Funding for COVID-19 measures to reach P2.5 trillion this year

MANILA, Philippines — The government’s economic response to the COVID-19 pandemic is seen reaching P2.5 trillion this year.

During the National Employment Recovery Strategy Job Summit held Saturday, Socioeconomic Planning Secretary Karl Chua said the total budget for economic recovery for this year was set at P2.5 trillion or roughly 14 percent of gross domestic product.

This is slightly lower than the P2.6 trillion pandemic response allocated last year.

The fiscal response is one of government’s three-pronged strategies to ensure recovery from the pandemic. The other two are risk management and vaccine deployment program.

Bulk of the total or P2 trillion is from the P4.5-trillion national budget under the 2021 General Appropriations Act.

“The 2021 budget was designed to achieve our economic recovery alongside the other complementary measures,” Chua said.

The remaining P478 billion will be sourced from Bayanihan 2, the enactment of the Corporate Recovery and Tax Incentives for Enterprises (CREATE), and the second round of the Social Amelioration Program.

Broken down, P317 billion will come from Bayanihan 2, including the P163 billion in loans from equity infusion.

“Bayanihan 2 is also supporting the businesses through subsidies on interest payment and a higher level or coverage of credit guarantee,” Chua said.

Further, the recently signed CREATE law is expected to result in P138 billion foregone revenue for the year, which will be in the form of tax incentives and tax breaks for companies, regardless of size and ownership.

“Instead of collecting that money, we are giving that to all businesses of all sizes, including 90,000 small and medium enterprises and 100,000 more micro-enterprises,” Chua said.

The P23 billion emergency subsidy, on the other hand, is under the SAP 2, following the reimposition of lockdowns in Metro Manila and four nearby provinces since the end of March.

Meanwhile, research and advocacy group IBON Foundation said a large fiscal stimulus is critical to arrest economic scarring, jump-start the economy, and genuinely improve employment on a wider scale.

The group slammed government claims that employment in the country has improved. Jobs in February increased by 610,000, but this remains lower than the pre-pandemic levels.

“The so-called increase in employment is just Filipinos desperate to make a living in any way they can. This makes the need for substantial cash aid even more urgent,” IBON said.

“The marginal increase in employment should not be seen as a sign of any improvement because it masks a serious deterioration in the quality of work in the country,” it added.