More aid needed
The Tokyo-based think-tank Asian Development Bank Institute (ADBI) said last week that the COVID-19 pandemic has further widened the income gap between the rich who had the means to cope with the COVID-19 pandemic, and the poor who had to suffer much from the economic recession caused by the health crisis.
Based on the results of the ADBI surveys in Asean countries last year, poor households in the Philippines were more disadvantaged and faced financial difficulties amid the pandemic more than rich households. Worse, it noted that people in the Philippines (together with those in Cambodia and Indonesia) lacked a well-developed social safety net to support them when there is a shock such as the ongoing health and economic crisis.
Across the region, it was in the Philippines where the biggest share of households, or 85 percent of respondents, said they experienced financial hardships due to the pandemic; 84 percent said their incomes dropped last year. In terms of sufficiency of resources to cover daily necessities in case households lose all of their income sources, the ADBI said “the situation is also serious in the Philippines, with less than 30 percent having enough resources to cover necessary expenditures for more than a month.” Referring to the Philippines and Indonesia, where 86.6 percent of households said they could survive for only two weeks without income, the ADBI warned that if the COVID-19 pandemic is prolonged, “many households in these countries may suffer from hunger and increased poverty.”
The remedy to this urgent problem is for the Duterte administration to find the means to implement another round of dole-out to the poor and the jobless displaced by the severe lockdowns it had imposed in response to the pandemic. Borrow if it must. If protecting the country’s investment-grade credit rating is holding it from contracting more loans, that should take a backseat to preventing even more suffering among the millions now enduring the harshest effects of the economic meltdown.
Moody’s Analytics, the research arm of credit ratings agency Moody’s Investors Service, in fact says the country is “in a worrisome state.” Its recent Asia Pacific Daily Briefing took note that “Elevated inflation, a large output gap, a recent resurgence of COVID-19 infections, and limited vaccine availability are all reasons for concern.”
Given the inflation spike, the resurgence of COVID-19 infections, and the likelihood of quarantine measures for still some time (Metro Manila and surrounding provinces are back to ECQ starting today), many households remain squeezed, their earning members unable to work, or with income that barely allows them to scrape by. It is imperative for the government to find ways to bring a fresh infusion of cash to the hands of the poor and the unemployed. The government’s previous stimulus plan was simply not enough. The Bayanihan to Recover as One Act, or the Bayanihan 2, only allotted P165.5 billion, which was already smaller than the P200-billion emergency subsidy program (ESP) under Bayanihan 1, which targeted 18 million low-income households for two-month cash subsidies.
Malacañang officials have shut the door to calls for more “ayuda” on the premise that the economy is reopening and people are now back to work. But that ignores the grim figure that some 4.5 million Filipinos were rendered jobless last year. That unemployment rate of 10.3 percent is the highest in 15 years, according to the Philippine Statistics Authority. The World Bank also estimated that the economic contraction in the Philippines in 2020 was likely to increase poverty in the short term, resulting in an additional 2.7 million people breaching the poverty line of $3.20 a day per person (the multilateral lender’s benchmark for middle-income countries like the Philippines).
The government should get its priorities right. Despite health requiring top priority status because of COVID-19, the 2021 budget still allocates a big bulk to “Build, build, build”; economic managers justified this on the ground that infrastructure projects can generate substantial employment because of its big multiplier effect. But how about the gargantuan budget for activities like the anti-communist campaign, which is a sheer waste of funds and governance energy at this time in light of the monumental demands of the fight against both the pandemic and runaway poverty?
There is no doubt that the private sector can and will once again step up to extend help and fill the gaps in the government’s response — as it did at the onset of the pandemic — despite many large companies reporting lower net profits in 2020, and many more small enterprises just barely able to survive at all. But the power to address the staggering suffering among millions of Filipinos at this point rests with the government. It needs to see this—and act fast.
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