Nomura has stressed the need for a “sizeable” supplementary budget if the current enhanced community quarantine in Luzon would be extended, saying it is important to provide additional aid for the poor and the economy.
In a report, the global investment bank said that since the coronavirus disease 2019 cases in the country continue to increase, an extension of the lockdown is a risk, citing similar developments in Malaysia.
Another risk is the possible incidents of social unrest, it said.
“We believe an extended lockdown would not only require an improvement of the distribution of relief measures but also more funding. We therefore continue to believe that, similar to what other countries have already done in the region, a sizeable supplementary budget (apart from reallocations of the existing budget) will have to be passed that is designed to provide more aide to the poor as well as measures to support the broader economy,” it said.
As of April 3, Covid-19 cases in the country have reached 3,018, with 52 recoveries and 136 deaths.
To address the rise in the number of cases, the government declared a community quarantine in Metro Manila from March 15 to April 12, but this was upgraded to an enhanced community quarantine starting March 16 for mainland Luzon.
A measure, the Bayanihan to Heal as One Act, has been signed into law last March 25 to give the President some leeway to realign a portion of this year’s national budget to be used for financial aid to people whose livelihoods were affected by the lockdown.
To date, the government has announced a P200-billion cash subsidy for affected workers in the informal sector, and the vulnerable sector like the senior citizens, pregnant women, lactating mothers, and persons with disabilities belonging to the lower bracket of the society.
With the additional funds needed for the Covid-19 response program, Nomura forecasts the government’s budget deficit to surpass the target of 3.2 percent of gross domestic product and widen to about 4.5 percent of domestic output.
GDP this year is projected to slow to about 1.6 percent from last year’s 5.9 percent, which in turn is a slowdown from the six percent level in recent years due to the impact of the delay in the approval of last year’s national budget.