MORE THAN 30 business groups urged Congress, in coordination with the Duterte administration, to approve the “maximum fiscal response” to shelter the Philippine economy from the impact of the coronavirus disease (COVID-19).
Business groups, led by the Philippine Chamber of Commerce and Industry, Employers Confederation of the Philippines, the Makati Business Club, and the Management Association of the Philippines, said the government should commit to a “more forceful action on the fiscal front in order to “mitigate the suffering of Filipinos and reduce damage to the society and economy.”
In a statement, the 32 business groups said the government “can and should” adopt a fiscal stimulus program that will hike the deficit-to-gross domestic product (GDP) ratio to nearly 5%.
“Assuming GDP growth slows to 4.5% (GDP: P20 trillion), a 5% deficit will be P1 trillion. Subtract the programmed deficit of 3.6% (P720 billion), and there is room for a P281 billion fiscal stimulus program,” the groups said.
“Assuming GDP growth slows to 3% (GDP: 19.7 trillion), a 5% deficit will be P987.5 billion. Subtract the programmed deficit of 3.6% (P711.3 billion), and there will be room for a P277 billion fiscal stimulus program.”
Economic planners said that coronavirus outbreak may slash this year’s growth by up to 1.2 percentage points if it lasts until yearend, although it has yet to officially announce changes to its 6.5-7.5% target. Last year, the economy grew by 5.9%.
The government has put a cap on its deficit-to-GDP ratio at 3.2% for this year.
The business groups said that the Luzon quarantine is impacting millions of workers, including informal workers who are barred from leaving their homes to work and regular workers who may lose jobs as companies experience difficulties.
“A health issue is now also a hunger issue and may trigger violence and longer term social tensions,” they said. “Many companies are doing what they can to keep their employees paid despite their inability to work and drastic declines in sales. But they can only do so much compared with the millions who are vulnerable to the downturn.”
While the business groups believe that the initial P27 billion response package announced this week is a “great start,” they called for a bigger fiscal stimulus.
The groups said there should be funds for conditional cash transfer recipients and for the labor department and company programs supporting workers affected by the quarantine. There should also be additional efforts to transfer funds or food to low-income families.
They are also asking the government to allot funds for temporary hospitals and quarantine areas to cope with a surge in patients and for micro, small, and medium-sized enterprises that focus on hiring.
The business groups believe there should be targeted subsidies for health, tourism, and transport, as well as increases in public investment spending and deferment of penalties related to interest payments.
The statement was also signed by industry groups like Philippine Exporters Confederation Inc., Information Technology and Business Process Association of the Philippines, the Philippine Retailers Association, the Philippine Franchise Association and banking groups like the Chamber of Thrift Banks Rural Bankers Association of the Philippines, and the Bankers Association of the Philippines.
Foreign chambers like the American Chamber of Commerce of the Philippines, and their European, Japanese, German, Canadian, and Australian-New Zealand counterparts also signed the statement.
Funding, the groups said, can also be sourced from savings or mandated savings of government-owned and controlled corporations and government agencies not directly in charge of the crisis like the health department and local government.
“This massive stimulus will save lives and protect our society but will not trigger alarm bells in the credit rating and global investment community as the Philippine debt/GDP measure is only likely to rise from 41.5% to 44.2%. It was almost 70% about 15 years ago.”
Meanwhile, the Financial Executives Institute of the Philippines, Inc. (FINEX) called for the government to implement an emergency calamity amelioration program to support the poor, jobless and homeless during the ECQ.
In a statement, FINEX called on Congress to authorize President Rodrigo R. Duterte to realign unspent or unobligated appropriations in this year’s General Appropriations Act for the emergency calamity amelioration.
“The national budget was designed and approved for normal times. But we are now in abnormal times, unprecedented since the war years. This global virus pandemic was not foreseen nor factored into the budget. We are now in a war for the survival of our nation and its economy, and fiscal policy and programs must be realigned as we propose during the exigency of this national emergency,” FINEX said.
In response to President Rodrigo R. Duterte’s call for Congress to hold a special session to pass a supplemental budget, House Speaker Alan Peter S. Cayetano said they are ready to convene at the earlier possible time while following social distancing protocols.
“The House of the People stands ready to respond to the call of the President for a special session to pass measures, including a supplemental budget that would give the executive department more flexibility in containing the spread of COVID-19, and help ease the burden brought about by the pandemic among our nation’s most vulnerable sectors. As well as to discuss all other issues regarding health, the economy, and the concerns for a speedy recovery from the effects of this crisis,” he said in a Facebook post.
The House committee on appropriations earlier passed P1.65 billion in supplemental funding to support the government’s response to COVID-19.
On Thursday, Senate President Vicente C. Sotto III said that the Senate would tackle during the special session a “food subsidy budget” for daily wage earners who have lost their jobs during the enhanced community quarantine in Luzon.
Congress began its two-month break last March 13. Hearings in both chambers have also been suspended. Congress will resume regular sessions on May 4. — Jenina P. Ibañez and Genshen L. Espedido