The procurement of Covid-19 vaccines and gradual easing up of the economy will enable the country to immediately recover up to 5% to 6% unemployment under the proposed Bayanihan III Act from the 10.4% it registered middle of this year, due to quarantine lockdowns.
Albay Rep. Joey Sarte Salceda, chair of the House Ways and Means committee. said about 4.5 million Filipinos have lost their jobs in 2020, citing a government report. The figure translates to 10.4% unemployment rate, the highest in 15 years. It had already slid down to 8.5 percent in October, however, with the gradual easing up of quarantines allowing workers to return to their jobs.
“I take it as a signal that as soon as we get the vaccine and return to the previous normal, we will recover to around 5% to 6% unemployment,” said Salceda, the principal author of the P302-billion Bayanihan to Rebuild as One Act III, which provides some P75 billion for the purchase of vaccines, other health requirements and for regulatory and fiscal interventions.
Salceda said Bayanihan III, packed with emergency response and economic recovery programs, will serve as the “booster shot” to power the country towards overall recovery. The measure is seen to bring an additional 1.5% of GDP in incremental deficit, and while the first two Bayanihan laws were able to keep the economy afloat, Bayanihan III, the third stimulus measure versus the Covid-19 threat is “the necessary booster shot so we can truly begin recuperating in 2021.”
“Our proposal is 1.5 percent of GDP in incremental deficit. I think we can afford it because it is for vaccine, the headliner and largest one-program item. Buy the vaccine now, not later. The bill places paramount emphasis on the procurement of vaccine,” said Salceda, who co-chairs the House Economic Stimulus and Recovery Cluster. Its proposed interventions, he added, are primarily to ensure that national and local government units can mobilize “robust response and recovery programs,” following the two recent typhoons and the slower than expected economic recovery in the third quarter of the year.
“I made it clear to the economic managers that if we recover more quickly than expected in the 3rd quarter, a third Bayanihan may no longer be necessary. Seeing that the economy did not recover as quickly in the past quarter, and given the recent spate of typhoons, we need to provide emergency aid,” he stressed.
Bayanihan III focuses mainly on health, regulatory, and economic interventions. Aside from the P75 billion for vaccines, it also includes measures to ensure the sufficiency of health supplies, and the creation of a vaccine committee.
Salceda said a fully funded vaccine program will create a ‘herd mentality’ among Filipinos with a strengthened will needed to recover from the psychological impact of the pandemic, and move on towards rebuilding their lives.
“Mass vaccination is actually the most critical determinant of recovery. There are two basic scenarios—a vaccine by end of 2021 or end 2023. Both pathways start with minimum health standards. The long road means higher fixed costs and lower economies of scale due to social-distancing imperatives. A quick vaccine will work like magic,” he said.
The government has set a P3 trillion borrowing program for 2020 and another P3 trillion for next year. Given the country’s pre-Covid fiscal, monetary and external balances, Salceda said it is actually the agility and strength of the stimulus response and structural reforms that would shape the complexion and direction of Philippine post-Covid socioeconomic prospects.
“Maladaptation is a clear and present danger to excess fiscal risks which could curtail long-term output potential,” he pointed out and added the proposal also contains rental housing relief, an eviction moratorium, condonation of agrarian reform loans, small business regulatory relief, and credit mediation and refinancing assistance.
It likewise includes a P40-billion local government support fund for calamity response, P100 billion in health- and resiliency-related infrastructure programs under ‘Build-Build-Build,’ P10 billion in assistance for agriculture and fisheries, P7 billion for rent refinancing, P10 billion for loans to companies to pay 13th month benefits, P10 billion for Tulong Para sa Displaced workers (Tupad);
P10 billion for the Covid Adjustment Measures Program (CAMP), P10 billion for Assistance to Individuals in Crisis Situation (AICS), P10 billion for the Medical Assistance for Indigents Program (MAIP), P5 billion each for Technical Education and Skills Development Authority (Tesda) and the Commission on Higher Education, respectively, and another P10 billion for the Department of Education programs.
“You will see that my contribution here is primarily the structural credit interventions. We have already introduced around P1.9 trillion in new liquidity due to monetary policies. Credit uptake is still low, however. due partly to demand lack and structural defects of usual loan products. That’s why the state has to come in and create more favorable loan structures,” he explained.
Salceda added that the third stimulus program is necessary to ensure the crisis does not “eat up too much of our economic structure,” stressing that “it is very hard to recover when so many businesses have already closed for good.”
“The Executive can make their concerns known, and we will consider them. They can even give us a fiscal limit to work on, but what we cannot accept is the idea that we have spent enough in 2020. That may have been barely true if the recent calamities did not strike. The sheer fact is that more people have gone into poverty this year than we expected,” Salceda said.
The lawmaker said the House Ways and Means Committee already passed measures with P691 billion in 5-year revenue potential that is “more than enough to keep our credit ratings attractive.”
“If there are items in Bayanihan III the government can afford, we will cooperate, but it cannot be zero. If there are tax reforms needed to be enacted so the medium-term fiscal overhang does not gape too much, I will do it in the Ways and Means Committee,” he added.