The Philippine Debt Crisis On The International Trade Amid The Covid - 19 Pandemic

On January 30 and March 11, respectively, the World Health Organization (WHO) proclaimed
coronavirus disease 2019 (COVID-19) to be a Public Health Emergency of International
Concern. Along with fever, tiredness, and myalgia, COVID-19 typically manifests as respiratory
symptoms (cough, sneezing, and sore throat). It is believed that asymptomatic people,
contaminated surfaces, and droplets all contribute to its transmission. Wuhan, China was the first
nation to recognize the new virus as the origin of the epidemic. In response, the authorities
imposed globally unprecedented restrictions on movement. The initial suspect in the
Investigation into the Philippines began on January 22, 2020, and As of March 1, there have
been 633 recorded suspected cases. In the National Capital Region, 183 of them were. several of
whom were admitted to San Lazaro from Manila Manila's National Infectious Disease Hospital
(SLH) hospital for referral (Edrada et al., 2020). Beginning in March 2021, the Philippines began
to place a stronger emphasis on Minimum Health Standards (MHS) regulations, which call for
the proper usage of facial coverings, physical segregation, and hand hygiene. To learn more
about the Philippines epidemic during the initial transmission wave Livelihoods have suffered
greatly as a result of COVID-19. The main issues among underprivileged communities in the
Philippines were lost income and job possibilities. Communities that are vulnerable to disasters
struggled more to deal with COVID-19 restrictions and their negative economic effects. The
authorities "enhanced community quarantine" was implemented in response to these covid
response. The rigorous home quarantine was part of the increased community quarantine. in all
residences; a halt to all public transit rules on the the provision of food and basic healthcare
services, as well as the deployment of a enforcement of quarantine measures by uniformed
personnel. Governments are forced to choose between implementing economic recovery
programs and health policy measures to stop the virus' spread and make sure it won't overwhelm
the healthcare system as economies slowly begin to recover. There is no exception to borrowing
in the Philippines. To finance the provision of public goods and services and promote economic
security, the Philippine government borrows money. Due to the necessity to meet economic
demands, the Philippine debt will inevitably rise over time, particularly now that the country's
economic growth has slowed to the point of negative GDP growth and the financial markets have
been severely harmed by the pandemic. Santos, Bianca & Serrano, Kiana & Pigao, Kevin.
(2022).

The total outstanding debt of the National Government (NG) was recorded as P12. as of the end
of March 2022, 68 trillion. 586 pesos for the month. The net issuance of government securities to
both domestic and international lenders resulted in an increase of 29 billion, or 4.8 percent, of the
entire debt portfolio. The Duterte government spent Php1.84 trillion on infrastructure and
Php2.17 trillion on debt servicing, of which Php809 billion went toward interest and Php1.36
trillion toward amortization. This is more than seven times what was reportedly used to respond
to COVID-19. The Department of Finance estimates that the COVID-19 outbreak resulted in a 2
trillion dollar debt for the Philippine government. In 2019 the Philippines' debt-to-GDP ratio of
39.6 percent was among the lowest in Asia and the world. However, during the Covid-19, the
idea of a booming Philippine economy with a manageable debt load abruptly vanished.
According to the government's pre-Covid-19 funding strategy, annual borrowing would be
around P1 trillion ($20 billion). The Finance Department (DOF) recognized that the pandemic
would result in a P3 trillion increase in overall indebtedness for the entire year. As a result, the
debt-to-GDP ratio, which stood at 39.6% at the end of 2019, would now rise to 53.9% by the end
of 2020 and to 59.9% in 2022.

As the world's emerging market and developing countries battled the greatest pandemic in more
than a century, their fiscal deficits grew dramatically (Badia et al. 2021, Kose et al. 2021). In the
Philippines, the fiscal deficit of the national government as a percentage of GDP more than
doubled from 3.4 to 7.6 percent in 2020, the largest deficit since the middle of the 1980s (Figure
2.1). The combined public sector deficit, which refers to the combined financial condition of the
national government and other government entities2, and the primary deficit, which excludes
government spending on interest payments on public debt, both grew to around 5.5 percent.

The Philippines is a member of ASEAN, which has been slow to react to COVID-19. This has
led to some economic problems for the country, including an increase in unemployment rates
and decreased exports due to lower demand for goods. The country's export volume declined by
nearly 4% from January 2019 through March 2019 compared with the same period last year
(according to World Bank).

In the aftermath of the COVID-19 pandemic, the Philippines has been in a state of economic
distress (S. Talabis et al., 2021). This crisis is affecting not only the country's political and
economic stability but also its promise as a global business partner. There are many reasons for
this, but one of the main reasons is that many companies and businesses were unable to get paid
due to financial difficulties caused by the pandemic.

One of the biggest problems is that many businesses do not have the resources or capital needed
to continue operations while they wait for recovery from the pandemic's effects on trade. Due to
the lack of available workers, many companies have been forced to reduce their production
output by up to 50% (World Bank, 2021). This means that they will not be able to export as
much as they would have wanted. They also cannot afford to pay their employees during this
time, which means that some people are losing their jobs even as others are being laid off
because there aren't enough jobs for everyone who wants one.

Another reason is that many people lost their jobs due to their inability to work for extended
periods of time due to medical leave, which led them to lose their homes. Also, many people
could not afford food and water because of high prices at supermarkets and restaurants due to
demand outweighing supply. This includes the Philippine economy being impacted by a lack of
international trade, which has led to an increase in domestic production and decreased
importation. The country's exports have been affected by slowdowns in transportation, which has
resulted in decreased consumer demand for Philippine goods. The government has worked hard
to mitigate this crisis but there are still many challenges that need to be overcome before this
issue can be resolved.

The country's gross domestic product (GDP) is expected to contract by 2 percent in 2019,
according to the World Bank. This is because of the impact of COVID-19 on tourism, trade, and
remittances, which have made up 30 to 40 percent of GDP in recent years (Behsudi, 2020). The
country's exports have been hit especially hard by the pandemic: Exports fell by 28 percent in
January 2019 compared to January 2018, research by Barbero et al. (2021). This is a big deal for
a country that relies heavily on foreign trade: In 2017, exports accounted for 23 percent of GDP
and remittances accounted for 10 percent according (International Trade Administration, 2021).

In order to improve its international trade capabilities, the Philippines needs to focus on
improving its logistics infrastructure while also improving its customs procedures and
regulations. Additionally, the country must continue efforts to create greater awareness among
businesses about what steps they can take during this time period.

References:

Barbero, J., de Lucio, J. J., & Rodríguez-Crespo, E. (2021). Effects of COVID-19 on trade
flows: Measuring their impact through government policy responses. PLOS ONE,
16(10), e0258356. https://doi.org/10.1371/journal.pone.0258356
Behsudi, A. (2020). Impact of the Pandemic on Tourism – IMF F&D. IMF.
https://www.imf.org/en/Publications/fandd/issues/2020/12/impact-of-the-pandemic-on-
tourism-behsudi
International Trade Administration. (2021). Philippines - Market Overview. International Trade
Administration | Trade.Gov.
https://www.trade.gov/country-commercial-guides/philippines-market-overview
S. Talabis, D. A., Babierra, A. L., H. Buhat, C. A., Lutero, D. S., Quindala, K. M., & Rabajante,
J. F. (2021). Local government responses for COVID-19 management in the Philippines.
BMC Public Health, 21(1). https://doi.org/10.1186/s12889-021-11746-0
World Bank. (2021, April 13). Impacts of COVID-19 on Firms in the Philippines: Results from
the Philippines COVID-19 Firm Survey conducted in November 2020.
https://openknowledge.worldbank.org/handle/10986/35430

National Government Debt Recorded at P12.68 Trillion as of end-March 2022

https://www.treasury.gov.ph/wp-content/uploads/2022/05/NG-Debt-Press-Release-March-
2022_final_ed.pdf

First COVID-19 infections in the Philippines: a case report

https://tropmedhealth.biomedcentral.com/articles/10.1186/s41182-020-00203-0

Understanding COVID-19 dynamics and the effects of interventions in the Philippines: A

mathematical modelling study
https://www.thelancet.com/journals/lanwpc/article/PIIS2666-6065(21)00120-6/fulltext

Santos, Bianca & Serrano, Kiana & Pigao, Kevin. (2022). An Assessment: The Philippine
Outstanding Debt and other Economic Determinants towards its Implication on
Economic Growth. Journal of Economics, Finance and Accounting Studies. 4. 126-147.
10.32996/jefas.2022.4.2.11.
https://al-kindipublisher.com/index.php/jefas/article/view/3162