Balancing act

It is speculative and even pointless to argue about whether the unprecedented total lockdown of the economy which we undertook to stem the onslaught of the feared COVID-19 pandemic was the right move to make or not. True, some countries, notably Sweden, chose the path of herd immunity (without lockdown), with results not too different from those that chose total lockdown.

It is also true that the scientific basis to support a total lockdown has meandered along a learning curve even as the pandemic raged—from a doomsday scenario of 2 million deaths in the United States to an actual current level of about 100,000, from a pronouncement that face masks were optional to one where they are mandatory at all times, from a finding that exposure to sunshine is a proven antidote against infection while simultaneously advising against going outdoors even in wide open spaces like beaches.

The list of inconsistencies goes on, and our authorities seem to go with the flow along with its puzzling inconsistencies. But we made our choice for a total nationwide lockdown along the likes of the United States and Italy, and like them we will have to live and deal with it.

In the case of the United States, it was reported that a “tsunami of bankruptcies” had begun with even the biggest car rental company (Hertz) and the oldest retail company (JC Penney) filing for bankruptcy, the biggest mall in America (Mall of America) stopping its mortgage payments, and unemployment claims reaching an all-time high as the unemployment rate zoomed to 25 percent.

The US government has dealt with this dire situation with a combination of measures: the fast-tracked escalation of the provision of needed medical services and health protocols, a targeted fiscal and monetary stimulus package, improved statistical tracking and analysis of the progress of the pandemic (flattening curve or not), and a gradual reopening of the economy, based on a combination of these factors, that would strike a balance between the imperative of reducing the mortality consequences of the pandemic to levels of manageable risks, and the imperative of averting economic disaster resulting from a prolonged lockdown accompanied by an ultimately futile effort to fill the void of a comatose economy with finite resources from government coffers.

The Philippine situation is similarly dire, with deaths breaching 1,000 and the continuance of the longest pervasive economic lockdown on the planet based mainly on this statistical component. Meanwhile, closures of micro, small and medium enterprises (MSMEs) have reached 50 percent of the country’s total MSMEs, the unemployment rate has tripled from about 6 percent pre-COVID-19 to about 18 percent now, and OFW remittances, which constitute about 8 percent of GDP and are a major engine of our largely consumption-driven economy, are expected to decline by up to 20 percent.

Clearly, a deft balancing act along the lines described above is needed. It seems, however, that we are still less than surefooted in our approach. The build-up of necessary health facilities and protocols (testing, for instance) continues to be at a lower than desirable pace; the gradual reopening of the economy while moving from ECQ to GCQ is beset by bizarre bureaucratic and documentary requirements that defy common sense, are unevenly implemented, and stifle the flow of economic activity; some necessary stimulus funds end up diverted to the wrong pockets, and so on.

The government is poised to infuse more funds to resuscitate the economy, and is also formulating strategies and reform packages. To strike the proper balance needed, the deployment of funds should be focused and targeted toward priorities, particularly the build-up of health infrastructure (without which the reopening of the economy may be detrimentally snail-paced), sensibly packaged financial support to key sectors, and reasonably designed assistance to the seriously disadvantaged. It is not the sheer quantity of money thrown at the problem that will make the difference, but its judicious and responsible deployment toward a sustained revival of vibrant economic activity sooner rather than later.

Roberto F. de Ocampo, OBE, is a former finance secretary and was Finance Minister of the Year in 1995, 1996 and 1997.

Business Matters is a project of the Makati Business Club (makatibusinessclub@mbc.com.ph).