Philippines needs more financing amid pandemic uncertainty

MANILA, Philippines — Developing countries such as the Philippines will need greater financing moving forward amid the pandemic’s uncertain duration and its economic impact, a global think tank said.

In its recent Realtime Economic Issues Watch, Washington-based Peterson Institute for International Economics (PIIE) said low and middle-income countries would need more funds to spur business activities even as global organizations and multilaterals are giving assistance.

“Many developing countries still require greater support to acquire and distribute vaccines and to address the economic fallout of the pandemic,” PIIE said.

“With new viral variants emerging around the globe, these needs could well expand, exacerbating their financial problems,” it said.

Last year, the national government’s gross borrowings reached P2.74 trillion as the country ramped up financing for its pandemic response. This includes domestic financing and financing from external sources.

The economy has yet to be in the radar of recovery as quarantine restrictions, the world’s longest and strictest, have yet to be lifted, especially now that COVID-19 cases are surging anew.

“Because of the uncertain duration of the pandemic, liquidity problems are likely to continue and possibly worsen for some countries. A number of countries could face sovereign insolvency, requiring debt restructurings,” PIIE said.

In 2020, the share of the country’s debt to gross domestic product (GDP) expanded to 54.5 percent from the record-low 39.6 percent in 2019.

The Department of Finance earlier said the country’s sovereign debt rating remains stable and would continue to have good access to external commercial borrowings and official development assistance.

Further, the think tank said international financial architecture has evolved in response to prevailing economic difficulties, and it needs to do so again to help lower future risks and vulnerabilities.

PIIE noted that the changes made in the aftermath of the Asian financial crisis of 1997 and the global financial crisis of 2008, including improving financial regulations and oversight, helped lower global vulnerability to economic crises.

“We are in a similar critical moment when changes in policies and institutions could not only help to remedy the current public health crisis, but also make the world less vulnerable to the inevitable scourge of future pandemics,” PIIE said.

“Beyond saving precious individual lives, such investments would yield a high return in reducing future pandemic-related economic losses in communities and countries across the globe,” it said.