WP 2020-08: Recommendations on Health Improvements and Economic Rescue and Stimulus Program for the Rest of 2020

Working Paper 2020-08
Recommendations on Health Improvements and Economic Rescue and Stimulus Program for the Rest of 2020
Joseph Anthony Lim

The paper gives evidence for the urgent need of improvements in Covid testing, contact tracing, personal protective equipment (PPEs), filling up of quarantine centers, and reducing the infection and mortality rates of Covid patients and health workers. Funding must be from very concessional loans (WB, ADB).
The current social protection program should go well beyond the current P5,000 – P8,000 worth of cash transfers to around 23 million low-income families (including MSME workers) to cover the rest of the year. Workers to be protected include: returning OFWs, public transportation workers, cultural workers and athletes, retail workers of non-essential products, workers in the informal sector and those who will be laid off because of the impending recession. 
Many companies will obviously have to be rescued including travel agencies, airlines, hotels, restaurants, other firms where social distancing is impossible, and those to be hit by the impending recession. It is recommended that the government and BSP prepare for strong and widespread ammunition via credit lines and restructuring of debts of failing firms.   
Fiscal stimulus to counter the recession should include stimulation of the agricultural and rural economy, investments in green economy and clean energy and the BBB projects of the government, at the very least.
Funding for such a huge spending requirement should depend on a huge scale on the monetization of financial funds (BSP increases bank reserves, and BSP providing funds for the fiscal deficits) plus some foreign and local debts at very concessional rates and terms. Of utmost importance will be BSP supervision of financial loans and debts to ensure massive defaults and financial crises will not occur.

Keywords: Covid pandemic, economic stimulus, social protection, financing, Philippines