Neda, DOF: NG needs P734 billion for stimulus after Covid damage

More from author

Value of domestic trade down 2.9% to P834.72 billion in 2019, PSA data show

Despite an increase in the amount of goods traded domestically, the total value of these commodities contracted...

‘Calamity’ extension raises spending alert

THE extension of a declaration of national calamity for one year bodes well for the economy, economists...

Amro sees PHL economy regaining pre-Covid status, but flags risks

THE Philippine economy is expected to return to its pre-pandemic growth path in 2022, according to the...

THE national government needs an additional P734-billion initial stimulus to boost the economy, according to estimates made by the National Economic and Development Authority (Neda) and the Department of Finance (DOF).

Documents obtained by the BusinessMirror showed that the amount accounts for 3.8 percent of the country’s GDP. Of this amount, 0.9 percent of GDP is composed of a fiscal stimulus.

The remaining 2.9 percent comprises savings, off-budget, monetary policy, financial sector regulatory relief, and private sector contribution.

“Reconciling the macro framework and survey results: P734 billion of initial stimulus is needed, but fiscal space is limited. Base case (-2 percent real GDP growth in 2020),” the document stated.

Based on Neda and DOF estimates, the 2020 pre-coronavirus 2019 (Covid-19) was estimated at P21.468 trillion. However, due to the pandemic, this will decline to P19.554 trillion.

This represents a reduction of P1.914 trillion in nominal GDP due to Covid-19. Of this amount, 87 percent or P1.665 trillion are losses due to profits and wages.

However, Neda and DOF said there is a need to keep spending prudent and ensure that the country’s deficit-to-GDP ratio and debt-to-GDP ratio are in check.

For the deficit-to-GDP ratio, the government said the country is already at 5.3 percent. But with the recovery program in place, it is estimated the government can keep this to around 6.18 percent deficit-to-GDP ratio.

In terms of debt-to-GDP ratio, the government aims to keep this to below 50 percent of GDP. As of 2019, the debt-to-GDP ratio is at 39.6 percent, the lowest in nearly 40 years.

“[There is a need to] limit exposure and contingent liabilities by having highly targeted equity infusion to the most affected industries subject to conditions,” the document stated.

The country’s debt-to-GDP ratio was at its highest in 2004 when it reached 71.6 percent, followed by 2003 when it was at 71.1 percent. Economists at that time said the country was on the brink of a fiscal crisis.

Austerity measures implemented by the government after 2004 allowed it to cut the debt-to-GDP ratio to 65.7 percent in 2005 and 58.8 percent in 2006.

In 2011, the country’s debt-to-GDP ratio further declined to 48.8 percent. In 2018, the debt-to-GDP ratio reached 38.9 percent.

Image credits: Benard Testa



- Advertisement -

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

More updates

READ | President Duterte’s Statement at the UN General Assembly in New York

 (Note: For the first time since being elected in 2016, President Duterte participated in the UN General...
- Advertisement -

Sagada, other North Luzon destinations eye reopening to tourists

MORE destinations in Northern Luzon are considering reopening to tourism, following in the footsteps of Baguio City, which will be accepting tourists from the Ilocos region by October 1. Benguet and Ifugao are also looking forward to tourists, after meeting with the governors of both provinces on Monday,...

Rice importers charged P1.4 billion on undervaluation

OVER 40 rice importers have been told to pay a combined total of P1.4 billion “additional audited assessment” after the Bureau of Customs (BOC) found them liable for undervaluing their rice shipments from March to June last year. Sixty entities with the “most number of incidents of deviation and...

DOH hails ‘calamity’ status extension as Covid cases rise

THE Department of Health (DOH) on Tuesday welcomed the extension of the declaration of a state of calamity in the country as a means for sustaining the response to Covid-19, as confirmed cases surged to 291,789. Of the confirmed cases, 56,097 (19.2 percent) are active cases, 230,643 (79.0 percent)...

As PHL moves to ensure access to Covid vaccine, 2 nations seen unlikely to charge reservation fee

PRESIDENT Duterte appears to be certain that at least two countries will provide the Philippines with a supply of Covid-19 vaccines without asking for a reservation fee, Malacañang said on Tuesday.  In a virtual Palace briefing, Presidential spokesman Harry Roque said Duterte is sure that China and Russia will...
- Advertisement -

In case you missed it