By Butch Fernandez & Jovee Marie N. Dela Cruz
THE stimulus package needed to prime an economy gutted by the prolonged lockdowns forced by the battle to stop the deadly coronavirus disease (Covid-19) will require from P1 trillion to P1.2 trillion, Sen. Sherwin Gatchalian estimated over the weekend.
Gatchalian said the Senate is set to frontload passage of remedial legislation to prime the economy in the wake of the crippling effects of the enhanced community quarantine that shut down business activities and may cost the economy some P950 billion by May 15, the end of the third ECQ period ordered by President Duterte.
The President in mid-March imposed a community quarantine, but upgraded this to an ECQ, imposed over Luzon, to run from March 17 to April 14, or the end of Holy Week.
However, on advice of health experts and epidemiologists who presented models of how a premature lifting could cause transmission to accelerate anew and swamp the health system, Duterte extended the ECQ to April 30. Last Friday, he announced a second extension until May 15 for Metro Manila and other areas tagged high-risk in central and southern Luzon.
In an interview with DWIZ, Gatchalian cited the tourism industry among other sectors reeling from the Covid-induced lockdowns.
The airline industry is also barely operating amid lockdowns not just in the Philippines but in many other destinations struggling to contain the virus.
“Tourism-related establishments may not likely open soon for lack of tourists. As for small and medium enterprises, some of my franchisee friends who sell food [tell me that] if the small enterprises cannot open soon, they’ll go under,” he said in a mix of English and Filipino.
Gatchalian stressed this was why it is important for the Senate to tackle a “stimulus program” to assist the business sector, particularly small businesses, warning that “job losses would lead to bigger problems.”
He agrees with suggestions that the focus of Congress upon resumption of session on May 4 is to address the funding required for such a stimulus package, reported to initially range, per various estimates, from a trillion pesos to around P1.4 trillion.
“I estimate we’ll need P1 trillion to about P1.2 trillion. Per our calculations, the economy lost at least P800 billion and this could rise to around P900 billion to 950 billion by the end of May 15,” he added.
“So, to jumpstart, we cannot simply fill up what was lost; we have to add to their funds for restarting businesses,” he continued.
The senator projects it could be “between maybe P1 trillion and 1.2 trillion or even more, depending on what we will see along the way, as the situation is fluid. For now, that’s my rough estimate.”
Earlier, Duterte signalled that funds to contain Covid-19 are being depleted, signalling he may ask for supplemental funding for the Bayanihan Act, which Congress passed in a special session last month to authorize the Executive to realign at least P250 billion initially in the 2020 budget to provide for immediate cash aid to families amid the lockdowns.
“The Bayanihan Act was meant to stop the spread of the virus but the next step is to restart the economy, as we expect many businesses to lose money,” Gatchalian said.
‘Don’t stop infra’
Meanwhile, the leadership of the House of Representatives on Sunday objected to the call of the Department of Budget and Management (DBM) to temporarily stop funding some infrastructure projects, saying it would cause a significant decline in GDP growth.
While backing the DBM’s decision to impose austerity measures to raise more funds to fight Covid-19, Speaker Alan Peter Cayetano said Budget Secretary Wendel Avisado should implement planning and transparency in the war against Covid-19.
Cayetano proposed a dialogue between the DBM and Congress on projects, programs and activities that would be affected by the cost-cutting.
“The economic team has always been saying that the infrastructure program should not be touched, unless the project is useless or cannot be implemented, because infrastructure drives economic activity, especially in remote parts of the country. And in fact, it also fights insurgency,” he said.
Under National Budget Circular No. 580, the DBM said 35 percent of programmed appropriations under the 2020 national budget shall no longer be made available for release to government agencies starting April 1 this year. The DBM also said at least 10 percent of the total released allotments to national government agencies for maintenance and other operating expenses (MOOE) and capital outlays that are not related to the Covid-19 response efforts shall no longer be available for obligation.
Cayetano said certain infrastructure projects programmed for 2020 could be undertaken next year. However, he said there are roads and bridges implementation of which this year could not be postponed.
He said workers in such urgent projects expect to go back to their jobs once the extended ECQ is lifted or relaxed.
The Speaker also cited allocations for travel, as well as expenses for paper and other office supplies, among funds that could be used instead to fight Covid-19.
Growth impact
Marikina City Rep. Stella Quimbo, an economist, said reducing spending for infrastructure programs at a time when the government needs to keep the economy afloat would lead to a significant decline in GDP growth as well as over a million in job losses.
Quimbo said funds for infrastructure projects under the 2020 national budget should be left intact to provide the economy the stimulus it needs during and after the pandemic.
“Given its multiplier effects, a conservative estimate would show that a P100-billion loss in the infrastructure budget would translate into a corresponding drop in GDP valued at P300 billion,” said Quimbo, who co-chairs the economic cluster of the Defeat Covid-19 Committee in the House of Representatives.
Quimbo said that if labor accounts for 37 percent of the P100-billion cut in infrastructure spending, then the loss in wages would amount to P111 billion.
Citing Finance Secretary Carlos Dominguez, she also underscored the need to sustain funding for infrastructure projects to help restart the economy and generate jobs and other livelihood opportunities.
For his part, Deputy Speaker Luis Raymund Villafuerte said, “‘Build, Build, Build’ will enable the country to achieve a V-shaped or quick recovery as infrastructure investments have the highest multiplier effects on the economy, including the generation of jobs.”
“Creating a lot of jobs will go a long way in reversing the surge in unemployment brought about by the economic standstill,” he said.
However, Villafuerte believes “Build, Build, Build” could be restarted now rather than later, most especially in the low-risk areas under the relatively relaxed GCQ, to pave the way for the quick recovery of the domestic economy.
Spare
For her part, Quezon City Rep. Precious Castelo wants to spare big projects under the administration’s centerpiece Build, Build, Build program from the extended ECQ.
In a statement, Castelo said the government has to take advantage “of the remaining dry-season window” to resume work on BBB projects.
“We have at most May and June to do public works activities before the onset of the rainy season, which will surely slow down again the implementation of our national and local government infrastructure programs,” she said.
She said resuming work on certain BBB projects would provide income to those who lost their jobs due to ECQ.
“It would be a way of restarting the economy, even on a limited scale,” she stressed.
The government could require contractors to test their workers and other personnel for Covid-19 before resuming construction activities and compel them to observe social distancing and other ECQ protocols, she said.
She said contractors not complying with IATF requirements could face suspension of their projects or other penalties.
She cited the MRT-7 rail line from North Avenue in Quezon City to San Jose del Monte in Bulacan as one project that could be resumed.
Before the ECQ, she frequently noticed that workers were spread out along the long stretch of MRT-7 and did not congregate in one work site or station.