Gov`t banks on fundamental reforms, recovery measures to revive economy

The Duterte administration is banking on an array of recovery measures, plus fundamental reforms it has put in place to keep the economy resilient, to put the country back on its positive growth trajectory and let Filipinos get back to work as safely and as soon as possible under a post-quarantine environment, Finance Secretary Carlos Dominguez III said Thursday.

Dominguez expressed confidence that the Philippines can bounce back from this unprecedented health crisis spawned by coronavirus disease 2019 (COVID-19), given President Duterte’s prudent approach to fiscal management, which has placed the country in a strong position to weather the impact of the pandemic that has battered the global economy.

The President’s conservative economic policies have also provided the government with the fiscal space it needs to fund cash-intensive programs that will help the economy and the people hurdle the current crisis, Dominguez added.

With the contraction of the economy expected to get worse during the April-June period as a result of the implementation of strict quarantine measures to contain the COVID-19 spread, Dominguez noted that experts from the World Bank and Yale University have advised people not to focus on quarter-to-quarter numbers because the pandemic is hurting not only the Philippines but the entire global economy.

The economy shrank 0.2 percent in the first quarter, which covered the period when the national government imposed an enhanced community quarantine (ECQ) in Luzon and local governments implemented similar containment measures in other parts of the country to prevent the further spread of the highly infectious virus.

“We need to focus on a smart combination of fundamental reforms and recovery measures to help ensure that we get the country back on its positive growth trajectory,” said Dominguez at the opening of the first-ever ‘Sulong Pilipinas’ workshop held online in an electronic conference format.

Dominguez stressed that the government needs platforms like the annual Sulong consultative meetings to be able to engage all sectors in a collective effort to come up with more reforms and recovery measures responsive to the needs of the Filipino people in this time of the coronavirus crisis.

He said the active participation of the private sector in the multiple Sulong workshops conducted since 2016 has resulted to several game-changing reforms, such as the ‘Build, Build, Build program, the National ID System, comprehensive tax reform programs (CTRP), the Ease of Doing Business (EODB) Act, the Universal Healthcare Law (UHC) and additional funding from so-called "sin" taxes.

“Participation and collaboration have always been at the heart of these consultative workshops since we first launched this series in 2016. Perhaps most importantly: we don’t just listen to your recommendations, we actively implement them,” Dominguez said.

Over 400 youth participants from 97 campuses and more than 42 organizations joined the online ‘Sulong Pilipinas: Youth Partners for Progress’ hosted jointly by the Department of Finance (DOF) and the National Economic and Development Authority (NEDA) to gather inputs on how the government and its citizens could work together to restart the economy and strengthen its resilience once the country contains the spread of COVID-19 and gradually transitions to a post-quarantine environment.

NEDA Acting Secretary Karl Kendrick Chua provided a situationer on the economy and presented the government’s bounce-back plan--the Philippine Program for Recovery With Equity and Solidarity (PH-PROGRESO)--making the Sulong participants among the first to learn about the economic managers’ proposal to recover from the impact of COVID-19.

In his opening remarks in the Sulong workshop, Dominguez said while recovering from the coronavirus-induced crisis will not happen instantly, the government continues to speed up the implementation of programs that will help businesses get back on track and Filipinos back to work safely as soon as possible.

He said President’s Duterte’s prudent fiscal management--as reflected in the Philippines’ sovereign credit rating of "BBB+," which is the highest in the country’s history; strong gross international reserves; low inflation and stable prices; and improved revenue flows from the CTRP--has allowed the government to promptly and effectively address the COVID-19 crisis.

“This ‘saving-for-a-rainy-day’ approach to economic management has gained for us the trust and confidence of the world’s most respected credit rating agencies and development partners, such as the Asian Development Bank (ADB), the World Bank, Asian Infrastructure Investment Bank (AIIB), allowing us to borrow money at lower interest rates and longer repayment periods,” Dominguez said.

As a result, Dominguez said the government was able to implement its P205-billion Social Amelioration Program (SAP) to provide financial assistance to 18 million low-income and informal sector households during the ECQ, which is the largest social protection program in the country’s history.

The government also implemented a P51-billion wage subsidy program for employees of small businesses, harnessing the power of automation and cloud computing to deliver the aid to 3.4 million targeted beneficiaries, he added.

More than 2.1 million employees have so far received their subsidies under this Small Business Wage Subsidy (SBWS) program.

To help revive the economy while protecting the health and well-being of Filipinos, Dominguez said he has recommended to the President the implementation of five priority measures.

These include: (1) the revival and acceleration of the "Build, Build, Build" infrastructure modernization program, subject to compliance with minimum health standards; (2) the hiring of contact tracers to boost our efforts to slow down viral transmission; and (3) attracting foreign investors in search of resilient, high-growth economies like ours by passing the Corporate Income Tax and Incentives Rationalization Act (CITIRA), which will be redesigned to include flexible tax and non-tax incentives so we can better target the investors the economy needs.

He has also recommended: (4) promoting the manufacturing of products that have strong, inelastic demand, such as food production and logistics, to stimulate demand; and (5) supporting their whole value chains, from inputs to packaging and logistics.

“We need to help businesses, especially micro, small, and medium enterprises, and consumers weather the economic storm together,” Dominguez said.