BSP chief: Faster vaccine rollout, not ‘Bayanihan 3,’ needed to spur growth

Benjamin Diokno

The head of the central bank urged the government to focus on accelerating the rollout of anti-COVID-19 inoculations around the country instead of foisting the possibility of a third multi-billion spending package to combat the ill economic effects of the pandemic.

In a mobile phone message to reporters, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the passage of a so-called “Bayanihan 3” bill by Congress would not positively impact on the country’s international credit standing.

“I disagree that legislating Bayanihan 3 will help us to improve our ratings prospects after Fitch downgraded the country’s outlook to ‘negative’ from ‘stable’,” said the former two-time Budget Secretary.

“What needs to be done right now is to accelerate the vaccine rollout, pursue the structural reforms the government of the Philippines was pursuing before and during the pandemic, continue aggressively with its ‘Build, Build, Build’ program,” Diokno said. “These measures will immensely improve the Philippines’ growth prospects and its ability to attract foreign direct investments.”

Since the beginning of the pandemic, legislators have passed two spending bills allowing President Duterte to reallocate a combined P440 billion from the national budget of 2020 and 2021 for the government’s response to the health crisis.

Unspent funds

With the expiration of the “Bayanihan 2” program last month, however, a substantial amount of these resources had yet to be deployed by the government.

Diokno said the wisdom of whether the government should legislate Bayanihan 3 now that Bayanihan 2 had lapsed should be decided upon by the Executive Department and Congress, the issue being outside the mandate of the central bank.

“Nevertheless it should be pointed out that in a sea of ratings downgrade globally last year and this year, Fitch has affirmed the Philippines’ investment grade,” he said.

“The major ratings agencies—S&P and Moody’s—have affirmed their ratings and outlook, while the Japan rating agency has upgraded its ratings. That should be seen in a positive light.”

Sustained recovery

Diokno expressed confidence that the government’s vaccination program was on the right track, with the country receiving a steady supply of vaccines from multiple sources; with authorities showing the ability to administer the vaccines on a wide scale; a strong support from the private sector and the absence of vaccine hesitancy among the population that has plagued other countries.

“The success of the vaccination program is the key to a strong and sustained economic recovery,” he said. “With its success, future surges in virus incidence can be avoided. In turn, there would no need for lockdown measures, which have proven to be costly economically here and abroad.”

Diokno also pointed out that “the rationale for Bayanihan 3 fades” with the submission of next year’s national budget due within “a month or so.”

“Additionally, as a result of the Supreme Court [Mandanas] ruling, more fiscal resources will flow to local governments starting January 2022, less than half a year, from now,” he said, adding that local governments may be in a better position to address the needs of their local constituents who are affected by the pandemic.” INQ