MANILA -- The Philippines must deploy a "social insurance package," including a "liquidity bazooka" from the central bank, to help mitigate the impact of a sharp but sudden economic downturn due to the coronavirus pandemic, economists from the state university said.
The government must be "decisive and formidable" in ensuring that businesses will not fail, jobs will be secure and people will not go hungry as it moves to fight the disease that force a lockdown of Luzon, home to half of its 100 million people, according to the University of the Philippines School of Economics' proposal.
"Doing this will involve providing emergency financial and non-financial aid to the most vulnerable households, guaranteeing the viability of businesses and maintaining the employment of their workers, and creating an economic environment which will allow the economy to recover quickly and continue on a growth trajectory when the public health crisis eventually wanes
"Many households will be plunged into poverty. Without assistance, those who are already poor will find themselves at the literal threshold of life and death as they battle both the virus that is ravaging their health and well-being, and the economic hardship that will almost certainly exact a social—if not physical—death," according to the school's proposed "Philippine Social Protection and Economic Recovery Plan."
The authors include economists Alfredo R. Paloyo, Cielo Magno, Karl Jandoc, Laarni Escresa, Ma. Christina Epetia, Maria Socorro G. Bautista and Emmanuel S. de Dios.
"The world is facing its biggest public health crisis in a century. Containing the crisis via a lockdown requires an intentional contraction of the economy of unprecedented proportions," according to the paper.
"This deliberate and unavoidable drawdown in market activity will put businesses at risk of destruction, with hundreds of thousands of Filipinos likely to lose their source of livelihood," it said.
The paper's main points in full include:
1. Social Protection. Guarantee that no one, most especially the vulnerable, go hungry. Secure supply chains and ensure that essential services remain open. Immediately distribute emergency financial and non-financial aid to the most vulnerable. Provide financial relief to vulnerable households. Protect the health of individuals. Enforce anti-price gouging and anti-hoarding laws. Provide support to agriculture and ensure its supply chains are unimpeded. Mobilize local governments. Put in place a coherent, comprehensive, and compassionate containment plan for Metro Manila and its vicinity, and anticipate that this may need to be extended to other cities.
2. Preserve Jobs and Businesses. Workers’ jobs must be preserved. Small- and medium-scale enterprises (SMEs) must be assisted through various schemes including access to credit and tax relief. Improve the ease and lower the cost of doing business. Provide emergency loans to SMEs conditional on them retaining their workforce. Target the benefits to the industries who are most severely affected by the crisis.
3. Provide Liquidity. The BSP should be ready to deploy unconventional monetary policy measures and provide the economic resources necessary to deal with the crisis to put it in good stead to return to a normal growth trajectory post-crisis.
4. Transparency and Accountability. The balance of power between the branches of government must be maintained. The power of the purse should remain with the Legislative Branch to maintain fiscal responsibility.