Vaccines and economic stimulus

The Philippines’ performance, both in the management of the pandemic and the economy, was the worst among all Southeast Asia countries in 2020. The nation’s recovery now hinges on two factors: the rapid vaccination of 80 percent of the population, and a financial stimulus to jumpstart the economy. The senators are worried that we have fallen behind since not a single purchase contract for vaccines has been signed by the government while our neighbors have already started mass vaccination. The House of Representatives is proposing a P420 billion stimulus bill but our economic managers are deeply worried about leakages in the disbursement of stimulus funds.

How do we speed up the vaccination, and how do we plug leakages in the disbursement of stimulus funds? The government, under a tripartite agreement with vaccine manufacturers, has allowed private companies to buy, with their own funds, vaccines to be used on their employees so that businesses can resume normal operations. However, the government requires these private companies to donate to the government 100 percent of the vaccines purchased. Half of the donated vaccines will be used by the government for its own general vaccination program, while the other half will be used in geographic areas or sectors that the private companies will identify.

However, the distribution of vaccines in such geographic areas or sectors will still follow the guidelines prescribed by the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF), which has officially prioritized those who should be vaccinated. First in the priority are frontline workers in national and local health facilities. Second are senior citizens and those with comorbidities. This means that the private companies’ employees, who are not frontline health workers, and most likely are neither senior citizens nor with comorbidities, may not qualify to receive the vaccines that the private companies purchased. No wonder most private companies have refused to avail of the government’s tripartite agreement on vaccines.

This is unfortunate because private companies need their employees to be vaccinated to resume normal operations, which is essential for any economic recovery. The private companies are willing to use their own funds to vaccinate their employees. They are not taking any money from the government or any vaccine intended for the public. If the private companies do not buy the vaccines, the vaccines will simply be sold by vaccine manufacturers to other countries. The way to speed up the vaccination, and to restart the economy, is to allow private companies to buy, with their own funds, the vaccines needed for their own employees, from the company president down to the janitor, without insane conditions from the government.

On the other hand, leakages in the disbursement of stimulus funds can be avoided by using the funds to pay directly the expenses of employees, households, and businesses, which has the same effect as putting money in their hands. First, the stimulus funds can be used to pay directly the government for the obligations of businesses to the government like, among others, the payroll tax of employees, contributions of employers and employees to SSS, Pag-Ibig, and PhilHealth, market stall fees charged by local governments, mayor’s and business taxes of small businesses, and the VAT payable by small businesses which have been the hardest hit in this pandemic.

Second, the water and power bills of households, spending not more than a certain amount for water and power per month, can be subsidized by the government and paid directly to utility companies from the stimulus funds. Tuition of students up to a certain amount, limited to one or two students per family, can be paid directly to schools from the stimulus funds.

Third, the stimulus funds can be tapped by banks for co-lending to businesses engaged in agriculture, retail, tourism, and other businesses hard hit by the pandemic. The stimulus funds will be interest-free, halving the interest payable by borrowers. However, the stimulus funds should be lent pari-passu with funds of the bank so that the risk of the loans will be borne equally between the banks and the government. The disbursement of stimulus funds through these methods will avoid the handling of funds by local officials, preventing the leakages dreaded by the economic managers.

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