THE MAIN challenge is, of course, that we are not currently winning the battle against COVID-19.
Even when we experienced the enhanced community quarantine from mid-March to May, Bacolod-based Dr. Drilon noted that the reproductive number (R) in Bacolod of the virus was over 0.8, uncomfortably close to 1, wherein we are not making progress is reducing the onslaught of the pandemic.
Now that we have relaxed the quarantine strategy somewhat, we are beginning to lose ground versus COVID-19.
The associated economic challenges are serious. Overseas remittances, for years a reliable prop to our economy, fell sharply to $2.276 billion in April 2020 compared to $2.713 billion in April 2019. This was accompanied by repatriation of some Filipinos previously working in countries heavily affected by the pandemic.
Last month, Sen. Joel Villanueva, chairman of the Senate Labor Committee, painted a dark but realistic picture of the employment situation, particularly that the deterioration of the global economy could result in as many as 400,000 overseas Filipino workers (OFWs) becoming jobless this year.
He suggests that the government should formulate a comprehensive plan to help the large number of displaced OFWs who have already been repatriated. I believe that the creation of government-run job centers whose task is to form a communication channel between displaced workers, especially OFWs, and the few employers who are currently recruiting.
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The proposed budget for 2021 has been pegged at P4.56 trillion. Top priority must be poverty alleviation. We have made slow progress in reducing the absolute percentage of the population currently suffering from poverty. The pandemic makes matters even more difficult. But the social amelioration program must be extended with the prime objective of keeping poverty levels under control. The conditional cash transfer (4Ps) scheme should be under more scrutiny to ensure that it is working properly.
Immediately prior to the pandemic our debt to GDP ratio was approximately 40 percent reflecting, in round numbers, indebtedness of P6 trillion and a GDP of P15 trillion. By the end of 2021 my very rough estimate is that our indebtedness could be as high as P8 trillion and our GDP, conservatively, could reduce to P14 trillion.
Thus, the debt/GDP ratio would reach 60 percent. This is a disturbing increase but is necessary to keep poverty under control in a weak labor market.
By international standards, a debt/GDP ratio of 60 percent is not horrendous. In fact, as recently as 2009 our debt/GDP ratio was 74.5 percent.
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There are some debt alleviation programs. The Central Negros Electric Cooperative (CENECO) has introduced a debt moratorium scheme. This is necessary, particularly when consumers are paying first world prices for electricity but are, often, at best, only receiving third world incomes.
Banks, for example, BPI, have reported, unsurprisingly, that some borrowers are having problems with repayments. I hope banks are able to show flexibility in this uniquely difficult time./PN
