The macroeconomic response of Bangko Sentral ng Pilipinas (BSP) to the COVID19 pandemic is strategic as it adumbrates proactive approaches in dealing with the crisis. With such an unprecedented predicament of a third world country, BSP’s measures to combat economic anguish from business sectors up to individual level are so far working in stabilizing fiscal operations.
It won’t be called a crisis if there is no grief and chaos in many different aspects of any nation all across the globe. One way of alleviating the suffering is to try creating balance. The sad truth is before equilibrium is obtained, different sectors will suffer first from a great loss, down to the household level when family members lost jobs or and some do not get one.
Poverty becomes stronger, the digital divide is much felt, while an unseen enemy is lurking around and waiting for our own system to break down before it totally engulfs to our graves. Yet, BSP has laid down a promising path.
The Phased Approach
What is far more comforting than knowing where you are headed in this road you are taking? With the Phased Approach, BSP gives us a better view of what to look forward in the days to come as they work also hand-in-hand with the National Government (NG) in protecting not just the health of the Filipinos, but also pushing through the great intentions of the 4-pillar strategy against COVID-19 called the Philippine Program for Recovery with Equity and Solidarity (PH-PROGRESO).
As it has been mentioned, we already have taken off the government’s 4-pillar strategy and the IATF-TWG-AFP COVID19 framework. As plotted, this strategy has 4 pillars. While Phases 1 and 2 are now the current dealings of the country, Phases 3 and 4 are assumptions of our graceful exit from these unfortunate economic conditions. The 4-pillar strategy also gives us a better view of what preventive and reactive measures are being undertaken, which promotes transparency of the NG’s and BSP’s budget allocation and national expenditures.
Arresting liquidity run and rescuing the economy (Phase 1).
Indeed, with the consecutive predicaments from Taal Volcanic eruption, to US-China trade tensions, and African swine fever. Simultaneously, COVID-19 is happening in neighboring countries until it reached the Philippine grounds on its first case last January 30. With the lockdown and quarantine measures, it put the country into economic freeze, which halted many operations, which affected millions of lives all across the nation. Yet, the BSP and the NG formulated the most needed Fiscal Policy Support to moderate at least the adverse effects of the pandemic.
Indeed, it was a great help for many Filipinos when the BSP has temporarily suspended the term deposit facility auctions for certain tenors to ensure the availability of short-term peso liquidity in the financial system and to support funding to businesses and households during the community quarantine.
Indeed, desperate times demand desperate measures. As stated, this is the first time since the creation of the BSP in 1993 (RA 7653, as amended by RA 11211) that a provisional advance has been requested by the NG and granted by the BSP. More to that, BSP has also remitted dividends worth ₱20 billion to support the NG’s programs during the period of community quarantine. BSP’s regulatory and operational relief measures are also significant in saving many Filipinos from debts.
Managing through the recession (Phase 2).
It is good to know that the Philippines is in a stronger macroeconomic position compared with the regional peers at the onset of the pandemic. As stated, this is due to robust growth, good fiscal performance, and strong external and financial sector positions. Despite the threats of economic freeze, government agencies are pushing through the recommended policies and program implementation from 2020 to 2021, which can help the nation to rebuild.
As the economy continues to contract, giving birth to more economic burdens, BSP is holding its ground to make monetary and fiscal support available. There are operations that continue risk assessment so that the agency will get a better grip of the situation.
Moreover, in combating the digital divide that is trying to cripple the system, online financial services are promoted with regulatory measures to avoid fraudulent asks of the lawbreakers. There is now fast-tracking the implementation of the Philippine Identification System (PhilSys) as an enabler for inclusive and innovative digital finance and continuous monitoring of banks’ business continuity and cybersecurity plans to ensure that online financial services are not only accessible to the public but are provided securely.
Preparing for new economy arrangements towards recovery (Phase 3).
Price and financial system stability as well as effective communication are part of the well-thought exit strategies. This phase heightens the fiscal and monetary actions to finance emergency initiatives and keep the economy afloat.
Indeed, it is true that this pandemic has revealed so much of the truth about a country. It unmasked the weaknesses of the Philippines, but it also gave the spotlight to our great strengths. This crisis, though focused on health, did not leave the macroeconomic and fiscal policies irrelevant. Instead, it emphasizes more, that one of the true measures of the Human Development Index (HDI) is health, apart from education.
Fortunate for us Filipinos that pandemic entered our boundaries in our position of strength, because if it did not, what worse situation can we get more than this we are experiencing now?