THE Philippines needs to double its aid to vulnerable members of the population after the lockdown strategy for containing the pandemic disrupted their earning capacity, Nomura Global Markets Research said.
It said the announced Philippine social assistance measures worth P1.17 trillion are about 1.7% of Gross Domestic Product (GDP), and that it estimates that spending of 3.7% is needed for such assistance to be “sufficient.”
“Overall, the total fiscal costs that we estimate to provide sufficient assistance to vulnerable groups is around 3.7% of GDP over the two-month period that the lockdown is in place, more than twice the total 1.7% of GDP worth of comparable measures announced by the government,” Nomura Global said in a note issued Thursday.
“We believe the government has available fiscal space as debt to GDP ratios have declined in the past several years, standing at 41.5% in 2019 from 74.4% in 2004,” it said.
Nomura Global added that additional health care spending of about 1% of GDP will give the Philippines adequate resources to deal with the outbreak.
“We estimate an additional 1% of GDP in healthcare spending is needed to adequately respond to the outbreak using the WHO’s (World Health Organization) estimates of required resources, and assuming the ‘true’ number of cases in the country peaks at 30,000,” Nomura Global said.
It said the Philippines is in the same category as Indonesia and India, with big populations of poor people, daily wage earners and informal workers, who are likely to be most adversely affected by the coronavirus disease 2019 (COVID-19) pandemic.
“This makes it even more challenging for their respective governments to deal with the dilemma of ‘saving lives (or) saving livelihoods,’” it said.
“Because imposing lockdowns or social restrictions in a bid to contain the spread of the COVID-19 is highly disruptive to economic activity and will adversely affect the vulnerable sectors the most, targeted government assistance will be urgently needed,” it added.
The report said the hotspots in India, Indonesia, and the Philippines were Mumbai, Jakarta, and Manila, which are also the economic centers of those countries.
It noted that Bangkok and Kuala Lumpur have much lower densities and poverty rates and have recorded declines in new cases thanks to containment measures.
Nomura cited data from the World Bank that in 2015, 22% of the Philippine population was below the poverty line, the same as India and higher than Indonesia’s 11%.
“The difficulty in addressing the local outbreaks is further compounded by very high population densities and urban poverty rates,” it said. — Luz Wendy T. Noble