Philippine President Rodrigo Duterte has widened a month-long quarantine in the Manila region to cover all of the country’s main island, a move that risks stalling one of Asia’s fastest-growing economies to prevent COVID-19 from spreading.
The “enhanced quarantine” of Luzon, which has 60 million people and is responsible for 70 percent of the Philippines’ economic output, would place tens of thousands of daily wage earners at risk of penury.
Hours after the announcement, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said policymakers are “inclined” to cut the key interest rate by 50 basis points when they meet tomorrow.
Photo: EPA-EFE
“We still have a lot of monetary space” to support the economy, Diokno told reporters yesterday. “We recognize at this point that a coordinated move by monetary authorities and national government will be more effective. In other words, we expect the national government to also use their fiscal space.”
The government late on Monday unveiled a 27.1 billion peso (US$525.49 million) package of fiscal measures. The bulk of the money would go to funding tourism projects, aiding affected workers, and acquiring virus test kits and health equipment.
“That’s the initial package, assuming that the contagion will end shortly after mid-year,” Philippine Secretary of Finance Carlos Dominguez said yesterday. “Other measures will be considered together with the private sector, as the effects of the contagion become more evident.”
Duterte said Luzon is to remain under lockdown until April 12, and that people should leave the house only to buy food, medicine and basic survival items.
The escalation prompted the suspension of Philippine stock, bond and currency trading from yesterday, although Philippine Stock Exchange President Ramon Monzon told traders that he plans to reopen by tomorrow.
The fiscal package comes as governments across Asia and globally enact stimulus to blunt the blow from the coronavirus, but analysts have said that Manila’s move likely would not be enough.
“The fiscal package looks small at just 0.1 percent of GDP to offset these risks, even if one assumes these are all new spending rather than budget reallocations,” Singapore-based Nomura Holdings economist Euben Paracuelles said. “The lockdown expanded to the whole of Luzon will clearly place greater downside risks to growth, as the economic contribution of the island is larger and the fear factor could be magnified.”
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