Local community quarantines have been in place in the Philippines to curb the spread of the coronavirus since March, but new infections continue to be at the thousands per day, bringing the national tally to over 425,000. The country previously ranked among the top 20 countries across the globe with the highest number of cases.
For UA&P senior economist Cid Terosa, the war chest set aside by the government may not be enough to finance the needs of the country as it is only about 2.5 to 2.8% of the gross domestic product (GDP). Other Asian countries have allocated 5 to 20% of their GDP for COVID-related efforts.
“Also, the agreements may just cover at most 50% of the total economic losses of the Philippines due to the COVID-19 pandemic. Despite the inadequate amount to finance COVID-related needs, I believe that the multiplier effects of the current level of government spending can make up for some of the gap in borrowing,” he said.
“I understand, however, that the government has to be cautious in borrowing more funds because of constitutional and budget considerations. Our ability to borrow money to fund disbursements in excess of what has been planned and budgeted is limited by the Constitution,” he added.
Read the full story at GMA News Online.
In other news, the Capital Market Development Council (CMDC) is studying the possibility of setting up the country’s Child Trust Fund (CTF), which would aim to encourage low-income families to save for their children’s college education. The Finance department said the national and local governments would both contribute to the proposed CTF and financial institutions will be tasked to manage these funds.
Aside from promoting savings, the proposed trust fund for children could also help diversify and deepen the capital market since it serves as another instrument to boost resources available in the market, said Dr. Terosa.
“It will be beneficial for students because the Child Trust Fund is a lifeline for low-income families to improve their standard of living and overall material welfare through education,” he said. “The key to a successful Child Trust Fund program is a well-designed partnership between the government and the private sector, particularly financial institutions.”
The financial institutions play a key role in designing and marketing the CTF, said Dr. Terosa, while both the public and private sectors are needed to make sure that consumers are protected and the funds will remain a viable and attractive savings and investment option.
Read the full story at Business World.