FINANCE Secretary Carlos G. Dominguez III said the Cabinet-level Development Budget Coordination Committee (DBCC) may once again revise its outlook on the Philippine economy to take into account the impact of the government’s decision to revert to a stricter lockdown in August after the number of infections rose with the easing of rules.
The country’s finance chief told reporters on Tuesday the possible revision of GDP outlook by the DBCC is now “under discussion.”
The DBCC currently projects the economy could shrink by 5.5 percent, which is within the range of its GDP assumption of 4.5 to 6.6 percent contraction this year.
“For the entire year, we project our economy to contract by about 6 percent. We have seen unemployment spike when the domestic economy was hindered by the lockdown. Our enterprises have borne the brunt of the economic downturn,” Dominguez said in an online business forum.
Downward revisions
This development comes after multilateral agencies further revised downward their respective outlooks for the Philippines this year.
Last week, the International Monetary Fund (IMF) said it sees a much worse economic contraction for the Philippines at 8.3 percent this year, a further downgrade from its previous projection of a contraction of 3.6 percent. It also sees the Philippines suffering the worst economic contraction in Southeast Asia.
Last month, the Asian Development Bank (ADB) said it expects the Philippine economy to post the second steepest economic contraction among Southeast Asian countries next to Thailand. The Manila-based multilateral lender said it sees the economy shrinking 7.3 percent, lower than its June forecast of -3.8 percent.
While IMF and ADB’s forecasts on the Philippine economy are lower than the economic team’s projection of a 5.5-percent GDP contraction this year, these are still within the range of 7 to 9 percent economic contraction projected by Bangko Sentral ng Pilipinas Governor Benjamin Diokno.
Covid-19 vaccine
In the same forum, Dominguez also revealed that he is already in talks with multilateral agencies, such as the World Bank (WB) and the Asian Development Bank (ADB), on vaccine financing.
He said they expect an effective vaccine to be in place and available in the country by around mid-2021.
“This morning I just had a long discussion with our multilateral partner in the World Bank, and we talked a lot about this vaccine financing. I asked them to please work together with other multilateral agencies like the ADB so that we are not duplicating our efforts with regard to vaccines. And we’re tapping their expertise in identifying the vaccine, in financing vaccines for the Philippines, and also, not only just with the vaccine itself, but the necessary infrastructure that is required for the delivery of the vaccines,” he said.
Dominguez pointed out that cold storage is needed for vaccines to be effective, adding that effective vaccination is easier to do in big cities.
“However, in the island communities, we will have to boost our infrastructure for that. So, again, my discussions with the World Bank, with the ADB, who are keeping a close tab on developments of the vaccine, are very, very promising,” he said.
Asked how much is the Department of Finance eyeing to borrow from WB and ADB for vaccine financing, Finance Undersecretary Mark Dennis Y.C Joven told the BusinessMirror there are “no specific figures yet.”
Apart from the World Bank and the ADB, Joven said they are also in discussions with the World Health Organization (WHO).
“Basically, government is seeking a coordinated intervention from MDBs such as WB, ADB and WHO to support vaccine access,” said Joven, who heads the International Finance Group.
Last week, President Duterte said the government already has money to buy Covid-19 vaccines, but he said he still needs more funds to provide vaccines for all Filipinos.
Joven, however, explained that the question of whether the government would be able to provide free vaccines for all Filipinos would depend on the type of vaccine.
“But the international rule of thumb is that 20 percent of the population will be inoculated. Health workers and high-risk individuals will be prioritized,” he said. “Internationally, children are not eligible for vaccination since Phase 3 trials do not cover children.”
In July, Dominguez said the government is ready to finance the P20 billion needed to provide free Covid-19 vaccines to 20 million Filipinos.
The purchase, he said, will be financed by the Land Bank of the Philippines and the Development Bank of the Philippines, and the vaccines will be purchased by the government through the Philippine International Trading Corp., an attached agency under the Department of Trade and Industry.
Image credits: Bernard Testa