MANILA -- A strong macro-fiscal foundation is vital for economies to weather shocks, such as the COVID-19 pandemic, the National Economic and Development Authority (NEDA) said during the virtual 2021 Asia-Pacific Economic Cooperation (APEC) Structural Reform Ministerial Meeting hosted by New Zealand on June 16, 2021.
“When building a house, we first need to ensure its structural integrity, or else its walls, roof, and windows will be blown away when a storm comes, and its dwellers will become vulnerable. In the same way, economies need to strengthen their macro-fiscal foundation to prepare them for the rainy days ahead, such as the COVID-19 pandemic,” said Socioeconomic Planning Secretary Karl Kendrick T. Chua.
The NEDA chief explained that the Philippines’ experience demonstrates this very well. “We entered the COVID-19 crisis with a solid macroeconomic foundation. Our resolve to save lives from the virus and improve our health system capacity led to the imposition of community quarantines, which temporarily disrupted our growth momentum,” Chua said.
The government’s progress in its ten-point socioeconomic agenda—which includes the Comprehensive Tax Reform Program, the Ease of Doing Business law, the Universal Health Care law, the Rice Tariffication law, and the Philippine Identification System (PhilSys) act—contributed to the poverty incidence falling by around 7 percentage points between 2015 to 2018, the biggest decline in the country’s history. With these reforms, the Philippines was also on track to becoming an upper middle-income country by 2020 prior to the pandemic.
With a strong macro-fiscal foundation, the country almost doubled, as a share of GDP, the fiscal space for infrastructure and human capital development between 2010 and 2019.
“Prudent management of our fiscal resources and the reforms we undertook prior to the crisis served as our insurance during this pandemic. They have enabled us to maintain our sovereign credit rating amid a sea of downgrades, access unprecedented financing cheaply, and provide to households and businesses a range of measures to support their particular need for recovery,” he added.
Chua also shared that the experience of the country during the pandemic included “overcoming several challenges that hindered our microeconomic response.”
For instance, to counter the difficulty in identifying beneficiaries for social protection programs and the lack of bank accounts for the efficient distribution of subsidies, the Philippine government accelerated the implementation of the PhilSys or national ID program.
“From zero registrations in April 2020, over 36 million individuals have taken the initial step to be registered and some 3.7 million household heads applied for a bank account. Our goal is to register at least 50 million individuals and achieve 100 percent financial inclusion at the family level by the end of 2021,” Chua said.
In line with the APEC meeting’s theme of “Haumi ē, Hui ē, Tāiki ē” or to “Join, Work, Grow. Together” in the Māori language, the NEDA chief said, “Our story is a collective effort to turn this crisis into an opportunity to correct long-standing constraints that have hindered our economies from achieving more inclusive growth. Our collective effort to share our experiences and learn from each other today will help pave the way for a stronger recovery and a more resilient region.”
The 2021 APEC Structural Reform Ministerial Meeting focused on the region’s policy response to COVID-19, with the overarching theme of structural reform and recovery from economic shocks. (NEDA)
