Business groups urge gov’t action to avert ‘social tensions’
The new coronavirus disease (COVID-19) pandemic that has left millions of workers suddenly jobless is now turning into an economic crisis, and a large number of business groups fear this might soon lead to social tensions and even violence.
To deal with this, 32 business groups are urging Congress to spend more money and help vulnerable communities, even if this means spending more than what the country earns.
Doing so would ultimately mean higher debt for the country, but if their estimates were right, their proposal to the government could have about P280 billion to stimulate the economy during this period, they said in a statement.
This fiscal stimulus package is several times larger than the P27-billion COVID-19 relief plan earmarked by the Department of Finance, which would mostly aid the tourism sector.
But as the groups put it, the lockdown on Metro Manila and the rest of Luzon imposed by President Duterte will impact millions of workers, be they regular workers laid off by companies that could no longer support them, or informal workers who suddenly couldn’t make a living because of strict quarantine measures.
‘Matter of life and death’
This, they said, “is literally a matter of life and death for them and their families.”
“A health issue is now also a hunger issue and may trigger violence and longer term social tensions,” they warned.
They said the government has the ability and the responsibility to adopt a fiscal stimulus program that would raise the country’s deficit-to-GDP ratio to close to 5 percent. GDP, or gross domestic product, is the total value of goods and services produced by the economy.
Red flag
A higher deficit-to-GDP ratio, simply put, means it might be difficult for a country to pay off its debts, which raises the risks for financial institutions that would have lent it the money.
Although this rate is usually a red flag, the group said credit watchers “will probably relax as an unprecedented number of countries buttress their economies.”
This is much larger than the latest programmed budget deficit of 3.6 percent. It remains to be seen if the economic managers would agree to their proposal.
Assuming the GDP growth slows to 4.5 percent (or a GDP of P20 trillion), a 5-percent deficit will be equivalent to P1 trillion. Subtracting the programmed deficit of 3.6 percent (P720 billion), leaves P281 billion for the fiscal stimulus program, the business groups said.
If growth slows to 3 percent (GDP: P19.7 trillion), a 5-percent deficit will amount to P987.5 billion. Subtracting the programmed deficit of 3.6 percent (P711.3 billion) will leave a P277 billion fiscal stimulus program.
Conditional cash transfer fund
All that money could be used in many ways, like adding to the conditional cash transfer funds for the poor, more funds to help displaced workers, building temporary hospitals and quarantine areas, and subsidies for the health, the tourism and the transport industries.
“Many companies are doing what they can to keep their employees paid despite their inability to work and drastic declines in sales. But they can only do so much compared with the millions who are vulnerable to the downturn,” they said.
The following organizations issued the joint statement:
• Philippine Chamber of Commerce and Industry• Association of the Filipino Franchisers Inc.
• Employers Confederation of the Philippines
• Federation of Filipino Chinese Chamber of Commerce and Industry Inc.• Foundation for Economic Freedom
• Federation of Indian Chambers of Commerce (Phil.) Inc.
• Philippine Center For Entrepreneurship/Go Negosyo
• IT and Business Process Association of the Philippines
• Institute of Corporate Directors
• Investment House Association of the Philippines
• Institute for Solidarity in Asia
• Management Association of the Philippines
• Makati Business Club
• Philippine Association of Local Service Contractors Inc.
• Philippine Franchise Association
• PHILEXPORT
• Philippine Institute of Certified Public Accountants
• Philippine Retail Association
• Semiconductor and Electronics Industries in the Philippines Inc.
• Shareholders’ Association of the Philippines
• Bankers Association of the Philippines
• Rural Bankers Association of the Philippines
• Chamber of Thrift Banks
• Microfinance Council of the Philippines
• American Chamber of Commerce of the Philippines
• Australian-New Zealand Chamber of Commerce Philippines
• The Canadian Chamber of Commerce of the Philippines
• French Chamber of Commerce and Industry in the Philippines
• European Chamber of Commerce of the Philippines
• Japanese Chamber of Commerce and Industry of the Philippines• German-Philippine Chamber of Commerce and Industry Inc.
• Philippine Association of Multinational Companies Regional Headquarters Inc.
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