MANILA, Philippines — A broad coalition of 32 business groups is pushing for a maximum fiscal stimulus package to help the country respond to the coronavirus disease 2019 or COVID-19 pandemic and weather its impact on the economy.
In a statement, the Philippine Chamber of Commerce and Industry, Association of Filipino Franchisers Inc., Employers Confederation of the Philippines, Federation of Filipino Chinese Chambers of Commerce and Industry Inc., Foundation for Economic Freedom, Federation of Indian Chambers of Commerce (Philippines) Inc., Philippine Center for Entrepreneurship, Information Technology and Business Process Association of the Philippines, Institute of Corporate Directors, Investment House Association of the Philippines, Institute for Solidarity in Asia, Management Association of the Philippines, Makati Business Club, Philippine Association of Legitimate Service Contractors, Philippine Franchise Association, Philippine Exporters Confederation, Philippine Institute of Certified Public Accountants, Philippine Retailers Association, Semiconductor and Electronics Industries in the Philippines Foundation Inc., Shareholders’ Association of the Philippines, Bankers Association of the Philippines, Rural Bankers Association of the Philippines, Chamber of Thrift Banks, Microfinance Council of the Philippines Inc., Australian – New Zealand Chamber of Commerce Philippines, Canadian Chamber of Commerce of the Philippines, French Chamber of Commerce and Industry in the Philippines, European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines Inc., German – Philippine Chamber of Commerce and Industry Inc., and Philippine Association of Multinational Companies Regional Headquarters Inc. said they support calls for Congress to have a special session for the passage of a supplemental budget amid the COVID-19 crisis.
The groups said while they support government’s measures to reduce or slow the spread of COVID-19 which includes the intensified community quarantine for Luzon, the impact of the lockdown is a matter of life and death for millions of workers as informal workers are barred from making a living and regular workers are at the risk of being laid off as companies respond to falling or disappearing sales.
With COVID-19 not only seen as a health issue but also as a hunger issue, the groups said it may trigger violence and longer term social tensions.
“To mitigate the suffering of Filipinos and reduce damage to the society and economy, we urge Congress, in coordination with the administration, to commit to a more forceful action on the fiscal front,” the groups said.
As the Bangko Sentral ng Pilipinas has taken decisive steps to help address the impact of the crisis through the second consecutive bigger rate cut last Thursday and the relaxation of certain regulatory measures to encourage more lending by banks, the groups said it is now time to make a move on the fiscal side.
“We believe the government can and should adopt a fiscal stimulus program that will raise our deficit-to-GDP (gross domestic product) ratio to close to five percent, which is a usual red flag for credit watchers, though they will probably relax as an unprecedented number of countries buttress their economies,” the groups said.
Should the GDP growth slow to 4.5 percent (GDP: P20 trillion), a five percent deficit will be P1 trillion and by deducting the programmed deficit of 3.6 percent or P720 billion), the groups said there is room for a P281 billion fiscal stimulus program.
In the event GDP growth slows to three percent (GDP: P19.7 trillion), a five percent deficit will be P987.5 billion, and subtracting the programmed deficit of 3.6 percent or P711.3 billion would mean room for a P277 billion fiscal stimulus program.
“This massive stimulus will save lives and protect our society but will not trigger alarm bells in the credit rating and global investment community as the Philippine debt or GDP measure is only likely to rise from 41.5 percent to 44.2 percent,” the groups said, noting it was almost 70 percent about 15 years ago.
The groups said the quick P27 billion package announced by the Department of Finance (DOF) is a great start and budgetary items of the package, as well as in the proposals of Albay Rep. Joey Salceda and others can and should be counted as part of the maximum fiscal response.
They added the government’s fiscal response package to COVID-19 should also include additional funds for conditional cash transfer program recipients who are most financially vulnerable and are likely to lose their livelihood during this time.
The groups also said there should be more funds for the Department of Labor and Employment and other programs to support workers affected by quarantine, whether directly or through companies, as well as measures to transfer funds or food to low-income families.
In addition, there should be funds for temporary hospitals and quarantine areas to ensure the health system can cope with the surge in patients.
The group said funds should also be made available to businesses especially micro, small and medium enterprises once COVID-19 is under control.
Government subsidies to the health, tourism and transport industries should also be given.
Also pushed by the groups are increased public investment spending and deferment of penalties related to interest payments.
The groups said funds may also be sourced from savings or mandated savings of government agencies and government owned and controlled corporations except the Department of Health, local government units and other frontliners in the current crisis to support all vulnerable sectors.
“The administration and the DOF have done a great job improving the country’s finances. Now is the most critical time to put it in service of the sovereign people,” the groups said.