Filtered By: Money

NEDA: COVID-19, community quarantines to cost Philippines P41.4T over the next four decades

The total cost of the COVID-19 pandemic and the implementation of the community quarantines is estimated at P41.4 trillion in the next four decades, according to the National Economic and Development Authority (NEDA).

According to presentation materials of Socioeconomic Planning Secretary Karl Kendrick Chua, the cost is in terms of net present value, with P4.3 trillion in 2020 alone, and P37.0 trillion in the next 10 to 40 years.

The presentation was made last week to the Public-Private Task Force T3 (Test, Trace, and Treat), which aims to boost the country’s relief efforts against the  pandemic.

Sources of losses over the next 40 years include foregone wages from premature deaths, lost productivity due to COVID-19 and non-COVID-19 illnesses, and medical expenses.

The NEDA estimates take into consideration lower consumption and investment in the next decade due to weak demand in sectors where social distancing is mandated, such as amusement, tourism, restaurants, and public transportation.

This will in turn drag tax revenues lower, with the economy expected to converge to the pre-pandemic growth path only after 10 years.

“Foregone consumption and investments in 2020 will result in lower capital accumulation in the future,” Chua said in the presentation.

Foregone consumption, physical investment, and returns in 2020 is estimated at P3.924 trillion, and is expected to reach P21.913 trillion in the next decade, for a total of P25.838 trillion.

In terms of foregone tax revenues, NEDA estimates P782 billion lost in 2020 — P271 billion in value-added tax, P144 billion in corporate income tax, P86 billion in personal income tax, and P282 in all other taxes.

This is predicted to worsen in the next 10 years, with total foregone tax revenues pegged at P1.206 trillion — P409 billion in value-added tax, P286 billion in corporate income tax, P229 billion in personal income tax, and P282 billion in all other taxes.

“Lower capital accumulation will result in lower financial returns and lower economic benefits for the people,” Chua said, noting that unbuilt factories would lead to less sales and less jobs, and unbuilt roads would not lead to time savings.

Distance learning

The same presentation materials indicated that the estimated total cost of not having face-to-face school programs at P11 trillion, which constitutes lost wages over a 40 year period.

“Long-term COVID-19 impacts include less learning, and lower future income, productivity, and competitiveness,” Chua said, citing studies that show each year of lost schooling translates to around 10% permanent lower wages in the future.

“All these mean the pandemic and school closure are exacerbating the already unequal access and lower quality of education in the Philippines,” Chua added.

President Rodrigo Duterte earlier this week approved the conduct of face-to-face classes, albeit at a limited capacity and only in areas with minimal risk of COVID-19 infection.

Education Secretary Leonor Briones said kindergarten classes can have 12 students, first to third grade classes with 16 students, and technical vocational classes with as much as 20 students, for three hours max.

The limited face-to-face classes will be piloted in 100 public schools and 20 private educational institutions, and the setup will be determined based on periodic risk assessments.

Wages and productivity

The estimated total cost of both COVID-19 and non-COVID-19 diseases is P4.5 trillion over the next 40 years, with expenditures in 2020 which could have been spent somewhere else.

This also covers foregone wages from premature deaths estimated at P493 billion, foregone wages from disability or lost productivity of P1.952 trillion, and additional healthcare costs of P1.892 trillion

“Many people who recover from COVID-19 experience other health concerns,” Chua said, noting brain fog, weakness, and respiratory damage.

“Many more people will become unable to work fully due to the inability to get treatment from other diseases. Both of these lead to lower productivity,” he added.

Latest data available from the Philippine Statistics Authority (PSA) showed that there were 3.07 million unemployed Filipinos in July, while individuals seeking better employment opportunities reached 8.7 million, bringing the underemployment rate to a pandemic-high of 20.9%.

Moving forward, Chua cited the importance of boosting the vaccination program of all adult Filipinos to reach 70 million by the end of the year, through the expansion of vaccination sites and removing artificial barriers.

The Philippines has so far administered a total of 41.793 million doses of COVID-19 vaccines — 18.823 million have received the full doses needed, while 22.970 million have received only their first dose as of September 20, 2021.

Chua also called for the safe reopening of the economy, allowing select family activities to resume, along with face-to-face classes, and the implementation of localized lockdowns.

Most of the Philippines has been in some form of community quarantine since March 2020, when the government started to implement the strictest lockdown.

The National Capital Region (NCR) is currently under Alert Level 4, under which select businesses have been allowed to resume operations, albeit at a limited capacity.

“Remember: the most restrictive community quarantines only postpone the surge. What will reduce the surge is the PDITR,” Chua said, referring to the prevent-detect-isolate-treat-reintegrate strategy.

The Philippines on Tuesday, September 21, reported 16,361 fresh confirmed cases of COVID-19, bringing the country’s active cases to 171,142. The total caseload now stands at 2,401,916 which includes 2,193,700, and 37,074 deaths. — RSJ, GMA News