THE ECONOMIC RESILIENCY PLAN

1. THE ECONOMIC RESILIENCY PLAN Presented by RD Arturo G. Valero During the General Assembly of the Philippine Federation of Local Councils of Women (PFLCW), Inc. November 19, 2009, Top Plaza Hotel, Dipolog City

2. What is ERP • the country’s response to the global crisis • aims to stimulate the economy • also seeks to prepare the country for the eventual upturn • a mix of government spending, tax cuts and public-private sector projects

3. Objectives of ERP • Ensure sustainable growth and attain the higher end of the growth targets; • Save and create as many jobs as possible; • Protect the most vulnerable sectors – poorest of the poor, returning overseas Filipino workers, and workers in export industries; • Ensure low and stable prices; and • Improve competitiveness in preparation for the global economic rebound.

4. Strategies for ERP • Implement budget interventions • Accelerate spending for small infrastructure projects • Expand social protection program • Save and create jobs • Implement off-budget interventions • Other measures

5. Budget interventions • Increased budget for departments in: • Infrastructure • Social protection • Agriculture • Health • Education • Maximize d personal services (PS) budget • Maximized MOOE

6. Small infrastructure projects • Front-load resources for full and quick spending • Focus on projects that are: • quick-disbursing • high impact • labor intensive • Obligate at least 60 percent of spending program in the first semester

7. Social protection programs • P5.0B conditional cash transfers to cover additional 321,000 poor households • P1.0B to PhilHealth as full contribution to the national insurance program • P2.0B to TESDA to equip more Filipinos with skills for income generation • P1.97 B to the DOH to improve primary and secondary hospitals

8. Save and create jobs DOLE interventions for overseas Filipinos: • Monitor overseas labor market displacements • Monitor contracts of job orders overseas • Worker registration • Redeployment services to other emerging labor markets • Identify and develop new market niches • Repatriation assistance • Expand livelihood/business formation programs • Reintegration and business counseling • Skills upgrading and retooling services

9. Save and create jobs • Early warning system to know which firms are likely to shut down or shed workers • Alternatives to laying off workers: • shortened work shifts • maximized vacation leaves • rotating forced leaves • Comprehensive livelihood and emergency employment programs (CLEEP)

10. Off-budget interventions • Tapping resources of GOCCs and GFIs for large infra • Enhanced social security benefits to members • Accelerating spending for comprehensive and integrated infrastructure program (CIIP), namely: • Official development assistance • National budget/general appropriations act • National-local government cost sharing • Public-private partnership/joint venture • Corporate funds • Proceeds from those mandated by law (i.e. EPIRA)

11. Other measures • Government will ramp up its housing programs • Expand trade with China and West Asia • Encourage exporting firms to diversify, innovate and upgrade products.

12. Funding the ERP • P330B economic resiliency plan • P160B increase in the 2009 budget • P40B tax cuts for low and middle income earners • P100B large infrastructure projects funded GFIs, social security institutions and private commercial banks • P30B additional benefits to members by social security institutions

13. Challenge for MSMEs • Focus on basic consumer commodities • Cling on labor • Operate just to weather the storm • Develop forward processing activities • Improve on technology/processes

14. Why basic commodities • Antidote to recession: spending • Natural tendency in crisis: saving • There are basic necessities: people eat • Things should be affordable

15. Why focus on labor • Household income needs to be sustained • Purchasing power necessary for spending • Enhance money circulation • Avert unrest

16. Why operate for subsistence • To be able to offer affordable products • Sustain demand • Save jobs

17. Why develop forward industries • Enhance value added of products • Available raw materials • Skills/technology likely available

18. Why improve on technology • To enhance competitiveness • To lower operating costs • Ensure quality products

19. Economic Resiliency Plan worked • GDP Q2 year-on-year growth of 1.5%, quarter-on-quarter growth of 2.4% • Public construction up by 29.9% • Government consumption up by 9.1% • Unemployment feared to rise due to the crisis. It actually fell due to CLEEP: from 8.0% in April 2008 to 7.5% in April 2009 • OF remittances still defy gravity

20. Lay-offs down due to rehiring Workers Displaced by the Crisis • October 2008 4,224 • November 2008 9,448 • December 2008 11,433 • January 2009 12,392 • February 2009 9,126 • March 2009 15,895 • April 2009 2,554 • May 2009 1,776 • June 2009 1,590

21. 2009-2010 Growth Outlook Indicator 2009 2010 GNP 2.1-3.1 4.7-5.6 GDP 0.8-1.8 2.6-3.6

22. Quote from Standard and Poor • “Yes, the Philippines is 'lucky' because they have made the necessary adjustments and reforms when times were still good. So they are facing the global market problems and economic slowdown from a considerably improved position, compared to what they were in 3-4 years ago… • “The Philippines is an 'island of calm' currently, while there is turmoil in the higher rated and previously stable countries… ”

23. Thank you!