In this pandemic, Duterte has everything wrong in his priorities | Business and Economy
In the past two weeks, community pantries have mushroomed all over the Philippines. The poor, with no other options, formed long lines in the summer heat, under threat of COVID-19, just to get what President Rodrigo Duterte’s government failed to deliver: economic aid.
The sudden growth of community pantries reflects not only the extent of the economic crisis in the Philippines, but also the extent of government neglect. Total production, measured by gross domestic product (GDP), plunged 9.5% in 2020, the Philippines’ worst economic crisis since World War II. Gross income per capita has fallen to 2015 levels. Countless businesses, especially small ones, have been forced to shut down and cut the wages of their workers. Unemployment has skyrocketed and more than three million Filipinos were still unemployed in March of this year.
The poor have been particularly affected. A whopping six in 10 Filipino households have gone hungry by the end of 2020, and up to 5.5 million Filipinos could slide into poverty if the government does not provide them with enough help.
The Philippines has also been the hardest hit among members of the Association of Southeast Asian Nations, suffering the region’s worst economic contraction and highest unemployment rate. The Philippines is also recovering the most slowly.
Duterte economics loved to tout the Philippines’ strong macroeconomic fundamentals before the pandemic. But with all the economic indicators going haywire, this is just a distant memory.
A botched pandemic response
The current recession, the first in about three decades, stems from the Duterte government’s failure to contain COVID-19 and mitigate its effects miserably.
Unlike countries like Vietnam, in the Philippines there has been no swift government action to stem the spread of the virus. The government imposed strict closures last year, but in the meantime it has failed to strengthen the capacity of the health system to cope with an epidemic. This partly led to the sharp rise in COVID-19 cases in April, which forced Duterte to put the capital region and neighboring provinces under strict lockdown. This has hurt the economy even more.
The Philippines was also the last country in Southeast Asia to launch its vaccination program. For starters, Duterte’s pandemic task force was woefully ill-prepared. While Congress has authorized 82.5 billion yen ($ 1.7 billion) to purchase the vaccines, only 2.5 billion yen ($ 50 million) is readily available. Most of it, 70 billion yen ($ 1.45 billion), looks like an unfunded check placed separately in “unscheduled credits”, while the rest (10 billion yen, $ 200 million) is an unfunded check. reserve fund that the finance department is always trying to fund. .
The ball was dropped again when the Vaccine Compensation Law was belatedly enacted. Vaccine makers have demanded additional protection against possible legal action – possibly due to the highly politicized dengue vaccination campaign a few years ago. Although aware of this indemnity condition, Duterte’s task force informed Congress too late. In doing so, the vaccine rollout was needlessly delayed and the Philippines lost to other countries in obtaining vaccines from manufacturers other than Sinovac.
In May, some 7.7 million doses of vaccine arrived thanks to donations and purchases, but vaccination is still progressing steadily. Unable to resolve bottlenecks in procurement, logistics and administration, the Duterte government continues to miss its own targets. Even Duterte’s czars do not know exactly when the next doses will arrive. To make matters worse, about a third of Filipinos still refuse to be vaccinated.
Limitation of aid
More and more countries are realizing that in addition to the need to strengthen health systems, economic recovery must be driven by fiscal stimulus. Governments should spend actively and strategically to ensure their economies do not collapse while responding to the pandemic.
But it’s painfully clear that the Philippine government’s budget response is not only lacking in size, but also focused on the wrong things.
The Philippines has spent too prudently for the magnitude of their economic crisis. According to the International Monetary Fund, last year Singapore spent around 18% of its GDP on its budget response, followed by Thailand (9.6%), Malaysia (4.9%), Indonesia (3.8%) and Vietnam (3.6%). The Philippines, on the other hand, budgeted a paltry 3.1 percent.
Duterte’s austerity is also painfully evident in the misguided priorities of the 2021 budget: there is no substantial funding for aid and economic aid, like the cash transfers granted last year. Instead, the government has set aside nearly a quarter of its 4.5 trillion yen ($ 93 billion) budget for infrastructure, especially philanthropic projects like local roads and public buildings. multi-purpose buildings, which will likely feature in next year’s general election. In short, this is a standstill budget, and poor Filipinos continue to be the least of the government’s concerns.
At the forum leading up to the State of the Nation (pre-SONA) speech in April, government officials also highlighted the continuation of their infrastructure project called “Build, Build, Build” and highlighted measures. which will mainly help businesses and large companies. In particular, they have trumpeted a trio of fallout economic policies that will lower corporate tax rates, help banks get rid of bad debts, and solve corporate liquidity and solvency problems.
Some lawmakers are pushing for a new stimulus package, called ‘Bayanihan 3’, which will bring massive economic relief to low-income households, disadvantaged workers, farmers and fishermen, among others. But economics officials rejected it for months, saying the government should instead spend the 2021 budget and the remaining funds from the two stimulus packages passed last year. They also argue that massive aid could not be paid because additional borrowing could hurt the country’s credit rating.
Such unreasonable restriction has not only produced watered down and ineffective quarantine measures – leading to spikes in infection that overwhelm the country’s health system – but also a shortage of economic relief, pushing more and more Filipinos into the country. poverty. The Duterte government has also failed to tackle another pandemic (African swine fever) that recently fueled food inflation and deepened economic misery.
No wonder private sector volunteers across the country have come together to organize community pantries and take over the distribution of food and aid. Although celebrated as a modern embodiment of the revered “bayanihan” or Filipino community spirit, these community pantries are also a damning accusation of the president and his cabinet’s failure to lead in this time of crisis.
Give more help
There is an urgent need to adopt Bayanihan 3 which will allow massive economic aid, including cash transfers to the most vulnerable sectors of society, employment aid for the unemployed and wage subsidies for small businesses. This package should also ensure that beneficiary families are able to pay the expenses and debts they have incurred during the past year.
The supply and administration of vaccines must also be accelerated, with an emphasis on effective diplomacy to ensure an adequate supply of vaccines.
The Philippines is in desperate need of an economic rebound, but considerable uncertainty still hangs in the air. Without a significantly strengthened health care system, the economy will continue to stumble. For millions of Filipinos – especially living hand to mouth – the future is bleaker than ever.
In the months to come, the nation’s attention will inevitably turn to the 2022 elections, and government officials will be increasingly concerned with politics. But there is still time to re-prioritize spending to meet the urgent needs of Filipinos – food, cash assistance and vaccines, rather than unnecessary multi-purpose roads and buildings.
The opinions expressed in this article are those of the authors and do not necessarily reflect the editorial position of Al Jazeera.