Further relaxation of the quarantine restrictions will help businesses better than cash aids, Socioeconomic Planning Secretary Karl Kendrick Chua said.
“If we just provide funds, let’s say Bayanihan 2, but then we restrict the economy from operating, then we are in this chicken and egg cycle that the businesses don’t operate, tax revenues fall then we do not have additional revenues to provide more targeted support,” Chua said during the virtual budget deliberations for the National Economic and Development Authority (NEDA) on Wednesday.
“If we had the practice of providing ayuda every month and every time, we would have easily run out of money,” he added.
According to him, the government can continue to provide support but a necessary condition will be the reopening of the economy.
Productivity must grow
“Otherwise, we will be just putting money or lending money to firms or people that cannot turn that money around and become productive,” he said.
Still, the NEDA chief recognized the strict lockdowns to be among the cause of uncertainty among banks to extend credit to businesses hence the necessity to further relax restrictions.
“I think the more sustainable way to help businesses is to first open the economy. We have restricted them for more than 18 months already,” Chua explained.
“Once we are able to open, then we will have this more virtuous cycle wherein those businesses that need financing or grants to support them, will be provided by the financial sector,” he added.
NEDA Undersecretary Rosemarie Edillon shared the same sentiment as she stressed on the agency’s intentions to help businesses be Covid-proof, which will help in the transition to the so-called “New Normal.”