Bayanihan 2: A narrow road to recovery
President Rodrigo Duterte will probably sign into law the Bayanihan to Recover as One Act (Bayanihan 2) in the coming days. Once signed, it will serve as a road to recovery from the economic devastation brought about by the COVID-19 pandemic. Bayanihan 2 is armed with a P165.5 billion package to rebuild a comatose economy with the poor at the receiving end of loss of jobs and livelihood.
The Philippine economy has sustained an estimated P707 billion losses as of the second quarter of this year. With the ongoing quarantine restrictions, we can expect losses balloon in the next succeeding quarters until people can get back to their lives before the pandemic. But the light at the end of the tunnel is not yet in sight. Hence, the government needs to splurge the economy with cash, hoping that the infusion will put it back somehow to its pre-COVID state.
The House of Representatives originally proposed a hefty P1.3 trillion economic rescue plan called ARISE Philippines. However, the President’s financial managers prevailed with their assumption that every peso spent on business loans will generate P8 to P10 in economic activities. The Bayanihan 2 allocates P39.473 billion to government financial institutions for business loans. Infusing the government banks with this amount is expected to generate P394.73 billion in economic activities if the economic managers’ assumption is correct. This allocation will not be enough to recover the P707 billion losses as of the second quarter. Of course, the amounts allocated for the Department of Agriculture’s direct cash subsidy, health-related responses, cash for work and separation assistance, DOTr and DSWD’s programs, and others with a total sum of P126.027 billion may have a positive impact in the economy.
Compared to losses as of the second quarter, the Bayanihan 2 package seems to be a narrow road to recovery. Duterte’s economic managers are pinning their hopes on the multiplier effects of this cash infusion. These multiplier effects may be challenging to attain if the Philippines continue to fail in plugging the source of the bleeding in the economy — the rise of COVID-19 cases. As long as the threat of COVID-19 infection is hovering like a sword of Damocles, the economy will continue to bleed, and any infusion will just go down the drain. So, what multiplier effect can we expect of the Bayanihan 2 package?
Bayanihan 2 is better than having none. It may be a road to recovery imagined by our lawmakers and economic managers wide enough to allow the economy to recover. But it is barely enough to survive until the end of the year. Suppose more than 100 million Filipinos rely on this road to make it through the promised recovery. In that case, it may take an eternity for all of us to get through.