Dominguez, Diokno are in Good Command
Doctors, nurses and other health workers are in the frontline of the battle against Covid-19. So are Finance Secretary Carlos Dominguez III and Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, who are making sure the Philippine economy is intact and ready to roll once the pandemic is effectively contained.
The latest 50-basis point cut in the benchmark interest rate by the BSP and Dominguez’s word that the government has enough funds to bankroll an extended enhanced community quarantine in Luzon even beyond April 30 are reassuring to the public and the whole business community.
Against the current situation where there is anxiety and fear over Covid-19, our economic managers are putting a resolute front. They give a clear impression that they are in command of their job, which is what the public and the business community want to see from their public servants.
President Duterte, like many leaders in the world, is facing the gargantuan task of keeping the population healthy and the general economy functioning at the same time. Gradually re-opening the Philippine economy after the Luzon-wide lockdown is lifted, as espoused by some in the Inter-Agency Task Force (IATF) on Emerging Infectious Diseases, is plausible as long as the business environment is conducive to our merchants, small entrepreneurs and our businessmen.
I believe Gov. Diokno’s decision and that of the Monetary Board to lower the interest rate by another 50 basis points to 2.75 percent to support the economy is in the right direction and a good preparatory move to restart the economy. The rate cuts this year, according to Gov. Diokno, were designed “to make borrowing money cheaper, to ensure the public and private sector will have no problem financing the fight to contain Covid-19, as well as all other basic needs during the health crisis.”
This is the first time in more than 11 years that BSP reduced the benchmark interest rates by a total of 100 bps in two successive Monetary Board meetings. The first happened on December 18, 2008 during the global financial crisis.
Meanwhile, Dr. Anthony Leachon, special medical adviser to the IATF, offered an interesting insight about “a rolling restarting of the economy” after the end of April when the extended quarantine ends, depending on certain key metrics.
Leachon, in an interview with the ABS-CBN News Channel, said the task force is discussing the possible courses of action to be taken after April 30, including another 15-day extension or pushing through with the lifting of the lockdown.
“The recommendation for a win-win situation—because we think the economy will not endure so much from this extension—is for a rolling or a localized opening of the economy, but based on two metrics,” Leachon said. He referred to the epidemiological and health-care capacity of the Philippines, or each town or province, to continue caring for the sick and restrain the pandemic after the lockdown period.
Dominguez shares the same pragmatic approach. He guaranteed enough funds are available if the government decides again to extend the enhanced community quarantine in Luzon beyond April 30. The government, according to him, had prepared the funds until the end of May.
“I am not saying that we will extend it [ECQ] beyond April 30, but our plan has been really to fund our requirements to beat this Covid-19 from April to May,” he said.
Mr. Dominguez has cautioned against a hasty reopening of the economy. The government knows the potential risks of opening or restarting the economy. “Should we expect additional infections? Will these infections overwhelm our hospitals? Will there be additional deaths? That is why we have to be very careful when we evaluate how and when we are going to open up our economy,” he said.
Against all these headwinds, our finance chief has remained optimistic on the economy. He sees the Philippines in a very good position to confront the challenges posed by the Covid-19 pandemic.
Dominguez also said the “Build, Build, Build” infrastructure program would remain a focus of the government to pump-prime the economy amid the setbacks posed by the pandemic.
With timely assurances and moves from our finance chief and the BSP governor, I think the Philippine economy is in good hands.