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Governance of fear

“All models are wrong, but some are useful,” declared the statistician George Box.

Forty-nine days under quarantine, and authorities remain in a quandary on the best way to address the myriad of issues created by the COVID-19 (coronavirus disease 2019): how do we contain the spread of the virus? Is social/ physical distancing producing the intended effect of “flattening the curve”? What is the best way to help the most vulnerable groups during the lockdown? Can the health system manage the influx of patients? How do we balance the need of the economy and the need to continue with the social-physical distancing? Will there be a second wave of infection after we lift the lockdown? There are no guaranteed answers to these questions. At best, what we have are projections based on mathematical models. The problem, however, is that if data is insufficient and/or inaccurate, mathematical models will be unable to churn out useful guesstimates.

What is clear during this entire period of quarantine is that everyone is afraid. We are all fearful of a threat that is unseen and undefeated. In the absence of a vaccine, everyone is vulnerable to getting infected. Thus, the biggest challenge to people in authority is, how do you run a state under threat of pandemic. How do you manage the affairs of the country if the threat is unseen, and a solution is still not available? In a state of conflict or war, the enemy is identified, and strategies can be devised to defeat the opposing force and protect the population. The current situation, however, is far more challenging since the carriers of the threat are the very same people that the state is supposed to protect.

When an entire population is afraid, those in authority are expected to manage fear — they are expected to lead and appease people’s anxiousness, and prevent fear from escalating into an “artificially heightened apprehension” (Robert Higgs, 2005) and spiral into chaos.

Regulatory systems are put in place. We’ve seen this early on when the government imposed the community quarantine, closed the airports, suspended commercial operations, suspended work, and regulated the mobility of people through the social/physical distancing. The goal is to stop the spread of the virus and give the health care system breathing space by spacing the number of affected persons over time. While the goal is noble, the regulations have consequences.

Intentionally or not, the government has reinforced and reproduced fear. By mobilizing the police and the military to manage the regulatory measures, the government has reframed the pandemic from being a health catastrophe to become an “enemy-centered problem” that needs to be defeated. The government has “securitized” the problem. Binaries are created — between the infected and the not-infected people; between government forces and the population; between the “ECQ” (enhanced community quarantine) areas and the “GCQ” (general community quarantine) areas; between those who follow the dictates of the government and those who criticize government actions. The discursive space where collective assessment and action is shrinking by the day. Submission to government imposition is now being equated with being nationalistic and criticizing government is being labelled as being unpatriotic.

The enemy-centered thinking is reflected in the terminology used: “persons under monitoring (PUM),” “persons under investigation (PUI),” “suspect case,” “probable case” are terms reminiscent of police investigations. The enemy-centered thinking is also reflected on how government responds to the problem — the checkpoints, quarantine and lockdowns, the very stringent interpretation of some police and Barangay officials regarding the use of face masks, and recently, the (narrow) interpretation of some officials that individual rights are trumped by collective welfare. The government is falling into the trap of resorting more on punitive action due to its fear of the uncertain. Intentionally or not, fear is being leveraged by those in authority. The government has emphasized the vulnerability of people instead of capitalizing on the collective capacity of citizens to address the problem. The government presents itself as the protector against the invisible enemy instead of enabling citizens and communities to address the problem.

But the basic motives of the leaders and the governed are different. If the government puts a premium on regulation and obedience, communities put a premium on their day-to-day existence. While the term “herd immunity” is often mentioned as a health terminology, people cannot be likened to a “herd” politically. No matter how much the government imposes rules, hungry people will find ways to move around if not totally discard the rules.

In other words, there is also a “peak” or a breaking point of how much people can tolerate and follow the strict regulation imposed by the state. Fear of the uncertain (virus) will be replaced by fear of hunger when supplies begin to dry up. When hunger growls stronger than the fear of COVID-19 virus, such a situation can begin to turn ugly. And we are already seeing the beginning of such situations: as of April 21, the PNP has reported 136,517 ECQ violators (GMA News).

When an ECQ “violation” is interpreted differently by different localities, the possibility of abuse increases. So our already overcrowded jails will be over-burdened further with ECQ violators.

What then? Echoing what has been said before by colleagues, the government must present a clear plan to get us out of this situation. It must harness the collective capacity of its citizens rather than addressing the problem alone. One thing we have also realized in the current situation is that while people are afraid, there is also a well-spring of courage in each one that moves people to help, sometimes even at the risk of one’s safety. Rather than governing people’s fear, the government must manage fear and transform it into a positive force.

A clear and sound plan on health, economy, and security based on inputs, data, and even mathematical models must be formulated. And it must be done now.

 

Jennifer Santiago Oreta is the Director of the Ateneo Initiative on South East Asian Studies, and an Assistant Professor of the Department of Political Science of the Ateneo de Manila University. She is also the Executive Director of the civil society organization Human Security Advocates.

An ode to the humble balcony

By Bernardo Zacka

MY TODDLER and I have a new favorite activity: craning our necks to catch a glimpse of the neighbors. Since we have been instructed to stay at home in our apartment in a triple-decker in Somerville, Mass., we have gotten quite good at it.

If we place ourselves at the bottom left corner of the living room window around 6 p.m., and press our cheeks hard against the glass, we might just catch them staring blankly at the empty street. The other day, our eyes met across the driveway, yet there was none of the usual awkwardness — being stared at felt more like a relief than an invasion. Before the pandemic, I had never spoken to them, but right now even these stolen glances feel like a precious form of contact.

When I first saw the videos coming from Italy under lockdown, with people quarantined in their apartments connecting through music, my first reaction was one of awe. My second was one of longing for the architectural element that made these gatherings possible: the balcony.

By suspending ordinary social life, the pandemic is teaching us to value what we normally take for granted. For those like me who grew up around the Mediterranean, the balcony is a fact of life — one so woven into the fabric of our cities as to be practically invisible. How I wish I had one now.

As a child growing up in Beirut, it was on the balcony that we celebrated birthdays, that I read my first novels, and that I watched my parents play endless games of backgammon. As an adult returning home for the summer, that is where my feet carry me to sip a coffee, crack open a beer, or smoke a narghile — always in the company of others in surrounding buildings who appear to be doing the same. Even now, with the city brought to a standstill by COVID-19 and a suffocating financial crisis, Beirutis are turning to their balconies for momentary respite and gestures of solidarity.

The genius of the balcony is to assemble people who live within proximity, but who are otherwise strangers, around a common world of events, experiences and issues. The balcony is fulfilling this role to great acclaim today, but that is what it does, silently, in ordinary times.

A balcony is a strip of private property suspended over public space. On a balcony, one is outside, yet at home; exposed, yet secluded. This ambivalence manifests in Beirut in the use of a distinctive sartorial code. The balcony is the domain of the nightgown and the undershirt: items too revealing for the street, yet modest enough to be worn at a distance.

As an intermediary space, the balcony supports a distinctive type of reserved sociability. Its contiguity with the dwelling facilitates access to city life just as easily as it enables withdrawal from it. In my district of Beirut, where most buildings are five or six stories high, the balcony is close enough to the street to greet someone down below, but just too far to hold a prolonged conversation; close enough to witness a dispute, far enough not to have to get personally involved. It offers company without the demands of intimacy.

In the late 1950s, the Dutch architect Aldo Van Eyck used the term “threshold” to designate physical spaces — such as porches, stoops, and balconies — that connect various spatial and psychological registers within the city. Van Eyck thought of such spaces as forming an in-between realm, mediating the encounter between distinct environments, sharing characteristics with each, without dissolving into either.

Van Eyck saw thresholds not just as sites of passage, but as places of dwelling. Such spaces are appealing, he thought, because they capture something fundamental about our inclinations. When confronted with a choice between two options like individual/collective, open/closed, order/chaos, our reaction is often one of ambivalence: we want to linger at the boundary, sampling a bit of both. In this in-between realm, we feel at home and are inclined to stop and loiter. Architecture should recognize this fact, Van Eyck said and “frame our desire to tarry, make places where we can do so.” The balcony is one realization of this vision.

Like theatrical stages, balconies lie dormant until brought to life by people. Consider this: most city dwellers live in apartments they did not design, embedded in facades they cannot alter. In Beirut, balconies are the only spaces in public view that residents can particularize and make theirs. Furniture is displayed; a birdcage is suspended; plants are meticulously arranged and watered — and everything is kept clean, in a Sisyphean battle against the dust. Balconies offer a rare opportunity to leave a personal trace in an otherwise anonymous urban fabric.

In the vicinity of balconies, one is always performing. Ordinary vices are laid bare just as ordinary virtues. Alongside the polite gestures of recognition and the loose sense of community, balconies also invite voyeurism and gossip. Family disputes, love affairs, losses in temper become a matter of common interest. This can be unnerving, but it forces us to come to terms with those who live around us.

Around the Mediterranean balconies are everywhere, yet it would be a mistake to take them for granted. In Beirut, two factors were critical to their popularity: a demand for external space to take advantage of the climate and a favorable construction law that incentivized their creation.

Over the past two decades, however, the growing popularity of air-conditioning units has enabled Beirutis to control the climate inside their apartments all year long. The increasing pressure on existing real estate has also prompted the Lebanese Parliament to amend the construction law in 2004, permitting the enclosure of balconies with transparent curtain walls. This has affected new development, with balconies now frequently conceived and marketed as inward-looking spaces, functioning as extensions of the living room.

Politicians justified the measure by claiming that they were enacting what their constituents wanted — more internal space, climate control, less exposure to noise and pollution. These are indeed salient concerns in Beirut.

Yet the danger in thinking of balconies as private amenities is that it obscures their standing as a public good. As city dwellers, we all benefit from the social life they foster even though we may individually prefer to enclose our own. It is for this reason that public regulation might be called for: not to prevent each of us from getting what we want, but to help avert a collective outcome resulting from such wants — a thinning of the social fabric of the city — that we might, collectively, come to regret.

In the throes of a pandemic, this message may land on sympathetic ears. The videos from Italy are still with us, and who today wouldn’t want the reserved sociability that balconies foster? The challenge will be to keep the sentiment alive once we return to a new normal. The first few weeks after COVID-19 may be all hugs and kisses. But reserved sociability is not a second best, and we should continue to look kindly at the architecture that makes it possible even after the pandemic leaves us.

 

THE NEW YORK TIMES

 

Bernardo Zacka is an assistant professor of political science at M.I.T., the author of When the State Meets the Street and the co-editor of a recent collection of essays, Political Theory and Architecture.

The phony war on the coronavirus

By Pankaj Mishra

GOVERNMENTS around the world say they’re engaged in a war against the coronavirus. Indian Prime Minister Narendra Modi invoked the legend of the Mahabharata, fought over 18 days, as he declared, with little warning, a devastating national lockdown.

British Prime Minister Boris Johnson, who always seems to be mentally screening a film of Winston Churchill in World War II, said that “we must act like any wartime government.”

Philippines President Rodrigo Duterte, who has long deployed bellicose language, most notoriously in his violent “war on drugs,” went further, advising the military and police that if quarantine violators “become unruly and they fight you and your lives are endangered, shoot them dead!”

This kill-or-die idiom is more than casual rhetorical overkill. Many governments are symbolically but very deliberately calling, in this time of fear and uncertainty, for general conscription along military lines.

This is so they can, while pointing to an insidious foreign enemy, aim their firepower against some of the most valuable institutions of domestic public life. They have been very successful so far. Last week, Duterte’s government shut down ABS-CBN television and radio, his country’s largest broadcasting service.

Things are not much better in countries with sturdier democratic institutions. Johnson’s Conservative government accused the British Broadcasting Corporation of bias after its flagship investigative program, Panorama, exposed shortages of personal protective equipment among health care workers.

The public broadcaster’s critique of the government was stinging in part because Johnson enjoys a high degree of support among Britain’s privately owned, overwhelmingly pro-Tory press. Nor does Modi, assured of craven public broadcasters, expect much criticism from the Indian media, which has been described, only semi-humorously, as veritably North Korean in its devotion to the supreme leader.

Modi held a virtual meeting with media editors and owners just before imposing his lockdown. According to his website, the attendees committed to “work on the suggestions of the prime minister to publish inspiring and positive stories” about COVID-19.

In addition to economic and military mobilization, wartime measures typically encourage a high degree of political, social and intellectual conformity. The general idea is that, in the face of an existential challenge from a vicious enemy, criticism of the government ought to cease.

The media tends to become more patriotic, as do former political partisans. Such was the case in the United States during the early stages of its wars in Afghanistan and Iraq, when most journalists and even Democratic politicians rallied around the Republican George W. Bush administration.

The trouble is that the “war” against COVID-19 is actually not a war at all. And no one should feel obliged to sign up for it.

The loss of, and separation from, loved ones, and the fear and anxiety that is devastating many lives is not an opportunity to fantasize about heroism in battle. The pandemic is, primarily, a global public health emergency; it is made potentially lethal as much by long neglected and underfunded social welfare systems as by a highly contagious virus.

A plain description like this is not as stirring as a call to arms — and doesn’t justify the more extreme actions governments have taken against critics during the crisis. It does, however, open up a line of inquiry that journalists ought to pursue, now as well as in the future.

According to the Indian government’s own statistics, its public spending on health before the pandemic measured just 1.17% of GDP, lower than Nepal and nowhere near comparable to South Korea’s 8.1%. Duterte no doubt wants his citizens to forget that as late as March 11, he told an audience: “I’ve been told, ‘You folks are too scared of this coronavirus epidemic’ and ‘Fools, don’t believe it.’”

Johnson, whose Conservative party presided over harsh cuts to health services, boasted, on the same day in early March that the UK government’s Scientific Advisory Group for Emergencies warned against shaking hands, “I shook hands with everybody, you will be pleased to know, and I continue to shake hands.”

Awakening late to the pandemic, authoritarian or authoritarian-minded leaders have turned it into an opportunity both to shore up their power and to conceal their stunning ineptitude. To fail to see through their manufactured fog of war, as many in the media are doing, can only further endanger the long-term moral and political health of their societies.

 

BLOOMBERG OPINION

House panel approves bill on bad-loan transfers to AMCs

THE House committee on banks and financial intermediaries approved on Monday a bill providing for the transfer of banks’ bad loans to asset management companies (AMCs) in expectation of a spike in non-performing loans in the wake of the public health emergency.

“We approve (the bill) subject to style and subject to the inputs of DoF (Department of Finance),” Quirino Representative and House banks and financial intermediaries committee chairman Junie E. Cua said at a virtual hearing of the panel.

Mr. Cua filed House Bill 6622 on April 24, which if passed will be known as the Financial Institutions Strategic Transfer (FIST) Law.

“To date, as a result of the pandemic and disruption of economic activity, most financial institutions are facing a period of delayed loan collections and are at risk of recording higher non-performing assets (NPAs) across all borrower segments. NPAs prevent banks and financial institutions from effectively performing their crucial role of financial intermediation,” Mr. Cua said in his explanatory note.

NPAs consist of financial institutions’ non-performing loans (NPLs) and real and other properties acquired (ROPAs) in settlement of loans and receivables.

The bill encourages financial institutions to sell NPAs to AMCs, to be known as Financial Institution Strategic Transfer (FIST) Corporations, which specialize in handling distressed assets.

“All sales or transfers of NPAs to a FIST shall be in the nature of a true sale after proper notice… without need for the borrower’s consent,” according to the bill.

In the case of NPLs, AMCs can restructure debt, condone debt and undertake other restructuring related activities to dispose of the debt, including to third parties.

The transfer of NPAs from a financial institution to an AMC, and from an AMC to a third party will be exempt from documentary stamp tax, capital gains tax, creditable withholding income tax and value-added tax.

Transfers are also subject to only 50% of applicable registration and transfer fees, 50% of filing fees on any foreclosure, and 50% of land registration fees. These privileges will be available for up to two years from the date of the effectivity of the bill’s implementing rules and regulations (IRR).

The bill provides that any loss incurred by financial institutions as a result of the transfer of NPAs will be treated as ordinary losses, with the loss carry-over subject to pertinent laws.

Only the Court of Appeals and the Supreme Court are empowered to issue injunctions against the transfer of NPAs.

AMCs will be required to set up consumer protection mechanisms “as may be prescribed in the IRR issued by the appropriate regulatory authority.”

The measure also encourages the private sector, government financial institutions, and government-owned or -controlled corporations to incorporate and invest in FIST corporations and help in the rehabilitation of distressed businesses “with the end view of contributing to economic growth.”

While the proposed measure will result in “revenue erosion” for the government, Finance Secretary Carlos G. Dominguez III said that he supports the bill.

“More or less what we are looking at is in terms of revenue erosion here. But again, it is not revenue we are expecting anyway to begin with because this is a totally unexpected event so we are willing to take some revenue erosion, the thing is we just have to estimate how much it will be in total,” he said.

“While we are 100% supportive of this and we are willing to provide fiscal incentives for this, please give us time to do the estimates, because right now we don’t really know how much of the loans will turn bad and how much of these are covered by assets that would qualify under this law,” Mr. Dominguez added.

National Economic Development Authority Acting Secretary Karl Kendrick T. Chua said that it is “very probable” that the bill will be given a certification of urgency by President Rodrigo R. Duterte.

“I think that is very probable because that is what happened also in the Bayanihan Act (Republic Act 11469) and considering we have very limited session days so we would recommend that approach. The direction I think is to recommend certification of urgency,” he said during the hearing.

If granted, the certification will allow the House to approve the measure on second- and third reading on the same day, doing away with the required three-day interval.

No counterpart measure has been filed in the Senate as of writing. — Genshen L. Espedido

Construction firms will need to provide worker housing under ECQ, GCQ

THE Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF-EID) will require construction firms to provide worker housing and observe social distancing and other safety rules when work is allowed to resume on public and essential private projects under both modes of quarantine.

In a briefing, Palace Spokesman Herminio L. Roque said Monday that the rules for construction firms released by the Department of Public Works and Highways (DPWH) will also require construction firms to sequence their works to facilitate minimal contact among workers.

The enhanced community quarantine (ECQ) imposed on Metro Manila is due to expire on May 15, with some parts of the country moving on to a less restrictive general community quarantine (GCQ) starting April 30. A decision is due this week on whether ECQ will continue or be downgraded to GCQ.

Mr. Roque said that an “inventory of works” is needed to allow sequencing of construction “para mapatupad ang social distancing (In order to observe social distancing).”

For private projects, Mr. Roque said “Ang mga contractors ng essential private construction projects under GCQ ay dapat magtalaga ng full time safety officer na magsisiguro sa pagpapatupad ng social distancing measures. (Contractors of essential private construction projects under GCQ should hire a full time safety officer to ensure workers comply with social distancing measures).”

The rules require contractors to provide living quarters and personal protective equipment for the duration of the project, as well as daily meals and hygiene products, while regularly conducting health checks. Health conditions of the workers should also be monitored regularly.

DPWH project overseers have been charged with ensuring that all workers are equipped with Personal Protective Equipment.

“Para sa government construction projects, ang DPWH engineers ay dapat magpatupad ng pagsusuot ng Personal Protective Equipment (PPEs) sa lugar na pinagtatrabahuhan, (For government projects, DPWH engineers should enforce PPE rules)” Mr. Roque said.

The Palace announced over the weekend that public and essential private construction projects will be allowed during ECQ and GCQ as long as they follow DPWH guidelines.

The guidelines also call for the regular sanitation of the workers’ quarters and equipment. Mr. Roque said, “Iwasan ang sharing ng construction at office equipment pero kung kailangan, ito ay dapat i-disinfect bago ipagamit sa ibang mga trabahador. Magtalaga ng isolated loading/unloading zone para sa lahat ng mga nagde-deliver ng disposable na materyales at equipment. Lahat ng materyales at equipment na pinapasok sa construction site ay dapat na ma-disinfect.”

(Avoid sharing construction and office equipment but if needed, they should be sanitized before this is used by other workers. There should also be an isolated loading/unloading zone for those who deliver disposable materials and equipment. All materials and equipment entering the construction site should be disinfected)

Non-essential personnel and visitors will not be allowed on-site under the rules, while workers will be restricted from leaving the site. Personnel entering the site on a temporary basis such as truck drivers and site inspectors will be subject to health checks.

The ECQ was first imposed by President Rodrigo R. Duterte on March 17 in order to contain the spread of the coronavirus disease 2019 (COVID-19). High-risk areas are required to observe ECQ rules until May 15 while low to moderate-risk areas have been placed under GCQ. — Gillian M. Cortez

Supplemental budget, job creation key to recovery — Diokno

BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said fiscal stimulus needs to catch up with the aggressive monetary measures adopted by the central bank to effect a recovery from the coronavirus disease 2019 (COVID-19) emergency.

“As the government moves into the next phase of the road to the New Economy, it should focus on a quick-disbursing, employment-creating program. It needs a supplemental budget, the size of which can be decided upon by the President with the recommendation of his economic managers,” Mr. Diokno said in a text message in reply to a query from BusinessWorld Monday.

Mr. Diokno said in an interview with ABS-CBN News Channel that monetary policy is not the only tool available to the government and that a supplemental budget may be needed during this crisis.

Pressed for details, Mr. Diokno said that every percentage point increase in the deficit would represent P200 billion in ‘new’ spending.

“Some of the ‘new’ money can be used for emergency employment aimed at creating two million new jobs,” he said.

Mr. Diokno said barangays could put residents to work on green projects, public works or health projects to keep people employed until December.

“Emergency employment is quick-disbursing and will have a high multiplier effect. It is pro-poor and egalitarian,” Mr. Diokno said.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said that the realignment of the budget for current and more urgent priorities is welcome.

“However, an exogenous injection to the economy should be done on the fiscal side to help further the creation (and/or protection) of jobs and health care,” he said in an e-mail.

Finance Secretary Carlos G. Dominguez III has said that he expects the budget deficit to hit P1 trillion this year amid emergency spending on the pandemic. This total is over 5% of gross domestic product (GDP). Economic managers have set a 5.3% cap for the deficit this year, higher than the 3.2% cap set before the outbreak.

Mr. Dominguez said last week that there are no plans to ask Congress for a supplemental budget despite rising expenditures.

Security Bank Corp. chief economist Robert Dan J. Roces noted that stimulus legislation so far filed has been “comprehensive” in terms of structure and targets.

“Even with a budget deficit, instituting these complementary fiscal initiatives will insulate taxpayers from the costs of the crisis in the long run. It will also strengthen the policy responses being undertaken,” Mr. Roces said.

The House of Representatives is currently putting together a bill that if approved will become the Philippine Economic Stimulus Act (PESA). It seeks to provide P475 billion to help businesses recover from the effects of COVID-19 between 2020 and 2022. It also includes wage subsidies and cash for work through the Department of Labor and Employment.

ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa noted that fiscal measures from the government during the pandemic came through the social amelioration program, income subsidies and cash grants issued via local governments. He also noted that the government stuck to its pre-COVID-19 playbook by pushing for tax reform and infrastructure to help effect a recovery.

“We are now in need of a fiscal rescue package as the economy is on the brink of recession. Focus should be on one thing and one thing alone: job retention or job replacement,” Mr. Mapa said.

Mr. Mapa cited the German government, which opted to subsidize worker incomes while the economy is recovering.

“Thus we believe that investing a little more now, running up the budget deficit in these dire times will be the more cost-effective strategy than to hold on to fiscal targets today, only to spend more tomorrow to retrench and retrain the scores of unemployed,” he said.

Mr. Diokno has said that the central bank will assess how banks have so far responded in order to gauge the next monetary policy moves, which could be directed at supporting the financial markets as well as the broader economy.

“But I think it will be prudent on our part to pause at this time and see how the economy is responding to the series of policy moves being done by the Monetary Board,” he said.

So far, the BSP has brought down policy rates by 125 basis points this year, lowering the overnight reverse repurchase, deposit and lending to 2.75%, 3.75%, and 2.75%, respectively, in a bid to cushion the impact of the virus on the economy.

The central bank has also reduced the reserve requirement ratio of big banks by 200 basis points to 12%. The reserve requirement has been maintained for thrift and rural banks at 4% and 3%, respectively.

Mr. Diokno has been authorized by the Monetary Board to reduce the RRR by up to 400 bps this year. — Luz Wendy T. Noble

PHL GDP could contract by up to 2% in 2020 — Fitch Solutions

FITCH Solutions Macro Research said the Philippine economy could contract by as much as 2% with a recession looming in the wake of the coronavirus disease 2019 (COVID-19) public health emergency.

The latest downgrade comes a week after Fitch Solutions cut its gross domestic product (GDP) outlook to minus 0.5%, after having issued a 6.3% forecast for 2020 before the pandemic.

“We are becoming increasingly aware of how significant the impact of lockdown measures can be on growth readings. As such, with the Philippines in lockdown through April and into May, the drag on growth will pull the economy into recession,” Fitch Solutions said in a note issued Monday.

Even with only two weeks of lockdowns falling within the three months to March, GDP fell to minus 0.2% in the first quarter, the first drop since the 6% contraction in the fourth quarter of 1998.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the GDP decline in the first three months was due to the Taal eruption in January, some travel restrictions that were imposed as early as February and the lockdown that started in mid-March.

The first quarter GDP result was a reversal from the 6.7% growth in the previous quarter as well as the year earlier 5.7%. Growth in 2019 was at 6% based on 2018 prices, slightly higher than the 5.9% previous estimate using 2000 prices.

“While we expect lockdown measures to be eased over Q2 2020 and Q3 2020, there will still be some drag initially from containment rules and external demand backdrop will remain subdued,” Fitch Solutions said.

“Ultimately, the Philippines’ dependence on household consumption (at 74.6% of GDP in 2019) will prove a vulnerability during the lockdowns and as such, our outlook has been tempered,” it said.

“Household consumption will prove vulnerable through the year on the back of a worsening outlook for household incomes and lower confidence,” it added.

The weaker outlook for remittances amid an impending global recession which could slash employment levels will also affect spending as cash remittances fuel consumption in the Philippines, it added.

“The US accounts for around 40% of remittances, but with unemployment in the US likely to prove its worst since the Great Depression, the outlook for remittance flows has deteriorated significantly,” Fitch Solutions said, adding that Overseas Filipino Workers (OFWs) in the cruise and service sectors are also vulnerable to layoffs or lower income during this pandemic.

In 2019, cash remittances grew 4.1% to $30.133 billion. With the outbreak dimming economic prospects around the world, the BSP expects remittances to fall between 0.2% and 0.8% this year.

Mr. Diokno has said about 20,000 to 30,000 OFWs have lost their jobs so far.

Another indicator of dimming consumer confidence is the rise of household savings to 37.8% in the first quarter of the year from the 36.3% a quarter earlier, Fitch Solutions said, citing data from the Philippine Statistics Authority.

“The rise in households with savings indicates a scaling back of consumption. As confidence declines, we expect more households to turn to savings given the weaker outlook for incomes and fear of potential health care costs from the COVID-19 outbreak,” Fitch Solutions said.

External demand is unlikely to provide a lifeline, Fitch Solutions said.

“We believe exports will experience a deeper contraction over the coming months,” it said, noting that exports and imports have contracted 3% and 9%, respectively, in the first three months.

“Weak growth outlooks for the Philippines’ key export markets: the US, Japan and China — which together account for 45% of goods exports — are all experiencing sharp growth slowdowns and this too will weigh on the growth outlook,” it added.

Fitch Solutions added that further fiscal stimulus will be needed to counteract a slowdown.

“A large fiscal package could boost domestic confidence and we believe the government has scope, given improved reserve buffers and public debt at 41.5% of GDP in 2019,” it said.

Fitch Solutions said that despite the government’s commitment to fiscal measures that amount to about 1.1% of GDP, fiscal measures are still restrained in terms of scope compared to those done in Thailand, where measures account for 9% of GDP, as well as the loan guarantees issued by Malaysia. — Luz Wendy T. Noble

GSIS loans to gov’t workers, pensioners exceed P4 billion

THE Government Service Insurance System (GSIS) has extended a total of P4.14 billion worth of loans to some 60,000 government employees and pensioners to help them deal with the public health emergency.

In a statement Monday, Rolando L. Macasaet, President and General Manager of GSIS, said the state pension fund has released P3.48 billion to more than 25,000 members and pensioners via conso-loans, policy loans and pension loans from March 27 to end-April.

Meanwhile, he said emergency loans disbursed totaled P664 million between April 13 and April 30, for around 33,000 borrowers.

The GSIS has relaxed the terms of its COVID-19 (coronavirus disease 2019) Emergency Loan program, increasing the maximum amount that can be borrowed to P40,000 for those who availed of the program earlier this year, while maintaining a P20,000 limit for new borrowers.

The state pension fund also waived the six months loan amortization requirement for its members who have due and demandable loan accounts, among others.

The emergency loan is payable over three years at a fixed interest rate of 6% per annum.

“Under the enhanced program, we now allow members who have in-default loan accounts (with arrears of more than six months) to renew their emergency loan. We have also reduced the paid premium requirement from six months to only three months,” Mr. Macasaet said.

However, he said that borrowers may encounter “some delays due to systems maintenance activities” as this is the first time GSIS has offered the program on such a scale.

GSIS said members and pensioners that had their emergency loans renewed and granted during the April 13-30 period can renew their loans starting Monday, May 11.

No counterbids received for West Philippine Sea oil exploration blocks

THE Department of Energy (DoE) said no counterbids were received for three oil exploration blocks in the West Philippine Sea (WPS).

In an e-mail interview with BusinessWorld, the department’s Energy Resources Development Bureau (ERDB) said there were no counter-proposals to explore Nominated Areas 6, 7, and 8 under the Philippine Conventional Energy Contracting Program (PCECP) after the challenge periods ended last week.

Area 6, which was nominated by an unidentified party on March 6, is a 1.432 million hectares block north of Recto or Reed Bank.

Areas 7 and 8, which were chosen by undisclosed entities on March 9, have areas of 1.5 million hectares and 1.412 million hectares, respectively.

Earlier, the bureau said it did not receive any counteroffers to explore Nominated Area No. 5, for which the challenge period lapsed on March 31. The block is situated along the Mindoro-Cuyo basin.

The PCECP is a petroleum service contract awarding mechanism that allows the government to develop indigenous petroleum resources in partnership with qualified domestic and international exploration companies.

Under this program, service contracts are awarded via a competitive selection process or via nomination.

The DoE-ERDB said it will formally open the applications for the exploration sites when Metro Manila is no longer under enhanced community quarantine (ECQ).

DoE Secretary Alfonso G. Cusi has said in an ANC interview that the collapse in oil prices has affected exploration activity across the country as potential overseas partners reevaluate their projects.

“Because of the low price of oil, these exploration (companies) will take time to think (about) their options,” Mr. Cusi said.

The government could return to formal discussions with Chinese partners for joint exploration in the disputed WPS as soon as the enhanced community quarantine is lifted.

“Maybe after the ECQ, we will sit down with our Chinese counterpart to see what is the best way to explore and exploit the resources,” Mr. Cusi said.

Areas currently under ECQ are the National Capital Region, Central Luzon (except Aurora), Calabarzon, Pangasinan, Benguet, Iloilo province, Cebu, Bacolod City, Davao City, Albay, and Zamboanga.

The rest of the country was placed under the more relaxed general community quarantine between May 1 and 15. — Adam J. Ang

300 Pinoy seamen from UK come home; local infections top 11,000

A TOTAL of 299 seafarers from the United Kingdom have come home amid a novel coronavirus pandemic that has sickened 4.2 million and killed more than 284,000 people worldwide, the Department of Foreign Affairs (DFA) said on Monday.

Locally, COVID-19 infections reached 11,086 after the Department of Health (DoH) reported 292 more cases yesterday.

The death toll rose to 726 after seven more patients died, it said in a bulletin. Seventy-five more people have gotten well, bringing the total recoveries to 1,999, it added.

Of the 292 new cases, 162 came from Metro Manila, 74 from Central Visayas and 56 are from the other regions, DoH said.

Health Undersecretary Maria Rosario S. Vergeire told a news briefing the Asian Development Bank (ADB)-funded molecular and diagnostic pathology laboratory in Jose B. Lingad Memorial Regional Hospital was opened on Saturday and would increase the national daily testing capacity by 3,000.

The laboratory would also help in the study of genetic diseases and cancer, among other illnesses, she said.

Kelly Bird, country director at ADB, said the multilateral lender was discussing a $125-million COVID-19 response project with DoH that could be approved next month.

The project seeks to set up two new laboratories, train technicians, scale up equipment and supplies to be distributed to public hospitals, and renovate and build isolation wards in some public hospitals, he said.

“We hope this will be up and running very quickly,” Mr. Bird said. “It will be quite a comprehensive project supporting the Department of Health scaling up its response.”

Meanwhile, the Foreign Affairs department said it would resume fetching Filipinos from overseas now that airport authorities have lifted the suspension on inbound international flights.

“With the reopening of the Ninoy Aquino International Airport today, DFA resumes its daily repatriation efforts by welcoming home 299 Filipino crew members of MV Azura from London,” it said in a social media post.

This brings the total number of Filipino workers who have come home to more than 26,400.

The DFA’s repatriation program was halted after the government suspended inbound flights for a week starting May 3.

The Civil Aviation Authority of the Philippines (CAAP) on Saturday announced it would lift the restriction, even as it limited flights to 400 passengers daily.

Meanwhile, DFA said two new laboratories have been certified as testing centers for Filipinos and their families who came home.

The certified laboratories now include the Jose B. Lingad Memorial Hospital in Pampanga and the Eastern Visayas Regional Medical Center in Tacloban City, bringing the total number of testing centers for OFWs to 26.

The laboratories also include the Chinese General Hospital, Lung Center of the Philippines, Makati Medical Center, Marikina City Health Office, Philippine Genome Center-University of the Philippines Diliman and Philippine National Red Cross.

Also yesterday the Overseas Workers Welfare Administration (OWWA) sought P2.5 billion in funding from Congress to finance its assistance to returning overseas Filipinos.

“We have an OWWA fund but we’re hoping that Congress and the Department of Budget and Management (DBM) can help us to fund these arrivals,” OWWA Administrator Hans Leo J. Cacdac said at an online House of Representatives hearing.

He said the agency was “financially healthy,” adding that it plans to use the OWWA trust fund to help overseas Filipinos after the lockdown.

“We are not in the red, we are financially healthy,” Mr. Cacdac said. “What we want is congressional assistance, DBM assistance to augment our funds.”

The agency has spent about P381 million helping 26,737 OFWs since the main island of Luzon was locked down on March 17.

OWWA expects about 45,000 Filipinos to return home this month and in June, Mr. Cacdac said.

Party-List Rep. Eric G. Yap. who heads the House committee on appropriations, said he supports the OWWA proposal. “I am in full support of the intention but it remains to be seen if this amount is justified or maybe it isn’t enough,” he said in a Viber message.

Meanwhile, Mr. Cacdac said 4,000 overseas Filipinos have been tested for the coronavirus disease 2019. — Charmaine A. Tadalan, Vann Marlo M. Villegas and Genshen L. Espedido

Malacañang considers more budget against coronavirus pandemic

THE presidential palace on Monday said it might propose a supplemental budget for the government’s anti-COVID-19 efforts.

Presidential spokesman Harry L. Roque told a news briefing Malacañang had asked the Budget department to come up with data on which funds in the national budget could be realigned.

He said he expects Budget Secretary Wendel E. Avisado would come up with the figures this week.

Lawmakers earlier passed a measure giving President Rodrigo R. Duterte special powers to fight the coronavirus pandemic, including realigning government funds.

Central Bank Governor Benjamin E. Diokno said the government would need more budget in the battle against the coronavirus disease 2019.

Mr. Duterte earlier said the government was “running low” in resources for programs to help communities affected by the virus.

He had ordered Finance Secretary Carlos G. Dominguez III to look for other fund sources as the P275 billion initially allotted by Congress for the COVID-19 response gets depleted. — Gillian M. Cortez

Universities, colleges told to open in August

PRIVATE colleges and universities should start the school year in August amid a novel coronavirus pandemic, even as they prepare for a flexible learning system months ahead, the Commission on Higher Education (CHED) said on Monday.

Some universities have moved their school calendar from June even before the outbreak, but those who still use the old calendar should adopt the new schedule, CHED Commissioner Prospero de Vera III told a news briefing.

“For private universities still using the old calendar, they would have to move the opening to August as we roll out flexible learning,” he added.

Mr. de Vera said the commission had ordered universities to submit their preparedness plans for the coming school year before August.

“We are giving them the month of May and June to come up with firm plans approved by their board,” he said.

The CHED chief also said the commission was assessing the preparedness of schools to start classes in August, adding that they were in discussions with private universities.

Mr. de Vera said universities should consider flexible learning programs. The commission earlier issued a memo ordering all tertiary-level schools to train their educators about this.

Under the plan, students will be given school work online apart from physical classes to ensure physical distancing measures meant to prevent the spread of the coronavirus disease 2019.

The amount of online school work will depend on the internet connectivity of students, teachers and the institutions themselves.

Mr. de Vera said the flexible learning system would not compromise the quality of education. “The flexible learning system will not change the learning outcomes and achievements that the students should meet.”

The Department of Education last week said it would move the opening of classes this year to August from June as the country battles a novel coronavirus pandemic.

Classes for school year 2020 to 2021 will start on Aug. 24 and end on April 30 next year, Education Secretary Leonor Briones said.

Not all teachers and students will physically report to schools once classes start due to lockdowns enforced in some areas of the country to contain the coronavirus disease 2019, she said.

The Education chief said various approaches will be used to teach students including technology-based learning through computers and mobile phones, media such as television and radio, and other offline methods.

Students will be made to answer a poll during enrolment about their preferred learning mode and which gadgets they own for technology-based learning.

President Rodrigo R. Duterte locked down the entire Luzon island on March 17, suspending work, classes and public transportation to contain the outbreak.

People should stay home except to buy food and other basic goods, he said. Mr. Duterte relaxed the lockdown for some areas of the island starting May 1 and extended the so-called enhanced community quarantine for Metro Manila, some cities and provinces until May 15. — Gillian M. Cortez

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