DOF REPORT ON COVID-19 SOCIO- ECONOMIC RESPONSE As of April 21, 2020
Out Outline ne of of t the P Presentation on I. Overview of the Philippine Economy II. Economic Impact of COVID-19 III. Four-Pillar Socio-Economic Strategy Against COVID-19 a. Emergency support for vulnerable groups b. Marshalling resources to fight COVID-19 c. Fiscal and monetary actions to finance emergency initiatives and keep the economy afloat d. An economic recovery plan to create jobs and sustain growth DEPARTMENT OF FINANCE 2
I. I. OVERV RVIE IEW OF OF TH THE PHILIPPINE NE ECONOM ONOMY
The Philippines’ ’ macroeconomic fundamentals are strong 5.9% GDP growth in 2019; Revenue effort of 16.9% in Average GDP growth from 2019 is the highest rate 2016-2019 is 6.4% in 22 years 9 7.63 8 16.416.9 18.0 16.5 7.06 6.88 15.815.215.6 15.7 15.6 15.6 6.68 6.68 14.013.414.014.514.915.1 7 14.714.414.5 16.0 6.24 6.15 6.07 13.513.813.714.0 5.9 14.0 6 GDP Growth Rate Revenue as % of GDP 12.0 5 10.0 3.66 4 8.0 3 6.0 2 4.0 1 2.0 0.0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Year DEPARTMENT OF FINANCE 4
The Philippines’ ’ macroeconomic fundamentals are strong Manageable Debt-to-GDP ratio March 2020 inflation rate is of 41.5% in 2019 2.5%, well within the target of 2% to 4% 80 74.5 6 5.2 68.5 70 61.4 5 60 53.9 54.7 54.8 52.4 51.0 51.5 49.2 Debt-to-GDP Ratio 4 45.4 44.7 42.1 42.1 41.8 41.5 50 Inflation Rate 2.9 40 2.6 3 2.5 2.5 30 2 20 1 10 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2018 2019 Jan 2020 Feb 2020 Mar 2020 Year Period DEPARTMENT OF FINANCE 5
II. II. ECO CONO NOMIC MIC IMP IMPACT CT OF CO COVID ID-19 19
Recent Estimates of Economic Impact of COVID-19* 2020 GDP Growth -0.8% to 0.0% Temporary Unemployment 1.2 Million Workers Budget Deficit 5.3% Debt-to-GDP 46.7% *Impact of COVID-19 on key economic sectors such as travel, tourism, exports, remittances, consumption, combined with the Enhanced Community Quarantine assuming that the pandemic will last until the middle of the year. Based on the DBCC Ad Referendum Approval of the Revised Macroeconomic Assumptions and Fiscal Targets in line with the Impact of the COVID-19 Pandemic dated March 26. DEPARTMENT OF FINANCE 7
III. III. FOU FOUR-PI PILLAR AR S SOCIO-EC ECONOMIC STRAT ATEG EGY AG AGAI AINST CO COVID VID-19 19
Fo Four ur-Pi Pillar r Soci cio-Ec Econ onom omic S Strategy A y Against C COVID-19 19
Pi Pillar 1: Emergency cy support for vulnerable gr groups and in individ ividuals als (initial estimate of USD 11.6 billion) It Item In PHP millions In In In US USD millions % % of GDP Emergency subsidy program for 18 million low-income families 205,000.0 4,033.1 1.1 • Wage subsidy program for employees of small businesses to incentivize retention of workers 51,000.0 1,003.4 0.3 • • Credit guarantee for affected small business to access bank financing during the crisis 120,000.00 2,360.9 0.6 situation • Net operating loss carryover (NOLCO) of five years to help business cope with losses 139,596.10 2,746.4 0.7 Department of Trade and Industry (DTI) loan program for MSMEs for enterprise development 1,203.00 23.7 0.0 • training and livelihood kits Department of Agriculture (DA) loan assistance for marginalized farmers and fishers, and 2,500.00 49.2 0.0 • micro and small enterprises engaged in agriculture and fisheries production Additional local government units (LGU) assistance to support vulnerable sectors 36,000.0 708.3 0.2 • DA and DTI rice programs to increase productivity and boost buffer stock 16,500.0 324.6 0.1 • LANDBANK loan program for LGUs to increase their emergency funding 10,000.0 196.7 0.1 • Department of Labor and Employment (DOLE) cash assistance program to support OFWs 1,500.0 29.5 0.0 • DOLE cash assistance program to support displaced workers 2,000.0 39.3 0.0 • • Social Security System (SSS) assistance to cover unemployment benefits 1,200.0 23.6 0.0 Technical Education and Skills Development Authority (TESDA) free online courses to upskill 3,000.0 59.0 0.0 • workers Tax expenditure for tax payment extension 470.0 9.2 0.0 • SUB TOTAL 589,969.1 11,606.9 3.1
Pi Pillar 2: 2: Exp xpanded medical resources to fight COVI VID-19 19 liners (USD 1.2 billion) and ensure the safe an afety of f fr frontlin Item In PHP millions In USD millions % of GDP • Philippine Amusement and Gaming Corporation (PAGCOR) and Philippine Charity 2,900.0 57.1 0.0 Sweepstakes Office (PCSO) assistance for purchase of medical equipment and supplies Asian Development Bank (ADB) grant to support health measures against COVID-19 150.0 3.0 0.0 • World Bank quick disbursing loan mechanism under the Fast Track COVID-19 Facility for 5,000.0 98.4 0.0 • purchase of medical supplies and testing kits PhilHealth subsidy on medical expenses coverage for all COVID-19 patients and healthcare 22,185.6 436.5 0.1 • workers, in case of exposure to COVID-19 or any work-related injury or disease during the emergency.* PCSO funding for COVID-19 medical coverage 420.6 8.3 0.0 • Procurement of personal protective equipment (PPE) by the Department of Health (DOH) and 10,933.7 215.1 0.1 • other government agencies* Test kit procurement and production* 1,102.8 21.7 0.0 • Other medical supplies (e.g., Intensive Care Unit and isolation beds, and ventilators)* 11,962.5 235.3 0.1 • Special risk allowance for healthcare workers* 200.9 4.0 0.0 • Compensation to additional healthcare workers* 449.7 8.8 0.0 • • Compensation to all healthcare workers in case of severe infection or death from COVID-19* 33.7 0.7 0.0 • Revenue forgone to expedite clearance and exempt importations of PPE and medical goods 2,701.5 53.1 0.0 from taxes and duties* Compensation for private facilities used for the purpose of fighting COVID-19* 511.8 10.1 0.0 • SUB TOTAL 58,552.8 1,152.0 0.3 *Preliminary DOF staff estimates
Pi Pillar 3: 3: F Fisc scal a and m nd mone netary a actions t ns to f fina nanc nce e emergenc ncy i ini nitiatives s my afloat (USD 16.6 billion) an and ke keep the economy Ite Item In In PHP millions In In USD millions % % of f GDP Additional financing from Asian Development Bank (ADB), World Bank, and 310,000.0 6,098.9 1.7 • various multilateral and bilateral sources Bangko Sentral ng Pilipinas (BSP) purchase of government bonds to fund 300,000.0 5,902.1 1.6 • COVID-19 response measures BSP estimated liquidity infusion into the economy as a result of the reserve 200,000.0 3,934.8 1.1 • requirement ratio BSP estimated liquidity infusion as a result of the cumulative reduction of 125 33,000.0 649.2 0.2 • bps in the policy rate SUB TOTAL 843,000.0 16,585.0 4.6 GRAND TOTAL 1,491,521.9 29,343.9 8.0
Pi Pillar 4: An An eco conomic c reco covery plan to cr create jobs and sustain growth Creation of an interagency task force to design a bounce-back plan • for post quarantine scenario. Conduct of a nationwide survey (with +44,000 respondents) to assess • damage to industries, especially micro, small, and medium enterprises (MSMEs). Results used in crafting a bounce-back program with differentiated interventions for various groups (MSMEs vs. large businesses; manufacturing; hospitality; etc.). Continued investment in social and infrastructure programs to help • revive and sustain economic growth.
Thank you.
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