Yellow Pad

Flattening the COVID-19 curve requires having a lockdown. In the Philippines, the lockdown is euphemistically called enhanced community quarantine (ECQ). The ECQ buys time until our system has conducted massive testing of all people with symptoms; done intensive contact tracing; and expanded health facilities and recruited health workers to accommodate and treat patients.

Our ECQ is working. I quote a study submitted to the Inter-Agency Task Force (IATF) titled “Evaluating Potential Consequences of Alternative Public Responses to the COVID-19 Epidemic in the Philippines,” Maria Elena Herrera et al (April 8): “If ECQ had never been implemented, our models shows ~4.7 million Filipinos would be infected simultaneously on May 23, with ~1.4 million of them need hospitalization, a number far exceeding that of the 2018 authorized bed count of 29.5 thousand.”

But the study likewise cautions us that even upon the eventual lifting of the ECQ, “there can only be a gradual lifting of quarantine measures, and social distancing, border controls, self-quarantine, and limitations on socializing and gatherings must continue to be in place.”

The benefits from ECQ, especially on our people’s health, are tremendous, but economic costs are unavoidable. Economic and productive activities are paralyzed. Most of the labor force is idled or displaced. The income and consumption of the overwhelming majority of citizens plunge. The period after the ECQ lifting will still constrain production and commerce.

Hence, the government has put in place an emergency program to tide over the citizenry, especially the most vulnerable. The social amelioration measures include:

A P205 billion subsidy program for 18 million poor and low-income families that belong to the informal sector;

A P35 billion wage subsidy for employees of small businesses affected by the ECQ;

An additional budget of P30 billion for local government units (LGUs) to support the vulnerable sectors;

A P10 billion emergency loan program from the Land Bank of the Philippines to LGUs;

Additional funding of P2.8 billion for the Department of Agriculture’s program of zero-interest loans of up to P25,000 for each farmer or fisherman;

An additional budget of P16.5 billion for the rice programs towards increasing productivity and the buffer stock;

A cash assistance program of P2 billion for displaced workers and P1.5 billion for overseas Filipino workers;

A P1 billion loan program for micro-, small-, and medium-enterprises, plus P203 million for enterprise development training and livelihood kits; and,

An amount of P1.2 billion for the Social Security System’s unemployment benefits.

The list is longer. All in all, the estimated budget for the emergency support is P305 billion. The money is there. The government has realigned the national budget and has borrowed money, with the Bangko Sentral ng Pilipinas purchasing government securities amounting to P300 billion, and official donors or creditors providing additional financing.

Note that the biggest chunk of the budget is allocated for the low-income families that constitute the informal sector. And there lies the challenge — quick and effective execution.

The Department of Social Welfare and Development (DSWD) has the main task of disbursing the cash transfers. Two-thirds of the budget for the emergency program is allocated for the cash transfers. Sadly, the DSWD is institutionally and organizationally weak.

The DSWD has already been beset with inefficiency, even before COVID-19 engulfed the country. In my column “What Explains the Increase in Self-Rated Poverty in the Last Quarter of 2019?” (BusinessWorld, Feb. 23), I reported that in 2019, the completion rate of cash grants to the poor households and indigent senior citizens was a dismal 42.85%.

In addition, the DSWD has yet to release an updated Listahanan (the National Household Targeting System for Poverty Reduction), the information system that tells us who the poor are and where they are. Updating the Listahanan was conducted in 2019, but the DSWD is behind schedule in encoding the data.

It does not help either that the DSWD has gone through four leadership changes in this political administration. This has resulted in changing policies and organizational rigmarole. The confusion and the disarray have demoralized the DSWD cadres.

Thus, in the war against COVID-19, the DSWD is slow, tentative and timid. In disbursing the cash grants to the LGUs, it is afraid that any violation of how the LGUs use and liquidate the money will ultimately be the liability and accountability of the DSWD. The DSWD is scared of the Commission on Audit (COA). That fear has prevented it from executing a bold and rapid strategy of disbursement to the LGUs.

The DSWD’s conservatism has translated into stiff rules. Documentary requirement demands beneficiaries have government IDs. But those in the informal sector do not have IDs even as the Philippines has not put in place a national ID system. The deadline for the liquidation of the expenses is tight. Without the liquidation, LGUs cannot receive the next tranche of cash grants. The LGU officials also face the threat of criminal, civil, and administrative liabilities if it is reported that the cash grants were given to unqualified beneficiaries.

The fear of the law has also made DSWD less transparent. The DSWD does not want to share the information it has with other parties, other than the LGUs, for fear of violating the Data Privacy Act. This prevents audit or verification by an independent third party.

The DWSD is but one side of the problem. The LGUs, a large number of them, also are weak. This partly explains the DSWD’s fear or apprehension.

Many LGUs do not even have the community-based monitoring system (CBMS) in place, making them dependent on the DSWD Listahanan . But then the DSWD has not encoded the updated Listahanan.

An operational issue is how to neatly match the targeted beneficiaries drawn from the 2015 Listahanan but adjusted to population growth and the actual number of beneficiaries in a specific locality. Some mayors complain about pre-determined “slots” for beneficiaries that they see as inadequate. This could have been the result of a misunderstanding of the distribution of the cash subsidies. The DSWD is responsible for distributing the cash transfers to the Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries. The LGUs are responsible for the other low-income families in the informal sector that are not covered by the 4Ps. The assistance for the minimum wage workers or the workers in the formal sector is coursed through other agencies like the Department of Labor and Employment and the Social Security System. It is likely that some LGUs lumped together all these segments.

Worse, lest we forget, the patronage system is alive and kicking even in the time of a pandemic. Sad to say, we have but pockets of local good governance. Thus, the majority of local executives will play populist and satisfy all families, even those who technically belong to the upper class.

The problems nevertheless are surmountable. To illustrate, the interpretation of COA rules can be made malleable, if only COA bureaucrats would show enlightenment. In this regard, the national leadership must flag both the DSWD and COA to adapt, do things differently, and scrap rigidity. The documentary requirement on IDs should be relaxed by having a vouching system in the community or barangay. The liquidation of the payout should not impede the release of forthcoming subsidies. And punishment should only be applied to those who commit fraud.

On transparency, the National Privacy Commission must likewise exercise flexibility in interpreting the law on data privacy. In fact, the law is quite clear that data privacy does not apply to “information relating to any discretionary benefit of a financial nature” and “information necessary in order to carry out the functions of public authority.”

The possibility of actual beneficiaries exceeding the targeted number of beneficiaries, because of omission errors and, worse, leakage due political patronage, is not a binding constraint. LGUs will have adequate resources. This is especially true for highly urbanized LGUs most affected by the ECQ, which enjoy big internal revenue allotments (IRA). Apart from the cash transfers amounting to P205 billion, the LGUs have a top-up of P30 billion that the Department of Budget and Management is releasing to them in the fight against COVID-19. The LGUs should likewise use their available resources from, say, the Quick Response Fund and the Local Development Fund. And if LGUs would like to have more funds, they could borrow from their future IRA.

To end, I quote the Roman emperor Marcus Aurelius, made famous by the movie Gladiator: “The impediment to action advances action. What stands in the way becomes the way.”


Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.