Focused fiscal fix
Governments are now pursuing economic stimulus packages to meet the COVID-19 threat, as if preserving economic growth is paramount. But there’s hardly any economic activity to stimulate under circumstances where “enhanced community quarantine” (a virtual lockdown) and suspension of nonessential activities are in place to prevent total catastrophe. The patient is sick, and the prior concern is survival and recovery, not growth. We in the Ateneo economics faculty have released a statement urging government to set aside its growth targets, and firms to do the same with this year’s profit targets. It’s not economic stimulus but an emergency fiscal response we need—a focused fiscal fix, I’d call it—to arrest the clear and present danger of twin disasters looming before us: a breakdown in public health, and breakdown of the social order.
Calling it an “economic stimulus” could be misleading and outright risky, as it could sidetrack our leaders from the most urgent needs in the short term that are critical to desired outcomes in the long term. It could even lead to misuse and misallocation of funds for unwarranted and, at worst, self-serving measures. Already, we’ve heard how the better part of the government’s P27.1 billion emergency response is allotted to the tourism sector, seemingly defying logic (unless the idea is to ameliorate the plight of poor idled tourism workers — but why just focus on them?). Yes, we need to spend a great deal of money immediately, but we must spend it right.
What would it mean to spend the money right — up to P1 trillion, based on government’s own estimates of reallocable funds? The Ateneo economists suggest what the critical elements are. The first of the twin disasters I’ve alluded to requires a drastic funding boost to ensure that our public health system is able to cope with the spread of the pandemic. What are most urgent?
First, we need large quantities of personal protective equipment (PPEs) for our frontline health workers, and systems to protect them from the virus. With PPEs now in short supply worldwide, government can move to facilitate repurposing of local apparel producers for now (especially in the municipality of Taytay, Rizal, known as the country’s garments capital) to the production of face masks, coveralls, gloves, and others.
Second, we need adequate testing kits, which experience elsewhere has already proven critical. Again, large-scale local production has been shown to be feasible, with enough funding support. We also need more ventilators, life support, medical supplies, and health infrastructure to address the needs of critical patients. Government hospitals, especially those crucial in providing assistance to infected COVID-19 patients, need a massive funding boost. And third, government must ensure that the poor and vulnerable need not worry about costs of treatment for the coronavirus and related illnesses, through accelerated funding of the Universal Health Care program.
The second looming disaster is the specter of a social breakdown, and possible anarchy, which could happen if prolonged ECQ prevents large segments of our population from earning their living and funding their basic survival needs for food and other necessities. We must thus ensure that no one goes hungry and displaced workers’ families are fed and provided for, and this will entail massive funding by government and private sector working together. Local governments have rightfully been put at the frontlines for this, but they need to be supported with the necessary funds to sustain such assistance. Local food production must also be given an extraordinary boost through direct assistance to farmers to obtain improved seeds, fertilizers, farm machines, and needed knowhow.
Extraordinary powers for the President, as proposed by Malacañang, should be limited to reallocation of unspent or nonmoving budgets to the above. But allow him to take control of “strategic businesses”? I would think long and hard about this. I’m sure our top business leaders would be more than willing to sit around a table with government counterparts, and agree to do what is right to get us through this unprecedented crisis.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.