A windfall of 140 billion pesos from the IMF
The International Monetary Fund (IMF) has approved a general allocation of Special Drawing Rights (SDRs) amounting to the equivalent of $ 650 billion (456.5 SDR). This is the IMF’s fourth general allocation since 1970-72, the third in 2009 in response to the global financial crisis, and this allocation is almost three times larger than this one, but still insufficient, according to some circles.
What does this have to do with us? Many. On the one hand, the Philippines receives a share of this allocation in accordance with our share (quota) in the IMF, which is around 0.43%, or $ 2.795 billion (139.75 billion pesos at 50 pesos = $ 1). We’ll get it by August 23. It is not a loan for us. It’s free.
So essentially that puts an end to our government’s whining and whining about not having enough funds to help us get through the two-week Enhanced Community Quarantine (ECQ) and to help the vulnerable people who are the most affected by the pandemic. Every P140 billion counts. You will recall the statement of the Development Budget Coordination Committee in May 2021 (before the call of this ECQ): “Finally, around 170 billion pesos would be needed to finance additional social support to those hardest hit by pandemic as well as to fund improved health protocols. A version of this proposal is currently under deliberation in the House of Representatives and depends on raising additional savings and revenue to remain deficit neutral. “
I cannot understand the pervasive obsession with deficit neutrality of our economic managers in the face of existential threats to millions of Filipinos. But the allocation of SDRs should help allay their fears.
Since the allocation is distributed to IMF member countries according to their respective quotas, the richest countries with the largest quotas get more. Oxfam has calculated that the richest countries will receive $ 400 billion, middle-income countries (like us) will receive $ 230 billion, and low-income countries will receive $ 20 billion. And since these rich countries do not need their SDRs, they can give them (or lend them at 0% interest) to the countries of their choice. But that option has more or less been cut off from us by our president telling the world, except China and Russia, to go to hell. Maybe Foreign Minister Teodoro Locsin Jr. can repair the damage.
To quote the IMF: “So how will a new allocation of SDRs help countries? The world is going through the worst peacetime economic crisis since the Great Depression. In around 150 countries, per capita income this year will be lower than in 2019 (including US-SCM). Many countries are less able to pay for vaccines or invest in their recovery and are more in debt.
“This is where a new allocation of SDRs comes in. It complements country reserves, using the collective strength of Fund members to make the 190 member countries a little stronger. It would provide cash support to many struggling low-income and developing countries, enabling them to pay for health care and support vulnerable people. All countries will benefit from rapid eradication of the virus. It is important to make sure that they have all the financial resources to do this.
In short, the government obtains this windfall of 140 billion pesos from the IMF, which it should use in a transparent and appropriate manner.
But the private sector and businesses also need to do more, especially in the next two weeks. The Manila Golf and Country Club allocated 3,500 pesos, 10 kilos of rice and two dozen eggs to each of its 151 caddies and contractors. It is to be congratulated. And some individual members even take the remaining bill for their shopping carts.
I also ask the Philippine Constructors Association Inc. (which has engaged, activated and empowered its members for 75 years of existence): what have you done, as a group and individually, to help protect workers from the construction that have been working for you all this time? They are among the hardest hit.
I am asking the same question of the banks. What additional efforts have you put in to help your small depositors and debtors?
I am asking because you know that this government, even if it were competent, cannot do it alone. And he is not competent.
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