Slow distribution of SAP adds to slow recovery

MANILA, Philippines — The slow distribution of fiscal support as the pandemic wears on will contribute to the slow recovery of the economy, according to a London-based think tank.

In a report, Capital Economics said the slow distribution of social assistance to vulnerable sectors may cause a slower economic recovery.

“While second quarter gross domestic product data showed that government consumption grew strongly last quarter, monthly data suggest that this was concentrated in April and that support has been lackluster since,” it said.

“Spending was not significantly higher in May or June than its monthly average in the first quarter. The Bureau of the Treasury noted that in June primary, spending missed its programmed allocation by 8.5 percent. This was mostly due to lower-than-targeted spending on the Social Amelioration Program, the government’s main scheme to provide cash handout to the poor families hit by the pandemic.”

The research firm already expects economic recovery in the Philippines to be slower compared to other countries in the ASEAN because of the prolonged and repeated lockdowns that severely affected businesses.

“If money is not getting to those who most need it, then the economic scarring from the pandemic is likely to be worse than it might otherwise have been,” Capital Economics said.

“This is one reason why we think the recovery in the Philippines will be slower than elsewhere.”

The government has recognized the slow distribution of the P205-billion Social Amelioration Program that provides assistance to low-income families and those displaced by lockdowns.

Several factors were cited for the slow distribution of cash aid, including the duplication of names of beneficiaries, lengthy validation process, and poor targeting of beneficiaries by local government units.