This is how London School of Economics graduate Sonny Africa describes the game plan of Finance Secretary Sonny Dominguez in towing the Philippines out of its worst economic period in history.
The IBON Foundation executive director lambasted Dominguez for throwing a puny P140 billion to P162 billion COVID stimulus fund to reinvigorate an economy which stands to lose as much as P1.9 trillion in 2020.
“As it stands, the administration bizarrely seems serious about just waiting out the health and economic storm because the vaccine supposedly promised by China or Russia by the end of the year will fix everything. Meanwhile, it will boast about credit ratings and being ‘fiscally responsible’ at the expense of the people,” said Africa in an article on ibon.org.
“We can only speculate why the Duterte administration and its economic managers don’t seem to appreciate the gravity of the situation and are proposing such trivial solutions. It could be blindness from neoliberal dogma, a sincere delusion that a Chinese or Russian vaccine just around the corner will fix everything, a malicious craving for crises to justify authoritarianism, or maybe even just sheer indifference. But who’s to say?” he added.
While the Philippines posted its biggest economic collapse in 70 years (the 16.5 percent plunge in gross domestic product in the second quarter this year is a staggering 21.9 percentage point swing from a 5.4 percent growth in the same period in 2019), Dominguez continue to highlight the Duterte administration’s fiscal responsibility and impressive credit rating amid the pandemic.
“The economic managers have perhaps bought into their own propaganda that the Philippine economy was strong coming into the pandemic. The decrepit health system, accelerating spread of the coronavirus, and massive economic collapse say otherwise,” said Africa.
“The self-delusion however has very real consequences for the people who will most of all suffer the cost of the Duterte administration doing too little, too late. The harm the inadequate response causes especially to the poor will be the worst by any government in the country’s history,” he added.
Dominguez claimed that the government has no money to spare for a massive stimulus program this year without breaking his borrowing limits and violating the Constitution (it cannot allocate without a revenue source).
But Africa argued the government has enough funds to raise P1.6 trillion for a “people-oriented COVID-19 response” if only it had a little creativity and more boldness.”
Africa noted that as much as P2 trillion in funds from the 2020 budget could be realigned for a stimulus fund – P989 billion from the public infrastructure fund; P451 billion from interest payment on debts; and P582 billion from principal payments.
“Big-ticket infrastructure projects that are no longer economically or financially viable, or are too import- or capital- intensive, can be put off or shelved. Debt service to development banks and the like can be restructured on the argument that there are more pressing uses for scarce government funds,” said Africa.
“Additional debt is also not necessarily a bad thing as long as this is used well and the burden of repayment is put on those most able to afford this. Whereas debt for irrelevant infrastructure projects, to just pay off debt, or militarist purposes would be grossly out of place,” he added.
Africa also dared President Rodrigo Duterte, if he was really serious in taking down oligarchs, to slap higher taxes on the super rich and large corporations could raise P440 billion in additional revenues.
“The country is facing an unprecedented crisis and this is not the time to be thrifty. A much larger and better designed fiscal stimulus is needed right away to avert deep and lasting hardship,” said Africa.
“The Duterte administration can be much more concerned about crisis imperatives and much less obsessed with narrow metrics of ‘financial stability’. The International Monetary Fund already notes that the average overall fiscal deficit worldwide may reach 14 percent of GDP in 2020 and global public debt over 100 percent of GDP. Against this backdrop and the damage of inaction, the narrow-mindedness of the economic managers is perplexing,” he added.