Speech at the Colegio de San Juan de Letran Graduate School’s 3rd Annual Economic and Political Briefing
January 29, 2021
January 29, 2021 - It is said that the Coronavirus pandemic has been the defining global crisis of our time, with over 101.8 million confirmed cases and over 2.19 million deaths globally.
On top of this, the health crisis has also caused unprecedented disruptions in the economy, pushing nations to deep recession that is expected to leave far-reaching and lasting scars in the next decade.
Our country has taken a beating from the global pandemic and its accompanying economic crisis. Almost instantaneously, economic activities were shut down and tolls of deaths bannered our daily news.
As already mentioned by Dean Lopez, just yesterday, the Philippine Statistics Authority reported that the economy contracted by 9.5% in 2020, making it the largest contraction ever recorded, beating the 7% contraction in 1984. This equates to a P1.4-trillion drop in our nominal Gross Domestic Product, our worst since World War II.
This is a depressing downturn of our economy, considering that the past years were already showing a continuous positive incline. In fact, the annual nominal GDP of the country had been sustaining an upward momentum in the past years: P14.48 trillion in 2016; P15.81 trillion in 2017; P17.43 trillion in 2018; P19.52 trillion in 2019 – and hold your breath, a much reduced P17.66 trillion compared to an adjusted GDP projection of P21.117 trillion, based on the 2021 BESF or Budget Expenditures and Sources of Financing data that we have compiled. If not for the unprecedented impact of this health crisis, we could have been at par with our neighboring countries such as Thailand with $590.2 billion (P24.4 trillion); Malaysia with $336.33 billion (P16.14 trillion); Vietnam with $340.6 billion (P16.34 trillion) in terms of nominal GDP.
With our economic state, our nominal GDP in 2021, projected at a low of P20.38 trillion and a high of P21.03 trillion, now appears to be far from reality. We certainly hope not.
As we speak, we are still in the grips of this crisis with the past months no less worrisome than today. In fact, we have already breached the 500,000 mark of coronavirus infection with the number of fatalities over 10,000. A couple of weeks ago, the UK strain – a new COVID-19 variant said to be more contagious – has already been detected in our country, infecting at least 17 persons as of date.
This pandemic proves to be an interruption to our sustained and collective pursuit towards inclusive growth. With the economic restrictions, all our gains from recent years dissipated almost instantly.
The brunt of these hardships is more concrete for our people with our unemployment rate noted at a high of 17.7% and hunger rate at a record-breaking 30.7% as of September 2020. Each day of General Community Quarantine costs the National Capital Region (NCR), Region 3, and Region 4A around P700 million in wages.
Amid all these, there is one thing we learned for sure: crises manifest the many opportunities we missed in the past, and the many more possibilities that may emerge in the future.
When we speak of “missed opportunities,” one that comes to mind is our National Identification System – a landmark legislation that serves as the foundation in transforming governance, enhancing delivery of services, and promoting social inclusion. In August of 2018, the Philippine Identification System (PhilSys) measure was passed into law. Unfortunately, much to our despair, it has yet to be fully implemented as of date.
As one of the authors and the principal sponsor of the bill in the Senate, I envisioned the proposed National ID to provide the foundation in promoting financial inclusion and streamlined government services — our paramount concerns in the face of this crisis.
To say the least, the National ID could have aided the expeditious and efficient release of the various stimulus funds of the government. I share the concerns of Dr. Lopez, as cited in his many insightful interviews, that the delay in the disbursement of stimulus funds such as subsidies from the Social Amelioration Programs (SAPs) of the government gravely hurt our economy. It imperils the generation of employment and resumption of economic activities in the “new normal.”
The lack of identification creates formidable barriers for the downtrodden and the poor, and creates even larger barriers between the government and the people. Hence, we should push for the implementation of the National ID if we want to further strengthen our response not only against the pandemic, particularly in the roll-out of the much-awaited vaccines, but in many of our future endeavors.
As many would say, from every crisis an opportunity arises. The Legislative Branch leaps on this window of opportunity at once. The Congress was forthright to pedal key policies to aid the positive trajectory of our economy. With the passage of the Bayanihan to Heal as One Act (RA 11469) and consequently, of the Bayanihan to Recover as One Act (RA 11494), we promote scaled-up spending to protect around 18 million low-income households, 3.4 million employees of small businesses and over 2 million affected formal, informal, and overseas Filipino workers.
As students and practitioners in the field of business, you of all people would certainly have a solid grasp on the importance of financial management in sustaining business operations and activities. The same principle goes true when it comes to government budgeting.
Generally speaking, the national budget as authorized by the General Appropriations Act spells out the government’s priorities, and serves as the ultimate indicator if the government is putting money where its mouth is. In my long years as a legislator, I must say that the 2021 National Budget is inarguably the most critical General Appropriations Act that we have passed, as this would set and gear the trajectory of our much-needed recovery from this dire pandemic.
As stated by World Bank Group President David Malpass, making the right investments now would be vital to support recovery and foster resilience of all nations, as our response to the COVID-19 crisis will shape our common future for the years to come.
For this year, the Congress passed the P4.506-trillion national budget, which is 9.9% bigger than our budget for 2020, and is equivalent to 21.8% of our Gross Domestic Product (GDP). This budget is anchored on the administration’s battle cry “Reset, Rebound, Recover,” which serves as our compass as we maneuver toward our collective direction amid the crisis.
Infrastructure spending and its multiplier effect are also the center of our government’s agenda. A big chunk of the 2021 national budget amounting to P1.107 trillion (5.4% of the GDP) is dedicated to infrastructure development in order to accelerate the administration’s flagship Build, Build, Build program. This substantial amount is expected to generate 140,000 to 220,000 additional jobs this year and to attract the private sector to invest in manufacturing and construction activities, thus establishing the foundations of the country’s economic recovery.
Unfortunately, it is also a reality that no matter how upright our resource allocation is, there is one setback that weighs on the foundations of good governance. I speak of the evils of corruption, which is fueled by the lack of transparency in the use of our public coffers.
Another key policy priority that was seriously taken during the deliberations of our national budget was the appropriations for the COVID-19 vaccines. While vaccine makers were still in the race against time on the development and availability of effective and safe vaccines late last year, Congress augmented the allocation for the country’s national vaccination program with additional P70 billion under the Unprogrammed Funds of the 2021 GAA, which we know would be sourced from various loans and grants. As we speak, a total of P82.5 billion has been allocated to fund the COVID-19 vaccine program.
In our unified effort to demand transparency and accountability from our chief implementers, the Senate has called a public inquiry, in aid of legislation, on the use of our public funds for the roll-out of the national COVID-19 vaccination program. This reinforces our democratic system of checks and balances — even at a time of emergency.
As the global agenda centers on vaccine roll-out and economic stimulus programs, we expect our country to rebound gradually in 2021. To say the least, the worst should be over.
We can all agree that the global pandemic appears to be the most formidable and challenging event of our time, but it is unlikely to threaten the very existence of the human race. We have the scientific knowledge and technological progress to overcome this crisis. What should concern us the most is the fact that as much as it is a healthcare dilemma, the global pandemic poses both an economic and political crisis.
State action at this critical time is most vulnerable to and may be rife with inefficiency and corruption — the root of public distrust. The difficult choice between loosening up and locking down further complicates an already complex situation.
A classic example is the recently reversed decision to allow 10-year-old kids and above to go out with their parents. NEDA studies concluded that 50% of the economy is driven by family activities outside their homes. Needless to say, we should exact accountability from everyone. We are accountable to push for our growth momentum; we are accountable in keeping our community safe; we are accountable to each other.
Lest we forget, state decisions will chart our path towards a sustainable “new normal,” pull us out from pits of social and economic distress, and shape a safer and more resilient society.
Time and again, you will hear that the measure of the nation’s progress almost always refers to the health of its economy — the total value of our products and services, growth of income, improvement in the standard of living. Yet, in the time of global pandemic, our progress as a nation will be measured differently: in lives saved, in crises prevented, in future restored.
Perhaps we can also take off our reflection from the challenges posed by the newly elected United States President Joseph Biden in his inaugural speech two weeks ago, in which he said: “We will be judged, you and I, for how we resolve the cascading crises of our era. Will we rise to the occasion? Will we master this rare and difficult hour? Will we meet our obligations and pass along a new and better world for our children?”
Again, I thank the Colegio de San Juan de Letran Graduate School for having me today. Arriba Letran! Mabuhay po tayong lahat!