Razon claimed that the Department of Finance concurred with his suggestion but only the bureaucracy was stopping it from stepping up its stimulus plan.
“The central bank has to follow the footsteps of the Federal Reserve and the ECB (European Central Bank) and start printing a little bit,” said Razon in a GoNegosyo forum.
“We have enough headroom to be able to print some money and I have been telling this to Secretary Sonny Dominguez and he agrees with me. But he has to grapple with a whole bureaucracy to execute things like these,” he added.
The US Fed and ECB have adopted emergency money-printing programs to inject more pesos into the system to cushion the devastating impact of COVID-19 on businesses and employees.
The BSP, however, has refused to follow the Fed and ECB’s lead and more currency than what it has budgeted for 2020 because it was more concerned about keeping inflation low.
Razon believes the government has to spend big for its stimulus package to make an economic impact.
“The government will have to spend in stimulus, at least 20 percent to 25 percent of GDP (gross domestic product) to support MSMEs (micro, small and medium enterprises), provide liquidity in all forms…Whether it is infrastructure, loans, liquidity. We need a bazooka, not a pistol,” said Razon.
This means the government would have to spend between P4 trillion to P4.8 trillion in a stimulus package.