Big, bold stimulus

May 20, 2020

The cure must in well-calibrated dosage.

The right amount would address a malady; too little would be ineffective while too much could be counterproductive.  

It must be custom-made, tailor-cut to specifications; otherwise, it would be ill-fitting.

In short, it should be commensurate to the problem being addressed.

Thus, the government's economic stimulus package "should be as big and as bold" as the problem it is addressing, as "any piecemeal approach will just be wasting money without achieving the desired goals," Senate President Pro Tempore Ralph Recto said.

Recto said he understands apprehensions against a package "with a large budgetary footprint, more so if it will be funded in part by loans".

"But if the economy has flatlined, then we should not be scrimping on the voltage needed to shock it back to life," he said.

He said there are two emerging "schools of thoughts" in the government on how to fight the pandemic, revive the economy, and transition to the new normal.

"One is conservative in funding, and with a short spending period. The other is an omnibus package, multi-year in disbursement, and premised on the worst case scenario, like the absence of a vaccine," he said.

"I would go for the second because that is the medicine cabinet approach. Lahat ng kailangan nandoon na. One arsenal of responses. Hindi 'yung patingi-tingi," he said.

The former Socio-economic Planning chief said a "one-time, big-time" pandemic response and resiliency package would spare both Malacañang and Congress from "episodic and seasonal" passage of Iaws authorizing new rounds of spending.

A comprehensive package, he  said, "will convey the comforting message to the nation that there is a long-term response. We have to give our people hope".

"Kung hindi komprehensibo, it creates an ad hoc mentality. If we are digging in for the long run, then we might as well hoard enough resources for the long haul," Recto said.

He said "a stimulus package should be at least P1 trillion. You don't use a fire extinguisher to fight a forest fire."

"Yung response-recovery-resilience template is only as good as the funds that will be put into it. If joblessness has shot through the roof, if we have lost trillions in economic output, you cannot just apply a small putty to repair a cratered economy," Recto said.

"Hindi naman ibig sabihin na kapag nandoon sa batas ang ganoong pondo ay automatic na gagastusin agad ng Executive branch. In the end, the President will have to decide when to push the spending trigger, based on the law," he said.

Meanwhile, the resumption of activities for the government’s priority “Build, Build, Build”  infrastructure program would help jumpstart the economy once the death rate and coronavirus disease 2019 infection are under control, Finance Sec. Carlos Dominguez III said.

Dominguez cited the acceleration of the infrastructure program as the best growth driver BBB “because it has the best multiplier effects in terms of employment and shared prosperity.”

He said people supervising the infrastructure projects should ensure that minimum health standards are being practiced in the construction sites.

The government is investing about P1 trillion annually for its BBB program as infrastructure projects are expected to have a long-term economic effect.

It aims to increase infrastructure investments from about 2.8 percent in the past to about 7 percent by 2022.

As of 2018, the share of the government’s infrastructure spending reached 5.5 percent of gross domestic product.