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Recession possible amid pandemic

The Philippine economy may contract in the second quarter as a result of the lockdown imposed by the government to contain the spread of the COVID-19 disease while up to 1.8 million people may lose their jobs amid the pandemic, the country’s chief economist said.

“A recession can’t be ruled out,” Socioeconomic Planning Secretary and National Economic and Development Authority (Neda) chief Ernesto M. Pernia told the Inquirer.

While a recession meant two consecutive quarters of year-on-year contraction in gross domestic product (GDP), the government during President Joseph Estrada’s administration had opted to use another definition and denied the economy underwent recession even as the Philippines’ GDP shrank during two straight quarters in 1998.

As far as the one-month enhanced community quarantine being implemented in Luzon and other parts of the country until mid-April is concerned, Pernia said it would slash GDP during “one quarter at least, the second quarter.”

BSP cuts bank reserves to inject another P 200B into PH economy

The central bank fired off another major weapon in its arsenal on Tuesday in an effort to flood the local financial system with cash and, hopefully, buttress the country’s economy growth that is expected to slow down substantially due to the coronavirus pandemic.

In a text message, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Monetary Board convened a special meeting yesterday and decided to reduce banks’ reserve requirement by 200 basis points effective March 30, 2020.

The move effectively frees up an estimated P200 billion in cash from banks’ vaults, which policy makers hope will be channeled into cheap loans that will encourage more economic activity.

“The reduction is intended to calm the financial markets and encourage banks to continue lending to both the retail and corporate sectors,” Diokno said, adding it will also “ensure sufficient liquidity in support of economic activity” amid the COVID-19 pandemic.

GSIS, SSS stock market support hit almost P1 billion

MANILA, Philippines — The state-run pension funds Government Service Insurance System (GSIS) and Social Security System (SSS) bought nearly P1 billion in stocks to date, which Finance Secretary Carlos G. Dominguez III said supported the local stock market despite a global slump amid the COVID-19 pandemic.

“I will review with them in the next couple of days their position. I think, so far, they have already put almost a billion pesos in the stock market. And the results have been that yesterday and today, the stock market firmed up. I understand this morning they opened, up at 4 percent,” Dominguez said in an interview via Google Meet Wednesday.

“It showed that government institutions have confidence in the stock market and are providing liquidity and a willing buyer,” Dominguez added.

In a separate interview on Bloomberg Television, Dominguez said that “at this point in time, we will keep a steady hand in the market and we will see how this develops

Dominguez nonetheless pointed out that the GSIS and the SSS as “state funds have a responsibility to the future generations as well.”

The GSIS is the pension fund for government employees, while private sector workers contribute to the SSS.

“So while we are supportive of the market. we have to do it in a very responsible way,” Dominguez said.

PH eyes up to $2 billion loans, grants to combat COVID-19 toll on jobs, health care

MANILA, Philippines — The Philippine government plans to secure up to $2 billion (almost P102 billion) in loans and grants from multilateral lenders so it can dole out aid to workers who lost their jobs while beefing up the health sector, as well as the economy’s defenses against the COVID-19 pandemic, President Duterte’s chief economic manager, said Wednesday.

“We are currently in negotiations with multilateral agencies for $1 billion up to $2 billion in funding support for [COVID-19 response]. We have to realize—we are looking at a drop in revenues. So we have to cover that gap somehow so that we maintain our pace of spending. So we are talking to multilateral agencies at the moment to do that. We want to do it early because all the countries in the world are trying to do the same thing. I think we are a step ahead of the others at this point,” Finance Secretary Carlos Dominguez said in an interview via Google Meet.
The ADB earlier made available an initial $6.5-billion “rescue” package to its developing member-countries, including the Philippines. The World Bank, meanwhile, had jacked up its “fast-track” financing package for COVID-19 to $14 billion.

The Philippines already secured a commitment from the World Bank to disburse a $100-million loan for the Department of Health (DOH), on top of a $3-million grant from the ADB to buy medical supplies and equipment.

The country was also in “continuous talks” with its bilateral development partners, but Dominguez pointed out that “they, too, are in lockdowns to one extent or the other, and they are also trying to address their domestic situations.”

Dominguez said the additional funds will be specifically spent to “support the people who have lost their livelihoods, and to increase our capacity to combat the virus and protect our front-liners.”

About P200 billion will be given away to displaced workers during the next two months under the emergency bill approved by President Duterte last Monday.

The Department of Labor and Employment (Dole) had said over 111,000 workers were affected by temporary stoppage and flexible work arrangements to date.

In a separate interview with Bloomberg Television, Dominguez said the Philippines was “going to tap all markets” for its commercial borrowings to ramp up financing for COVID-19 response.