The issuance of reconstruction and recovery bonds could provide the Philippine government a much-needed boost in its finances, according to former Socioeconomic Planning Secretary Romulo L. Neri.
A policy paper sent to the BusinessMirror by the former head of the National Economic and Development Authority (Neda) said the government can float a P1-trillion “Economic Recovery and Reconstruction Bond” similar in nature to a “War Bond.”
In the past, countries like the United States issued “war bonds” that were zero-interest debt papers that financed its war efforts. Other countries that have issued similar instruments were Canada, Germany, and the United Kingdom, among others, the paper said.
“[An] economic recovery (ER) bond [can be used] to shore up fiscal resources and to fund income transfers,” Neri said in the paper. “[While an ER] bond [can be used] to support countryside development projects that will redeploy and re-employ displaced workers.”
Apart from these, Neri also recommended other fiscal measures to respond to the financial challenge that the government faced due to the coronavirus 2019 (Covid-19) pandemic.
These include the use of Local Government Unit (LGU) funds, particularly from prosperous urban LGUs to purchase National Government bonds. These funds, Neri said, could also be used to finance household income transfers, distribute food to constituents, and finance local infrastructure projects.
Neri added that the country’s capital goods imports can also be financed through Official Development Assistance and long-term suppliers’ credit.
He also said it was important to identify possible Public-Private Partnership opportunities in these investment projects to bring in private sector financing, management expertise and operating efficiency.
Meanwhile, apart from these measures, Neri also recommended creating economic value through property rights.
He said these include revising the agrarian reform law to encourage bank lending to farmer beneficiaries as well as allowing land reform beneficiaries to sell their land.
Neri also said the Philippine economy “that will rise from the ashes” of Covid-19 should be a more sustainable one that takes into consideration environment-nurturing economic models.
The country’s former Chief Economist also said urban development should also experience a paradigm shift from shopping malls, crowded shanties, office buildings or urban jungles, urban traffic, condominiums, and overcrowded classrooms.
These should be replaced by the development of public parks that will be required for all LGUs, common tree covered areas and playgrounds, green buildings with cross ventilation, rooftop gardens, tree-lined avenues, walkable roads and sidewalks, affordable in-city dwellings, and educational TV as well as free WiFi for all.
“To pursue these recommended actions, the government will need to mobilize all its manpower and economic resources. A massive government restructuring and reorientation may be necessary to effect the desired economic recovery and transformations,” Neri said.
Over the weekend, Neda released the “We Heal As One” report, which stated that the losses resulting from the enhanced community quarantine (ECQ), excluding losses in the transport sector, is estimated at roughly P1.1 trillion, representing 5.6 percent of the gross domestic product.
Data showed the largest losses were recorded in Services at P589.72 billion followed by Industry at P537.72 billion and Agriculture, P94.30 billion.
In terms of region, the largest losses were recorded in the National Capital Region at P589.25 billion followed by Calabarzon with P265.13 billion and Central Luzon at P83.59 billion.
The Neda said the estimates only assumed a 45-day lockdown period in Luzon; for Visayas and Mindanao, the number of days of ECQ varies per province. Moreover, the losses in the transport sector have not been included.