By Beatrice M. Laforga, Reporter
THE NATIONAL Economic and Development Authority (NEDA) is expecting the economy to return to its pre-pandemic level by end of 2022 or early 2023, as quarantine restrictions continued to hamper growth.
“The prospects for 2021 remain encouraging and will allow us to recover to pre-pandemic level sometime at the end of 2022, if not early 2023, and this will also help us prevent long-term scarring and productivity losses,” NEDA chief and Socioeconomic Planning Secretary Karl Kendrick T. Chua said during the House Appropriations Committee hearing on the proposed P5.024-trillion national budget for 2022.
Mr. Chua said a sustainable recovery would depend on a fast vaccine rollout, safe reopening of the economy and full implementation of the recovery package that includes this year’s P4.5-trillion budget and recently passed tax reform measures.
“I would think if we want to hit it (pre-pandemic level in late) 2022, we have to grow slightly higher than 9% (in 2022), maybe 10%. If not, we will hit it in early 2023.”
Economic managers slashed their growth target for the year to 4-5% from 6-7% previously. Growth is forecast to accelerate to 7-9% in 2022, before easing back to 6-7% in 2023.
Economic losses averaged P73 billion for every week of the implementation of a modified enhanced community quarantine (MECQ) in Metro Manila, he said. This is 50% lower than estimated P144-billion economic losses incurred for each week that the capital region is under the strictest form of lockdown or ECQ.
The impact of lockdowns on the economy, poverty and the labor market eases as restrictions are relaxed, based on NEDA’s estimates.
Around 82,000-123,000 additional Filipinos fall into poverty for each week of MECQ, versus 242,000 under ECQ. Around 310,000 workers would likely lose their jobs in each week of MECQ, while some 607,000 Filipinos may be laid off when ECQ is implemented.
Currently, Mr. Chua said 54% of the economy is being held back and 15 million workers are affected with the imposition of MECQ in Metro Manila.
“Our imposition of quarantine does not come without cost, there are severe economic costs, that’s why our position is to manage this risk better so that we can open safely open the economy at the appropriate time,” he said.
At the same budget hearing, Finance Secretary Carlos G. Dominguez III said the government raised $19.6 billion (P979.6 billion) so far from loans and grants from its external lenders in order to fund its pandemic response.
He also reiterated the government will continue observing fiscal prudence by keeping the deficit and debt ratios within “reasonable” levels to ensure a sustainable economic recovery.
“To achieve a solid recovery, we need to ensure that fiscal responsibility is constantly observed… Fiscal discipline will save us from this long battle against the pandemic,” Mr. Dominguez said.
Prior to the pandemic, the Finance chief said the government was able to maintain a strong fiscal position with the help of the P347-billion additional revenues raised from several sin tax laws passed and the packages under the Comprehensive Tax Reform program between 2018 and 2020, as well as the P317.5-billion total dividend remittances collected from state-run firms.
However, ballooning pandemic expenses and falling revenues still prompted the state to increase its borrowings to P2.65 trillion last year and further to P3 trillion this year to fund its deficit.
Mr. Dominguez maintained that the additional debt incurred by the government during the pandemic are still manageable as the debt stock only rose to 54.6% of gross domestic product (GDP) in 2020, below the internationally accepted threshold of 60%.
He said the debt ratio will rise further to 59.1% by year’s end and peak at 60.8% in 2022, before slightly easing to 60.7% in 2023 and 59.7% in 2024.
The outstanding debt of the government hit P11.2 trillion as of June and is expected to rise to P11.7 trillion by the end of 2021, and further balloon to P13.42 trillion next year.