GDP growth falling from 7.1% in 2016 to 6.9% in 2017, 6.3% in 2018 and 6.0% in 2019.
Year-on-year first quarter growth also reflects this trend, falling from 6.9% in the first quarter of 2016 to 6.4% in 2017.
This slightly increased to 6.5% in 2018 but fell to 5.7% in 2019. In 2020, first quarter growth dove to -0.2%, which is the first GDP contraction since the fourth quarter of 1998 (-3.4%).
Important accustomed drivers of growth were falling even before the eruption of Taal Volcano in January and the COVID-19 crisis since February and especially since the lockdown starting mid-March.
Growth in overseas remittances slowed from 5.3% in 2017 to 3.9% in 2019, and foreign investment flows from US$10.3 billion to US$7.6 billion over the same period.
The manufacturing sector slowed from 8% in 2017 to 3.2% in 2019, and agriculture from 4.2% to 1.2% over the same time.
Tourism had also been lackluster, said the group. Growth in gross value added of tourism industries remained virtually stagnant from 10.1% from in 2016 to 10.3% in 2017 and 10.6% in 2018.
In terms of expenditure, gross capital formation considerably slowed from 10.9% growth in 2017 to 2.5% in 2019 and exports from 17.4% to just 2.4 percent.
Household consumption spending remained steady at 6% in 2017 and 5.9% in 2019.
Hence, overall economic growth has just been artificially driven by government consumption spending, which increased from 6.5% in 2017 to 9.6% in 2019 and by public infrastructure projects rather than an underlying dynamism from vibrant domestic agriculture and industry.
These basic economic weaknesses result in record joblessness and the proliferation of informal and irregular work.
Correcting the official methodology which underreports joblessness, IBON estimated that the number of unemployed reached a record 4.7 million in 2019.
The group also estimated that 27.2 million or 64% of employment in the same year was really poor quality work comprised of non-regular and agency-hired, government contractuals, and informal earners.
Widespread poverty is another indicator of a sluggish economy, said the group.
According to PSA data, some 12.4 million or over half of 22 million families nationwide were trying to survive on less than P132 per person per day.
IBON pointed out that the last three years of slowing growth has been despite the Duterte administration’s expanding Build, Build, Build infrastructure program.
Despite annual appropriations for infrastructure increasing to 4.7% of GDP in 2019, economic growth still fell for a third consecutive year.
The group explained that infrastructure spending is a short-term stimulus at best and that domestic agriculture and Filipino industry have to be strengthened for growth to be higher and more sustained.
The agriculture sector has been weakening due to long-time government neglect. It grew from -0.1% in 2016 to 4.2% in 2017, but steadily declined thereafter to 1.1% in 2018 and 1.2% in 2019.
First quarter growth in agriculture slid to -0.4% in 2020 from 0.5% the previous year. Continued agricultural liberalization, such as of the rice subsector, will only weaken agriculture further.
Growth in manufacturing, which has long been foreign-dominated and export-oriented, has also been dwindling. The sector registered 6.8% growth in 2016, which increased to 8.0% in 2017. But this dropped to 5.1% in 2018 and 3.2% in 2019. First quarter growth in manufacturing went down to -3.6% in 2020 from 5.2% in 2019.
IBON said that the government will be making this same mistake in overly relying on infrastructure spending as its response to the unprecedented COVID-19 crisis.
The group stressed that the government needs to implement bolder measures that prioritize the needs of Filipinos, especially the most vulnerable, and that genuinely develop the national economy.
These include: immediate emergency relief, and especially with unemployment soaring, extended income support to poorest households; expanding the public health system and providing universal social protection; and repurposing the economy for domestic demand-driven employment and growth by strengthening agriculture and building Filipino industry.
The resources needed for these can be raised by imposing a wealth tax, higher personal income taxes for the richest families, and higher corporate income tax for the largest corporations.
IBON said that if the government insists on its old neoliberal policies and does not change course, the economy will be even weaker after the COVID-19 crisis. #
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Kodao publishes IBON articles as part of a content-sharing agreement.
https://kodao.org/wp-content/uploads/2020/05/pila.jpg7681024Kodao Productionshttps://kodao.org/wp-content/uploads/2014/11/kodao.pngKodao Productions2020-05-08 08:51:222020-05-08 08:51:31PH economy was already slowing – COVID-19 just made it worse
In the face of the Filipino people’s growing anxieties about COVID-19 and life after the lockdown, president Duterte keeps heaping praises on China.
The Duterte government was reluctant at first to restrict travel and tourism from China and the operations of Chinese Philippine Offshore Gaming Operators (POGOs) because such moves to contain the virus would allegedly hurt China’s feelings. In the next presidential speeches, the government seemed to have flip-flopped from its cavalier attitude towards the pandemic, but it has not stopped uttering assurances to China.
That the Philippines remains to be by China’s side as China battles COVID-19. Or that China will help the Philippines overcome the health crisis and that president Duterte can directly send a personal note to Chinese president Xi Jin Ping. A you-and-me-against-the-world expression of devotion that is repeated ad nauseum.
In the most recent display, returning presidential spokesperson Harry Roque even got a little chummy – referring to the Philippines-China relationship as “BFF” (“best friends forever”), and that naturally China will prioritize the Philippines in giving COVID aid and funds.
It leaves a nasty taste in the mouth as the country continues to grapple with economic uncertainties and government’s lack of direction six weeks into the lockdown.
But is it even valid to cling on to China, or to any other country for that matter, for our survival as a nation post-COVID? Even without COVID-19, it is already insane as it is for the Philippine government to obsessively hold on to failed neoliberal policies and to rely on foreign capital for development. It would take some sobriety to tackle the question, but looking at the global economy and the seismic changes that have been happening is the sensible way to begin.
The world is coming down
China indeed remains the world’s leading merchandise trader and second to the United States (US) in trade of goods and services in the overall. But the slowdown in global trade that has been quite evident since 2016 on the back of a protracted global economic recession is weighing down on the world’s economies and leading traders. This has only been aggravated by the US-China trade war escalating at the end of 2018, which is hurting aggregate import demand, as well as the outbreak of the COVID-19 pandemic emanating from Wuhan, China at the end of 2019 whose impact on world trade is still unfolding.
World merchandise trade volume had a significantly lower growth of 2.9% in 2018 than the 4.6% growth registered in 2017 that raised false hopes of a return to better days. The slowdown in trade was accompanied by weaker output growth – the world gross domestic product (GDP) grew at exactly the same rate as trade (2.9%) compared to a minimally higher growth of 3.0% the year before.
The numbers turned uglier in 2019 – with the combined effects of the trade tensions in the first half clearly felt and the jitters in the second half over the possible lethal spread of COVID-19 across geographic and economic regions. The slowing world merchandise trade finally declined by 0.1% in volume in 2019. Likewise, in dollar values it fell by 3% to US$18.89 trillion, whereas it registered a 10% increase due to higher energy prices just the year before. The global GDP got even weaker with a preliminary growth figure of only 2.6% for 2019.
Projecting the full impact of COVID-19 on trade, the World Trade Organization (WTO) is looking at a further decline in 2020 by 12.9% in an optimistic scenario or by 31.9% in a pessimistic scenario. The International Monetary Fund (IMF) projects the global GDP growth in 2020 to fall to -3%, which is a major revision over a very short period. This crisis is going to be far worse than the global financial crisis, the IMF has said, and the worst since the Great Depression.
Palace photo.
China is symptomatic
The world is watching China with apprehension. The country has high demand for raw materials and intermediate goods and serves as a final-stage export platform for global production chains. But even before the number of COVID cases started climbing at the start of 2020, China’s GDP growth of 6.1% in 2019 was already slower than the 6.7% rate in 2018. It was in fact the country’s slowest growth in 29 years.
The National Bureau of Statistics of China reported a 6.8% year-on-year decline in the first quarter of 2020. It is the first contraction at least since 1992.
China experienced a deceleration in merchandise trade volume, from 8.0% in 2017 to its moderate growth of 5.2% in 2018. The value of exports slowed sharply at 0.5% growth in 2019 from a 10% rise in 2018, while the value of imports fell by 2.7%, the first decline in three years. In the first two months of 2020, exports plunged by 17.2% year-on-year, while imports shrank by 4%, amid factory shutdowns and travel restrictions to contain the virus.
China’s trade surplus and capital formation are its sources of economic strength to rise as an outward investor. In 2018, China ranked 2nd globally, next to Japan, in terms of foreign direct investment (FDI) outflows, and 3rd, next to the US and Netherlands in terms of FDI outward stock. But like global trade and the global economy, global FDI flows were in three consecutive years of decline, falling by another 13% in 2018. China’s FDI outflows slid further by 18%, the second year for China, based on UNCTAD data.
China’s Ministry of Commerce (MOFCOM) reported a lower figure of 9.6% decline in 2018, pointing out that China’s FDI fall was still significantly lower than the world figure of 29% according to MOFCOM. It does not change the general picture, however, no matter how Beijing paints stability. Outward FDI is falling anywhere else in the world, and it is 40% smaller today than its post-global financial crisis peak in 2015.
The China Global Investment Tracker of the American Enterprise Institute, an alternative to MOFCOM data, which tracks Chinese investment and construction around the world with a threshold of US$100 million, is seeing a dramatic fall in China’s outbound FDI of about 40% for 2019 that will be similar to 2011, with Chinese investment returning to a domestic rather than global phenomenon.
The problem is China cannot simply work from home. It has been infected with the unbounded, reckless desire of expansionism – it has to continue going global.
Palace photo.
BFF?
The Philippines is not even among the top 15 trading partners of China. It is also not a significant destination of Chinese investment.
Hong Kong (PRC) receives about 60% (US$86.9 billion) of China’s net FDI, followed by the US (US$7.5 billion), Virgin Islands (US$7.1 billion), Singapore (US$6.4 billion), and Cayman Islands (US$5.5 billion). It is obvious how China uses Hong Kong as an intermediary to take advantage of Hong Kong’s liberalized agreements and competitive currency before investing somewhere else, or of “double dipping” wherein Chinese investors return to the mainland as “foreign investors” and take advantage of additional fiscal incentives.
It also appears that Chinese investors, like many global investors, have sought safe havens such as the Virgin Islands and Cayman Islands as times get rough. Removing these and Hong Kong for the meantime would show that the top 10 recipients of China FDI in 2018 were the US, Singapore, Australia, Indonesia, Canada, Germany, Vietnam, South Korea, United Kingdom, and Thailand. The Philippines does not figure anywhere in the line-up.
On the other hand, some 56 countries along the Belt and Road Initiative (BRI), of which the Philippines is part, captured 12.5% of China’s total outward FDI in 2018. BRI investment has been particularly pronounced in the Middle East and North Africa (MENA) region. Meanwhile in Southeast Asia where China’s state-owned enterprises have particular interest, Cambodia is the favorite.
Narrowing our map now to the Association of Southeast Asian Nations (ASEAN), the Philippines captured 11% of China’s investment in the ASEAN in 2019, which is practically a fair share if China’s investment would be divided equally among the 10 member-countries.
In short, we may be among China’s friends, but we are not the best, and forever has not even started.
On the other hand, among the Philippines’ trading partners, China ranks 4th in terms of contribution to exports value, next only to US, Japan and Hong Kong (which is a trading port of many other countries apart from the mainland). Indeed, China is the country’s biggest supplier of imported goods, accounting for about one-fourth of Philippine import value, which shows a one-sided trading relationship. Exports to China in the first month of 2020 had a tepid 7% increase, while imports from China continued to increase at double-digit rate (16.4%), a trend that started in 2016.
Singapore, US, Japan and South Korea have remained the country’s top investors, with their combined net FDI of US$963.49 million in 2019. Inflow from China was US$106.16 million. Even if we add US$28.69 million (assuming 60% of what is coming from Hong Kong, since not all Hong Kong FDI is from the mainland), China would still come fifth. Surely there has been a dramatic rise in Chinese investments of 1,751%, from only about US$10.77 million in 2016 to its peak of US$199.38 billion in 2018, but net FDI from China has started to taper off and declined by 47% in 2019.
There has also been a phenomenal increase in Chinese official development assistance (ODA) loans from US$1.5 million in 2016 to US$364.9 million as of 2018. But Chinese ODA still pales in comparison with Japan ODA of US$6.2 billion or even USAID of US886.4 million.
In other words, even in un-reciprocated relationships that our liberalized and subservient economy has become so dependent on, China is not even the best master.
What then is the fixation on China all about?
There can only be one reason for China – it is unstoppable. Since building its internal strength and setting its sights on the endless possibilities in the global economy, China itself has been fixated on itself.
Its expansionist momentum has surged in the last two decades, perfecting its “go global” strategy and embarking on its biggest and most ambitious ever BRI as well as Made in China 2025, moving away from being the world’s factory to producing high-technology products and services. Beijing has been aggressive and at the same time cautious in its policy approach, which gives it confidence that it won’t crash as hard as its economic rivals.
It may be recalled that China held up well during the 2008 global financial crisis, compared to the slow recovery of the European Union and the US. Although today is different – China being the epicenter of the pandemic – China does its best to sustain the image of stability.
International observers have also pointed out that Westerners are finding it much more difficult than Asians to overcome the hardships arising from the health crisis. The observation could just be China’s own messaging echoed through its own propaganda machinery. In any case, China is sustaining the narrative.
This narrative has been copy-pasted in the language of lauding China’s ability to deal with the crisis, official restraint on China bashing and discrimination especially on social media (even setting up laws to penalize “fake news and rumors” about China and COVID-19), and loyalty to China to the point of endangering lives, as The Diplomat has observed across Southeast Asian governments. The Duterte administration has submitted to this propaganda line and has been most explicit about the fear of retaliation from China as expressed by none other than the health secretary.
For the Duterte government, there are two apparent reasons. One could simply be self-serving – that the Duterte administration, the most traveled to China, be able to maintain the business deals and transactions with Chinese firms. No matter how loose and small, these are big enough gains for its entourage of businessmen and cronies.
But the second reason is more on economic survival. The Duterte administration has yet to really jump-start its Build, Build, Build (BBB) infrastructure program and to capture the promise of China’s overflowing construction capital. Of the 100 flagship projects worth Php4.3 trillion, China accounts for only 17% of the number of projects and 16.3% of the cost, while only one of these projects is in the implementation stage. The economic managers are torn between revamping BBB and reallocating its budget for COVID-19 and leaving BBB unscathed. The fact remains, BBB is untenable now more than ever.
On endlessly praising China, the Duterte administration may not have really internalized China’s rhetoric, but it is clearly desperate. The Philippine economy is on its fourth year of slowdown, and the economic managers are still relying on foreign capital for pump-priming instead of building our industrial and agricultural core. The Philippine economy is down with the lingering illness of backwardness that has only been aggravated by neoliberal policies, yet government cannot think of a cure other than to be on its knees. #
https://kodao.org/wp-content/uploads/2020/04/duts-2.jpg640960Kodao Productionshttps://kodao.org/wp-content/uploads/2014/11/kodao.pngKodao Productions2020-04-28 09:02:572020-04-28 09:02:58Why do we keep on begging China for friendship?
The Duterte administration can end the lockdown sooner and help every Filipino in need. It can raise the resources needed for this if it lets go of its infrastructure fantasies, prioritizes life over debt, and is bolder in tapping the accumulated wealth of elites and large corporations. Not doing any of these means making the people bear the disproportionate burden of dealing with the pandemic.
Funds are available
In their most recent taped address last Thursday, April 24, the president and other members of the Inter-Agency Task Force (IATF) on Emerging Infectious Diseases took turns lamenting how little funds there are for responding to the COVID-19 crisis. No one doubts that huge resources are needed. However, using this an as excuse for failing to implement the necessary public health measures against the pandemic and for failing to help millions of poor Filipino families not just during the lockdown but amid the country’s worst economic crisis in decades is completely unacceptable.
Pres. Rodrigo Duterte declared: “Our country comes first.” For this to mean anything, the Duterte administration needs to take bolder measures to raise funds for dealing with the pandemic including letting go of its sacred cows.
Realigning the national government budget away from items that have fallen in priority is a start. However, the finance secretary’s latest declaration that the administration is preserving funds for its Build, Build, Build (BBB) program is particularly out-of-date. These BBB projects were conceptualized and justified at a time of giddy optimism about the economy. The pandemic, global recession, and domestic economic collapse mean that many projects in the Php989 billion public infrastructure program for 2020 are no longer viable and of much less priority than urgent health measures, emergency relief, and social protection.
The finance department’s earlier position that debt servicing will continue unhindered is also out-of-date. The national government is paying Php1.03 trillion to service debt in 2020 – Php451 billion for interest payments and Php582.1 billion for principal amortization. The current crisis however means that millions of Filipino families are at risk not just from the coronavirus but from disrupted livelihoods and loss of incomes. COVID-19 response spending should be prioritized over debt payments, starting with at least moratoriums on US$5.2 billion in debt service to so-called development agencies and supposedly friendly governments. The government’s human rights obligations to its people far outweigh debt service obligations.
The president said that the government will do everything necessary to raise money to fight COVID-19. This should include tapping the huge concentration of wealth and income in the country’s richest families and largest corporations. The 50 richest Filipinos had a combined wealth of Php4,061 billion in 2019, according to Forbes. The 50 largest conglomerates meanwhile had combined profits of Php856.4 billion in 2018 alone.
Much of this wealth and income is more socially useful today spent on COVID-19 response rather than accumulated as personal wealth or used for self-interested business purposes. The Duterte administration can take the bold step of issuing COVID-19 emergency bonds on solidarity terms targeted at these elites. There is also the daring step of reforming the tax system to become progressive with higher personal income and wealth taxes on the richest Filipinos and higher corporate income taxes on the largest corporations. The Duterte administration cannot say it has no money if it is not doing anything to mobilize concentrated income and wealth for socially urgent purposes.
Photo by Joseph Cuevas/Kodao
Lockdown can be ended
Millions of Filipinos are looking forward to the end of the lockdown, especially the vulnerable majority who have gone hungry and desperate over weeks of sparse or non-existent emergency relief from the Duterte administration. However, despite Malacanang’s posturing and government agencies’ reports, the fact remains that the national government is still being slow in putting the necessary health measures in place for the lockdown to be lifted safely.
The government needs to accelerate the pace of health measures for battling the coronavirus. At the same time, it needs to immediately arrest the enormous backlog in socioeconomic relief and assistance for millions of poor and vulnerable households affected by the lockdown.
The coronavirus continues to take its toll. As of April 23, the total number of reported cases has reached 6,981, with 462 fatalities. These include 1,062 infected health care workers with 26 fatalities.
Health experts such as from the UP COVID-19 Pandemic Response Team point out that the epicenter of the virus is the National Capital Region (NCR) and surrounding regions but also that it continues to spread elsewhere and still needs to be contained. The Department of Health (DOH) concedes that it is too early to say if the curve of COVID-19 transmission has begun to flatten.
While experts attest to the contribution of the enhanced community quarantine (ECQ) in controlling the spread of the coronavirus, it has heavily impacted on the poorest sections of the population, especially in Luzon, and the economy as a whole. The ECQ is disrupting 73% of the economy, corresponding to Luzon’s share in the gross domestic product (GDP) in 2019. IBON estimates that 14.5 million workers and informal earners have been dislocated. The 7.5 million lowest-income families in Luzon are most in danger of deeper poverty and hunger since they have little savings or means to absorb the shock of disrupted livelihoods.
The lockdown need not have been expanded or dragged on for so long had the government been more efficient and immediately started putting the necessary health measures in place. Yet three months since the first case of COVID-19 and almost six weeks into the lockdown, the government is still ill-equipped to contain the pandemic.
Despite the arrival of donations and test kits, only 55,465 individuals have been tested as of April 22. This is too few, according to health advocates, compared to the potential community and hospital transmission of the virus. There are still only 17 COVID-19 testing centers out of 78 that the DOH plans to install nationwide. Only 7,000 have been contact-traced, which is low compared to the number of confirmed COVID-19 cases.
Quarantine, isolation, and treatment facilities remain insufficient: the health system is not yet ready for when infections and hospitalizations peak in the coming months. Frontline health workers still lack protective equipment. This has already resulted in the Philippines having among the worst infection rate and highest number of COVID-19-infected health workers in the world.
Photo by Joseph Cuevas/Kodao
Unnecessary suffering
At the same time, the government is failing to ensure that all poor and vulnerable families affected by the lockdown get adequate emergency relief. Their rights to food, health, water and sanitation, and social protection are grossly unmet and even violated.
Over 13 million of government’s targeted 18 million low income families have not received emergency subsidies and are going hungry. Only 264,154 formal workers out of the IBON-estimated 10.7 million workers in the country have reportedly received assistance, and just 235,949 informal earners out of 5.2 million nationwide. Only 353,037 of 9.7 million farmers, farmworkers, and fisherfolk are reported to have received emergency subsidies.
The government claims to have released Php205 billion for emergency assistance. However, it is unconscionable for the government to have created so many bureaucratic barriers before this much-needed aid reaches the poor. These should be immediately removed.
The ECQ will be extended until May 15 in selected high-risk areas including the NCR, Calabarzon, Central Luzon, Benguet, Pangasinan, Albay, Catanduanes, Mindoro Island, Antique, Ilo-ilo Cebu, Davao Del Norte, and Davao City. Other parts of the country considered “low-risk” or “moderate-risk”, meanwhile, have been put under a “general community quarantine”, where aside from ECQ measures, “non-leisure stores” can partially open, higher education can finish the academic year, some construction projects may resume, and public transportation may operate on reduced capacity.
Affected families need expedient emergency relief in the period to come on top of what is due them for the past six weeks.
Making the most-affected families wait a day longer for aid that should have started coming many weeks ago nullifies government’s facade of being resource-capable with supposedly Php1.49 trillion towards its 4-pillar socioeconomic strategy against COVID-19. This amount gives the impression of huge spending but is really bloated by items that should not be counted as a ‘budget’ for the response.
In truth, the government plans to spend just Php366.9 billion with another Php133.7 billion for loan programs and credit guarantees. There is just Php50.7 billion for health response – it remains to be seen if this is enough to address the worst public health crisis in the country’s history.
The balance of Php316.2 billion is for social assistance. Yet this barely covers the Php297.1 billion in emergency socioeconomic relief that IBON estimates is needed for every month of the lockdown, which should include: emergency relief packages for the poorest 5 million families (Php15 billion); unconditional cash transfers for the poorest 10 million families (Php100 billion); wage subsidies for 10.7 million workers in formal establishments (Php53.5 billion); financial assistance for 5.2 million informal workers (Php26 billion) and 9.7 million farmers and fisherfolk (Php97 billion); and emergency support for 5.6 million indigent seniors and pensioners (Php5.6 billion).
Protecting people’s lives is the paramount concern, and the government should do everything necessary for this. This includes ensuring that the millions of families do not go hungry or suffer. It also includes giving special attention to high risk groups aside from the poor, such as the sick, elderly and those in congested jails. It however does not mean setting aside human rights as the Duterte government’s militarized approach is doing.
The lockdown may help contain the spread of the virus but this is at great social and economic cost and will be more and more untenable the longer it drags on. The necessary health measures have to be secured for the lockdown not be put to waste. At the same time, the government must ensure that it is giving enough attention to mitigating the lockdown’s effect especially on the poorest Filipinos. The country must deal with the pandemic, and the Duterte administration has the responsibility and obligation to ensure that this is done humanely and compassionately. The government also cannot claim that it does not have the money to respond well if it is just being blind to what really needs to be done. #
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Kodao publishes IBON articles as part of a content-sharing agreement.
https://kodao.org/wp-content/uploads/2020/04/covid4.jpg13891920Kodao Productionshttps://kodao.org/wp-content/uploads/2014/11/kodao.pngKodao Productions2020-04-25 16:00:432020-04-25 16:00:44Duterte govt can end lockdown sooner and help every Filipino in need
The Duterte administration continues to be misleading about its COVID-19 response strategy, research group IBON said.
A closer look shows that the government is not actually spending as much as it claims, the group said. This casts doubts on its real efforts to battle the pandemic, especially when it comes to the most vulnerable Filipinos.
The Department of Finance (DOF) recently announced that Php1.49 trillion would be allotted towards the administration’s 4-pillar socioeconomic strategy against COVID-19.
The 4-pillar program is supposed to ensure emergency aid to the poorest and vulnerable Filipinos, medical resources to fight the pandemic, fiscal and monetary actions to keep the economy afloat, and an economic stimulus plan.
“The Duterte government is still being intentionally misleading about its COVID-19 response measures – which makes one doubt what else about the COVID-19 crisis they’re being untruthful about,” IBON executive director Sonny Africa said.
Africa noted the DOF claiming on its website that the “total budget” of the 4-pillar strategy is now at Php1.49 trillion.
He said this gives the impression that the government is spending Php1.49 trillion to respond to the pandemic.
In truth, it aims to spend just Php366.9 billion, and allocate Php133.7 billion for loan programs (Php13.7 billion) and credit guarantees (Php120 billion), he said.
The Php366.9 billion includes only Php316.2 billion in social assistance which barely covers what IBON estimates is at least Php297 billion needed for every month of the lockdown, said Africa.
The balance of Php50.7 billion is for the health response and is hopefully enough to deal with the worst public health crisis in the country’s history.
Africa also pointed out that the Php1.49 trillion budget – which gives the impression of huge spending for COVID-19 response – is bloated by items that should not even be counted as part of this supposed budget.
Among these is the Php142.8 billion in tax cuts, deductions and forgone revenues. These are not actually spent even if they are income losses for the government, he said.
The reported Php233 billion in estimated additional liquidity in the financial system from cuts in interest rate and reserve requirement cuts should not be considered spending, said Africa.
It is also not even sure how much of this will actually go to any kind of COVID-related response, he added.
The Php610 billion in additional financing from foreign lenders (Php310 billion) and the Bangko Sentral ng Pilipinas purchase of government bonds (Php300 billion) are also not spending as such.
Africa said that it would even be double-counting if any of this goes to the targeted Php366.9 billion in spending or the Php133.7 billion in loan programs/credit guarantees.
Africa said that the Duterte administration’s inability to properly cost its COVID-19 response measures is a direct result of its still not being clear what exactly its plan is. This despite being nearly six weeks into the lockdown already.
“The government can be honest about this and the efforts it is taking, instead of, almost maliciously, trying to cover this up by dazzling the public with huge figures in the trillions of pesos,” Africa said. #
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Kodao republishes IBON reports as part of a content-sharing agreement.
Today (Wednesday, April 22) marks the 50th year of the commemoration of Earth Day. Environmental activists vow that it will not just be a day but a movement. But in as much as we would want to manifest this human solidarity in a rally and mass gathering, we cannot – we are on our sixth week of a rather militaristic lockdown due to a pandemic.
Fifty years – a lot has changed in those years, the most significant of which is how people have come to pay tribute to Mother Earth.
I myself remember my own environmental awakening – it was bittersweet. At first there was this desire to commune with nature, which I soon realized to be in a critically degraded state. I shed off that romanticism and embraced the harsh reality that we have to do something about our planet.
The other week while on lockdown, our batch at Ayala Mountaineers (named after the avenue, the concrete jungle) created an FB group to reconnect. In a matter of days, we’ve been photo-dumping old memories of our climbs, of breathtaking ridges, rock walls, rampaging falls, crisscrossing rivers, and crowded summits.
Yes, crowded summits and campsites! You see, we are Batch ’92 – right on the year of the first Earth Summit in Rio de Janeiro when there was an upsurge in environmentalism.
Mountaineering club memberships have dwindled since then, not because the mountains and the great outdoors have stopped beckoning lovers, but because even our mountaineering has been put in a proper perspective.
I have learned a lot from activists. They raised the level of the discussion to sustainable development in Rio, forwarded the critique on the manner things were being governed, and vowed to reclaim our common future. Today, the general public have a far more profound appreciation of our planet, which has been expressed in vibrant struggles and social movements.
Profits over planet
Yet, undeniably, we are confronted with the worst ecological crisis. It took Rio another 20 years for governments and stakeholders to talk about more focused political reforms for sustainable development, and another three years to formulate such goals. Yet again, it has been five years since the sustainable development goals or SDGs, we are faced with what can be the worst pandemic, which undeniably has ecological roots.
Are we really this ignorant, ill-informed and lacking in science and technology to reach this precipice? No, it is the profit-motivated economic activities of few corporations and individuals that have vested interest in resisting the reforms that we want to be introduced.
And in the last 40 years, profit-seeking has been facilitated by neoliberalism. We have seen the unbridled utilization of ecosystems in the name of the market, in the name of profits. The systematic onslaught of neoliberal policies that liberalize foreign trade and investment has unfortunately occurred simultaneously with our so-called sustainable development discourse.
Neoliberalism has devastated our environment and impoverished our people, leading to our vulnerabilities to natural hazards and pandemics.
Unrepentant neoliberalism
Scientists point to several environmental changes that have categorically caused the outbreaks of pandemics. For instance, forest clearing for other economic uses has disturbed the habitat of various species and unleashed various pathogens. The loss of ecological integrity reduces our chances for healthy living and capacities to cope with diseases, aside from having itself created new diseases and mutations.
The Philippines is a hotspot of all of these. Deforestation, land-use changes and coastal reclamation are being done to give way to real estate and infrastructure development, industrial plantations and corporate agriculture. Economic activities that undermine ecological integrity such as foreign large-scale mining and the use of coal for energy are being promoted and liberalized. The kind of urbanization the country has is more associated with poverty rather than human development, as displaced and poor rural folk flock to the cities for survival. The Philippines is also among the top five countries that are most vulnerable to climate risks and disasters.
The Philippine environment is critical, because government policies remain to be hopelessly neoliberal. The Duterte administration for instance is centered on the promotion of real estate, construction, infrastructure development, natural resource extraction, and privatization of the commons, to name a few of its unrepentant neoliberal policies.
Fight on
COVID-19 is a health crisis as well as an environmental crisis – both only showing a crisis of the system that we have not yet resolved. This is why when we commemorate this day, we vow that indeed it is a movement. No matter how we put emphasis on the climb, the summit remains the most rewarding part. But as they say in mountaineering, there can always be several approaches to the summit – a gradual meandering ascent or a direct assault. Whichever we choose, as we commemorate this day, we definitely commit that it is going to be a view of a better future. #
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Kodao publishes IBON.org stories as part of a content-sharing agreement.
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Research group IBON said that millions of Filipinos are going hungry and suffering the worst mass unemployment in the country’s history as the sixth week of lockdown begins.
The group said that government relief efforts, especially to the poorest Filipinos, is sluggish and minimal.
The Duterte administration is not giving emergency relief enough attention and appears more focused on using “martial law-like” measures to contain mounting social unrest, said the group.
Pres. Duterte’s latest report to Congress shows how government’s socioeconomic response is still dragging and meager, even in achieving its already low targets. Even with emergency powers granted to the President, bureaucratic hurdles and inefficiencies continue to stall urgent relief efforts.
IBON said that there has been little improvement in the distribution of promised emergency subsidies.
The group noted that just about 4.3 million or less than one in four (24%) of the government’s targeted 18 million low income families have received cash assistance.
Contrary to the promise of supposedly up to Php5,000-8,000 in aid each, recipients instead received just an average of Php4,392 each.
No additional Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries have been given assistance other than the 3.7 million families reported three weeks ago.
Also, just 617,141 more non-4Ps beneficiaries have been served since then.
Non-4Ps beneficiaries apparently include the previously reported 40,418 drivers of public utility vehicles and transport network vehicle service; this is only 9% of the 435,000 drivers nationwide targeted for cash aid.
This means that as many as 13.6 million or 76% of the 18 million poorest families have not received emergency subsidies and are going hungry, said the group.
IBON said that millions of households are at risk of hunger because of the poor reach of emergency subsidies and even of government’s other financial assistance programs.
The Department of Labor Employment (DOLE) stopped accepting applications due to the depletion of the Php1.6 billion fund for its COVID-19 Adjustment Measure Program (CAMP).
Only 264,154 formal workers have received Php5,000 each in financial assistance as of April 19.
This is just 2.5% of the IBON-estimated 10.7 million workers in the country, a large majority of whom are affected by the lockdown.
The group said that it is unclear if affected workers unable to avail from CAMP will now be shouldered by the Department of Finance’s Small Business Wage Subsidy Program.
Not all formal workers in need meet the criteria of being employed in small businesses and registered with the Bureau of Internal Revenue and Social Security System.
Meanwhile, just 235,949 informal workers were assisted by DOLE, which is still only 3.4% of 5.2 million non-agricultural informal earners estimated by IBON. They received just an average of Php2,300 each.
IBON said that financial assistance for farmers and fisherfolk is also slow and negligible.
The Department of Agriculture has so far reported giving assistance to 300,994 farmers under the Rice Farmers Financial Assistance Program and 52,043 farmers under the Financial Subsidy for Rice Farmers Program.
This means only a total of 353,037 farmers have been given subsidies or just 3.6% of the country’s 9.7 million farmers, farm workers and fisherfolk as per IBON estimates.
IBON expressed concern that the government is more focused on using a militarist approach instead of swiftly resolving inefficiencies and ensuring that emergency subsidies are given to all vulnerable households. Government’s neglect could lead to more and more Filipinos violating quarantine as they seek ways to feed their families.
If the government gives more emphasis on “martial-law like” measures instead of being more humane and sensitive to the plight of poor and low-income families under lockdown, millions of families will go hungry amid more human rights violations and mounting social unrest, said the group. #
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Kodao publishes IBON articles as part of a content-sharing agreement.
https://kodao.org/wp-content/uploads/2020/04/tvn2.jpg720960Kodao Productionshttps://kodao.org/wp-content/uploads/2014/11/kodao.pngKodao Productions2020-04-22 14:21:072020-04-22 14:23:59On the sixth week of lockdown: Millions of Filipinos going hungry, suffer amid worst mass unemployment in history
The Duterte administration is still not clear on what its COVID-19 response is and how much this will cost. On top of that, it also doesn’t know how to fund this because it refuses to let go of its sacred cows – infrastructure, debt service, and the accumulated wealth and profits of the country’s economic elite.
Millions of poor Filipino families are suffering the worst mass unemployment in the country’s history because of the military lockdown since March. This has even been extended for another two weeks. Yet, tragically, the nation still does not know how far it really is in dealing with its worst public health crisis ever.
It is over two months since the first confirmed case of COVID-19, nearly four weeks into the unprecedented lockdown, and over two weeks into pandemic emergency powers. The Duterte administration’s confusion and disarray in responding is unforgiveable and a disservice to the heroic efforts of so many Filipinos including in the lower levels of government and private sector volunteers.
Even worse, based on what little we know, the Duterte administration’s response is not just unclear but also slow and stingy. This means that millions of Filipinos are facing more difficulties today than ever, and also that there will be a deeper socioeconomic crisis going on long after the lockdown is lifted.
Billions to respond
The clearest sign that things are so unclear for the administration is its inability to say exactly what its COVID-19 response is and what budget is needed.
When the military lockdown was declared, the government announced a Php27.1 billion package versus the pandemic. This was a haphazard cobbling together for crude public relations purposes of mainly recycled pre-pandemic government programs, including a completely irrelevant Php14 billion for tourism.
Pressed for something more substantial, it superseded that first package and threw a Php275 billion figure into the air during the railroading of emergency powers through Congress. This supposedly consisted of Php200 billion for emergency subsidies and Php75 billion for health care.
Two weeks and two reports to Congress on the use of emergency powers later, that Php275 billion is still the representative figure and the closest thing to a summary of the government’s COVID-19 response.
In the meantime, the government reports what are meant to be impressive efforts at raising funds for its COVID-19 response – Php300 billion from the sale of government securities, Php189.8 billion in unreleased appropriations and realignments, Php121.6 billion in advanced remittances of dividends to the national government from government-owned and -controlled corporations (GOCCs), Php22 billion in unutilized cash balances and funds, and Php10.3 billion in additional cash allocations and allotments.
Mechanically adding these up gives the impression of Php644.1 billion already available from various sources. However, at least Php143.6 billion or 22% of this – the early dividends and unutilized cash – is actually not a literally new budget for the response and just about ensuring there’s cash at hand to immediately spend. The economic managers are also looking at US$2 billion from multilateral lenders.
Seeing so many numbers is bewildering – so where exactly are we?
Residents of Barangay Payatas’ “Plastikan Area” receive food aid from the group The Vegan Neighbors.
What response?
The logical place to start is from identifying what needs to be done. It’s a straightforward matter to just list what the government itself has already identified as needed, whether by the National Economic and Development Authority (NEDA) or as implied in the president’s reports to Congress.
There are the health interventions: personal protective equipment (PPE) and other logistical support for medical frontliners and responders; mass testing and surveillance; isolation and quarantine facilities in congested urban poor communities; and treatment facilities including medical supplies.
There are also the equally critical socioeconomic relief measures: emergency relief packages, cash transfers and other financial assistance, and business support for micro, small and medium enterprises (MSMEs).
And yet, so deep already into the crisis, the Duterte administration has failed to present a clear response plan to the public. Instead, the nation is fed a daily stream of anecdotal reports about its fragmented efforts. Clearly, these efforts are far from enough. The lived experience of thousands of frontliners and millions of locked-down households is stark neglect and unnecessary difficulties mounting by the day.
The president’s disorganized reports to Congress on March 30 and April 6 are of little help and in many ways just add to the confusion.
Compiling the various measures scattered in the reports shows the government apparently having plans worth Php233.9 billion. This includes Php38.6 billion for hospitals and other health facilities, Php114 million for emergency relief packages, Php154.4 billion for cash transfers and other financial assistance, and Php40.8 billion for local government units (LGUs).
This is getting close but still doesn’t correspond to the headline Php275 billion figure. The president’s reports to Congress seem to detail the Php200 billion emergency subsidies portion a little bit while leaving a gaping void in what the supposed Php75 billion for health care is about. In any case, something’s wrong if the government’s plan has to be built up in such a piecemeal manner.
Residents of Barangay Payatas’ “Plastikan Area” receive food aid from the group The Vegan Neighbors.
Slow response
The need for clarity about the response doesn’t just come from being unnecessarily obsessive-compulsive about details. Clarity about the response is the starting point of marshalling public resources and organizing the machinery for the immediate and effective response demanded by the crisis.
The disarray goes far in explaining the sluggish response of the administration to date. IBON estimates that up to 18.9 million workers in the formal and informal sector have been dislocated by the military lockdown; 14.5 million of these are in Luzon and the other 4.4 million in the rest of the country. ‘Dislocated’ is understood as work interruptions of some sort with varied risks of corresponding losses in wages, salaries and other income.
The month-and-a-half lockdown-induced disruption in incomes and livelihoods has dire consequences for the poorest 16.1 million low-income families in the country. Their monthly incomes are at most around Php20,000 or so, according to IBON estimates using data from the latest 2018 Family Income and Expenditure Survey (FIES) of the Philippine Statistics Authority (PSA). These poorest three-fifths (64%) of families are also those who have little or no savings to speak of, according to the Bangko Sentral ng Pilipinas (BSP).
The government itself has acknowledged the vulnerable situation of the overwhelming majority of the population. The Bayanihan to Heal as One Act (Republic Act 11469) explicitly said that 18 million low-income households – corresponding to around the poorest 75% of the population – will be given emergency subsidies.
Yet, weeks into the lockdown, the government response is still painfully slow and inadequate. It seems to have waited until hunger and unrest became critical. This is exemplified by the frustration of the urban poor residents of Sitio San Roque, Quezon City in the heart of the capital who were violently dispersed and, bizarrely, 21 of whom were even detained and charged.
It took three long weeks before emergency cash subsidies were released. And yet these have still so far only reached 3.7-4.9 million poor households – the government’s report is confusing – or not even one third (20-27%) of the supposed target 18 million households under RA 11469. Over two-thirds or as much as 11.5 million badly affected families are still waiting.
Adding insult to injury, the government could have reached as much as 10-15 million households immediately upon the lockdown three weeks ago. The president is also only able to report just a paltry 190,217 food packs distributed by the Department of Social Welfare and Development (DSWD). Underfunded local government units (LGUs), civil society groups, and concerned citizens have tried their best to fill this gap.
The government’s other emergency relief programs are doing even worse. The Department of Labor and Employment (DOLE) reports just 102,892 formal sector workers given Php5,000 in cash assistance under its COVID-19 Adjustment Measures Program (CAMP) – or barely 1% of 10.7 million workers in formal establishments nationwide. Only 55,934 informal workers have benefited from DOLE’s Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD), receiving just an average of Php3,121 each.
Up to 357,614 farmers and fisherfolk have supposedly been given zero interest loans under the Department of Agriculture’s (DA) Expanded Survival and Recovery Aid (SURE Aid) project, or granted loan payment moratoriums. This is just 3.7% of farmers, farm workers and fisherfolk nationwide. The president’s report however could not say how much this support was worth.
Residents of Barangay Payatas’ “Plastikan Area” receive food aid from the group The Vegan Neighbors.
Stingy response
The Duterte administration may be giving repeated anecdotal reports to give the impression of sustained help. The response however is still clearly very slow.
At least part of the reason is the government rationing the help and putting so many bureaucratic hurdles for poor families. However, the importance of ensuring that all the neediest are covered far outweighs the redundance of some less needy being included. Choosing to err on the side of inclusion means dispensing with these hurdles.
But the response is also stingy in two respects.
First, the amounts being given are very small. Beneficiaries will welcome any aid given to them but the amounts fall far short of even the government’s underestimated official poverty line of on average Php10,727 nationwide and Php11,951 in the National Capital Region (NCR).
It is also probable that reported cash transfers for the poorest are bloated because the amounts likely include prior entitlements before the pandemic.
Secondly, the Php275 billion response package is too small to provide critical subsistence support to all the millions of affected households during the lockdown and in the immediate period right after. It is also far below the order of magnitude needed to support the consumption-driven stimulus that the economy needs to moderate the economic collapse in 2020.
IBON is among many others that have pointed out that the relief measures have to be much more ambitious. Our estimate is that Php297.1 billion monthly is more sufficient and should be given for up to 2-3 months at least. This does not yet even include perhaps Php300-400 billion in crucial support for critically affected businesses especially the country’s 998,000 or so micro, small and medium enterprises (MSMEs).
Aid workers arrested by the police on alleged violations of the lockdown policy of the government. (Unyon ng Manggagawa sa Agrikultura photo)
Funding the response
The president’s lamentation in his last report on government’s response about lack of funding of course raises a valid point. Hundreds of billions of pesos are needed not just to contain the pandemic but to keep the economy from sinking further after the lockdown. More so amid the global recession. And this is not even to speak of what’s needed in the coming years to build a more stable and self-reliant economy.
This is where the Duterte administration is particularly stumbling. It either does not appreciate the difficulties faced by the people and the economy, or chooses to be insensitive because it refuses to even consider the radical measures needed to address these.
The government can find the funding for COVID-19 response measures needed – on a scale many times over its Php275 billion program – if it genuinely wants to. The administration basically has three areas of financing:
1. Budget realignment. It can realign existing budget items under the Php4.1 trillion General Appropriations Act (GAA) for 2020 and Continuing Appropriations from 2019. This includes using savings from existing projects, activities and programs to outright discontinuing them and then diverting budgets to COVID-19 response.
The president’s first report to Congress mentioned Php372.7 billion in unreleased special purpose fund (SPF) allotments. This was presumably mentioned as the initial universe of budget items that can be realigned. By the second report, Php189.9 billion was said to have already been so realigned (including Php100 billion to the DSWD); a large part are reportedly from capital outlays.
However, the government can be much more aggressive in considering budget items for realignment. The Php9.6 billion in dubious confidential and intelligence funds – including Php4.5 billion just for the president – is a start.
The Php989 billion public infrastructure program should be opened up to greater scrutiny. The feasibility studies of these projects were all drawn up at a time of giddy optimism about the economy. However previous assessments of economic and financial viability will no longer hold in today’s greatly changed conditions. At the very least, the social need for many of them will have been overtaken by pandemic-related needs.
The current crisis can also be used to justify at least a moratorium on the government’s debt payments. The SPF includes Php451 billion just for debt service on interest payments. Outside the GAA, there is also Php582 billion for principal amortization. Political will can overcome accustomed automatic appropriations and the habitual deference to creditors.
2. Solidarity financing. The administration can resort to increased borrowing but prioritizing those with favorable terms for the country. The administration has already sold Php300 billion in government securities to the BSP in a classic monetizing of the deficit. It is also looking into borrowing US$1.25 billion from the Asian Development Bank (ADB) – aside from US$8 million in grants – and possibly another US$1.1 billion from the World Bank.
However, the government can consider issuing special COVID-19 bonds targeted especially at large corporations, financial institutions and oligarchic families. There is a huge concentration of financial resources and wealth in this regard that can be mobilized beyond individual donations during the lockdown. This is debt but it can be designed more on solidarity terms rather than on crude financial metrics to minimize the burden on the government. For instance, they can be at low, zero or negative interest rates and be zero coupon; making them tax-exempt can be a sweetener. Perhaps Php300-600 billion can be raised in this way.
3. New progressive taxes. With a view to the longer term, the administration can actually consider new taxes on those who can afford this. It is worth recalling that the TRAIN Law lowered the personal income taxes (PIT), estate taxes and donor taxes on the country’s higher-income groups. This already resulted in Php117 billion in foregone revenues in 2018 – with initial projections of foregone PIT revenues of up to Php193.5 billion in 2022.
The government can consider starting with reverting personal income, estate and donor taxes to pre-TRAIN levels. This focuses on those who, even with the pandemic, are still in a much better position to contribute to the national effort. Tax levels can be fine-tuned to keep higher tax rates on the super-rich and to preserve tax benefits for middle-income households affected by the pandemic and the economic crisis to come.
COVID-19 has highlighted the critical importance of government intervention and public resources in a time of crisis. But it should also drawn attention to how significant government intervention is needed to address chronic problems of poverty, inequality and underdevelopment.
The radical shifts in economic policies the country needs after the pandemic and entering into a world economy in recession will demand huge government resources, among other interventions. Building up the public health system is just the start and the country’s agricultural and industrial system needs to be significantly and rapidly bolstered. A progressive tax system is among the many crucial policy measures to do these.
Barangay Krus na Ligas market goers call for faster distribution of releif aid by the government during the Covid-19 lockdown. (Kodao photo)
Unprecedented crisis
Time is running out for the Duterte government to put together a bold a COVID-19 response package. The country is still at the start of a steeply rising curve of infections and fatalities. After the lockdown, the economy will be facing a steeply falling curve of severe economic crisis.
Every day of delay means more distress for the poorest and most vulnerable, micro entrepreneurs and small businesses sinking, and of course the virus just waiting to spread even more rapidly once the lockdown is lifted.
The priority is saving lives and easing hardship. The problem right now is not lack of a national effort to deal with these – so many Filipinos are struggling everyday to deal with the pandemic and they deserve all the help they can get.
As so many are already realizing – the problem is at the top. #
https://kodao.org/wp-content/uploads/2020/04/duts.jpg460720Kodao Productionshttps://kodao.org/wp-content/uploads/2014/11/kodao.pngKodao Productions2020-04-20 08:38:262020-04-20 08:38:31There’s funding to respond to COVID-19 – the problem is at the top
Emergency relief for millions of Filipino families during the unprecedented COVID-19 crisis is more important than mindless debt servicing, research group IBON said.
The government should get its priorities straight, said the group, and seriously consider at least a moratorium on the government’s debt payments.
This will help provide much-delayed relief and financial assistance to the most vulnerable Filipinos affected by the coronavirus lockdown.
Finance Secretary Carlos Dominguez recently rejected the proposal of economic affairs committee chair Senator Imee Marcos to seek a moratorium on debt payments to enable additional funding for the country’s COVID-19 response measures.
Dominguez said the proposition has not been and will never be considered despite the pandemic.
Honoring its financial obligations, he said, is the strongest pillar of the Philippines’ standing in the global community and the reason behind investor confidence in the economy, he added.
IBON executive director Sonny Africa said that the government’s obsession with so-called creditworthiness is blinding it to how a moratorium can help give much more, and much more quickly, to the poor amid the raging coronavirus crisis and its burdensome impact.
“The Philippines is in the worst public health crisis in its history,” Africa said.
“The poor already suffer the worst economic crisis in decades – aggravated by the Duterte administration’s slow response to contain the pandemic, over-reliance on a harsh military lockdown, and stingy relief efforts,” he added.
Africa said that government should stop its wilful blindness to what the people need, which is hindering the country’s ability to stop the spread of COVID-19, build up the public health system, and give relief to millions of Filipinos. At least part of the over Php1 trillion in funds for debt servicing in 2020 can
be used for urgent COVID-19 response instead, he said.
The national government is paying Php1.03 trillion to service debt in 2020 – Php451 billion for interest payments and Php582.1 billion for principal amortization. Some Php285.8 billion of this goes to servicing foreign debt.
The Duterte administration needs to drastically increase spending to respond. It can begin by negotiating with foreign multilateral and bilateral agencies to waive interest and principal payments or even to totally cancel Philippine debt obligations in the face of the pandemic, said Africa.
“The government will be paying so-called development agencies and supposedly friendly governments at least US$5.2 billion in 2020,” Africa said. T
his consists of: US$686.6 million to the Asian Development Bank (ADB); US$433.8 million to the World Bank; US$406.9 million to Japan; US$21.4 million to China; and US$17.3 million to the United States.
Africa said that the government’s narrow-minded debt policy is the biggest stumbling block to a debt moratorium.
“Creditors will always want to be repaid. The government’s job is to struggle for the best possible terms for the country and not to defend creditors’ claims,” he said.
“The suffering of so many proves we are a country in need. The government should stop pretending that a policy of debt relief and debt restructuring is not an urgent option,” Africa said. #
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