THE extension of a declaration of national calamity for one year bodes well for the economy, economists said, but they strongly advised the government to practice judicious spending.
They said the extension of the national calamity status will enable both the national and local governments to immediately tap funds for Covid-19-related projects that have the potential to stimulate spending.
Under Proclamation 1021, the extension will allow the national and local governments to tap the Quick Response Fund for basic necessities and provision of basic services for affected populations.
“Extending the state of calamity until September 2021 is meant to cement the foundation for future economic recovery,” University of Asia and the Pacific Economics Dean Cid L. Terosa told the BusinessMirror. “It serves to ensure that economic recovery will have enough momentum in the medium to long terms by allowing swift response to signs of possible outbreaks and the mobilization of resources to arrest anything that can destabilize or jeopardize economic recovery.”
De La Salle University economist Maria Ella C. Oplas said having quick access to funds is important in the fight against Covid-19 and would be “good for everyone.”
Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang also said the extension served a “facilitative purpose” that will allow the government to act fast.
In both houses of Congress, however, minority lawmakers warned that a brewing battle over the House speakership and the infrastructure allocations for legislative districts could derail efforts to finish the 2021 national budget on time, a matter with serious implications in a time of pandemic.
It may be noted that government spending is an important part of the country’s economic growth. In the second quarter, despite the 16.5-percent contraction of GDP, government consumption grew 22.1 percent and accounted for 20.6 percent of GDP.
“It depends on how it is used,” Ang said. “However, they have the right idea. [This] can help the government act fast.”
Concerns
The extension of the state of national calamity raises a few concerns among the country’s economists. Oplas said she is concerned that this would have negative implications on the budget.
She said Covid-19 could be used as a gate pass to enter “a faster lane” in the budget, even if these items are not related to containing the spread of the disease.
Oplas also expressed concern that giving LGUs access to quick disbursing funds could worsen patronage in certain locations.
“I am assuming that once we lift the lockdown, the economy will slowly go back to normal. We just need economic activity. So I’m wary that it’s the whole Philippines that is placed in that state. Maybe it would be better to implement this only in areas with high incidence,” Oplas said.
Procurement rules
Meanwhile, Luis Abad, economics lecturer at the Ateneo School of Government, said procurement rules remain intact except for the purchase of personal protective equipment (PPEs) and other critical medical equipment.
With this, infrastructure projects, which account for a significant amount of government spending, will still have to follow regular procurement rules.
Ultimately, the extension of the state of national calamity will not have a direct impact on the economy. Abad said economic recovery can only begin if consumers and businesses regain their confidence to buy and sell.
“This can only be achieved through a decisive set of actions that will mitigate the continued increase of infections. As long as infections continue to increase, consumers and businesses will be wary,” Abad said.
For his part, Foundation of Economic Freedom (FEF) President Calixto V. Chikiamco said if at all, Proclamation 1021 is an admission that the Philippines is not out of the woods yet in terms of recovering from the pandemic.
“Certainly, the declaration means that the Philippines hasn’t gotten out of the pandemic and conceivably will have to deal with it for one more year,” Chikiamco said.
Last Friday, President Duterte decided to extend the declaration of state of calamity nationwide for another year.
In his Proclamation 1021, President Duterte said his new order extends the declaration of a state of calamity from September 13, 2020, to September 12, 2021, “unless earlier lifted, or extended, as circumstance may warrant.”
He made the declaration after his Proclamation 929 issued in March, placing the entire country under six months of a state of calamity, expired last Wednesday.
The President said the extension aims to allow concerned government agencies and local government units to continue using their supplemental budget, such as their Quick Response Fund, for their Covid-19 measures.
The measure will also allow the government to monitor and control prices of basic necessities and prime commodities during the pandemic.
He also directed law-enforcement agencies and the Armed Forces of the Philippines to ensure the peace and order situation in the country during the crisis.
The President signed Proclamation 1021 on September 16, 2020, but it was only released to the media on September 18.