On uncertainty and control once again
The world has suffered enough from the various strains of coronavirus for nearly two years. As of Dec. 1, some 263.15 million people have been infected with the virus, causing 5.24 million deaths. It is also in its economic impact that the pandemic proved vicious because the global economy retreated in the deepest recession, putting millions out of jobs and worsening inequality and poverty.
Marking the timelines of global efforts to mitigate this global pandemic is useful in assessing future roadblocks. The Delta variant is about to be reinforced by the Omicron variant.
The Philippines cannot plead innocence as a bystander.
The situation in 2020 was expected to turn for the worse with serious global implications. The World Bank Group (WBG) and the International Monetary Fund (IMF) joined forces as early as April 2020 to consider the call for possible suspension of debt repayments in order to provide critical support to the poorest countries in Africa. The G20 economies decided to temporarily suspend debt payments starting May 1, 2020. There was consensus that the pandemic represented a big setback for the progress that has been achieved by Africa in eradicating poverty, inequality, and underdevelopment.
It was difficult to imagine that debt suspension is at all possible. A few decades ago, it was anathema to the Washington-based institutions, with or without a health crisis. Their idea of economic adjustment excluded debt suspension, debt forgiveness, or anything to that effect until the developed economies themselves were hit by the economic conflagration in Europe during the Global Financial Crisis and the European debt crisis. In addition, as globalization lost some traction, conducting global trade and investments on a flexible exchange rate platform did not always work. The Fund began to look kindly on macroprudential measures and capital controls, or to be politically correct, capital flow management measures.
These are sea changes in the Washington Consensus. The pandemic contributed more.
Official creditors gathered $57 billion for Africa in 2020 alone, plus $18 billion each from the IMF and the WBG to help mitigate the effects of the pandemic on economic performance. The private sector provided assistance even as the amount put together paled in comparison to more than $100 billion that Africa needed to fight the virus.
In 2021, these efforts have to continue because the pandemic did not let up. Thus, the sister institutions sustained their call, this time focusing on developing countries’ access to COVID-19 vaccines, arguing that the “coronavirus pandemic will not end until everyone has access to vaccine… Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery.”
Both institutions decided to also develop and keep their separate programs to handle the requirements of their member countries in their pandemic response and other financing needs. Additional tools have been considered to offer short-term liquidity line especially for those considered to be strong economic performers as incentive.
Recently, the World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus proposed a pandemic preparedness treaty in view of the forthcoming Omicron variant. The treaty is proposed to be legally binding on issues like equitable vaccine distribution, knowledge-sharing, financing and oversight structures. Another key issue is whether WHO should be authorized to investigate the dynamics of viral outbreaks as well as monitor and assess the health situation in any of the 194 member countries.
The underlying philosophy behind all these efforts is the great uncertainty of how the virus would behave, as did Delta then and as will Omicron now. While some factors may be quantified and assigned some probability of happening, the latest concern about the Omicron is its 50 mutations so far and as such, anything could happen when it comes to the Philippines. Omicron could be vaccine resistant.
Given the uncertainty surrounding Omicron and the magnitude of global efforts to mitigate its impact, it would be too cavalier for any medical practitioner to dismiss the general concern about it. After sequencing the variant, South Africa for instance, found that it accounts for three-quarters of the nearly 250 samples from positive coronavirus tests. Caseloads are rising rapidly, doubling in a matter of days. Some African and European countries have reported Omicron incidents, with recent cases of infection in Latin America. The New York Times on Dec. 1 reported that a new simulation indicates the virus could survive inside tiny airborne water particles. In response, the US is now planning to require international plane travelers to show negative test result within 24 hours. In the case of Japan, new bookings were cancelled for incoming flights until the end of this year.
So far, the Philippines has demonstrated some quick response. Aside from the mandatory research and monitoring of the dynamics of the new variant, our health authorities have sought to mobilize hospitals and other health facilities to adjust their capacities and administer booster shots to our healthcare workers. Unlike in the way we dealt with the Wuhan virus, it is good we decided to immediately escalate the travel restrictions. Inbound flights from identified sources of Omicron have been suspended. Arriving passengers from both yellow and green zone countries are to be subjected to the same testing and quarantine protocols. No one knows for sure where passengers came from, and the connecting hubs taken on their way in.
But looking ahead, there are road blocks.
The National Task Force Against COVID-19 Chief Implementor Carlito Galvez, Jr. himself warned us last week of the possible fourth wave. Yes, the public’s discipline and observance of health protocols are pivotal in our new battle against the incoming variant. But a more basic issue is what to do with the current and forthcoming supplies of vaccines. In the last few days, the Government has accelerated its vaccination rollout. Anyone is to be accommodated including walk-ins. But Galvez himself admitted that “70 million Filipinos… haven’t had their first dose of vaccines yet.”
Let Galvez explain that indeed we are facing a dilemma:
“Because when the surge comes, they (over 70 million unvaccinated Filipinos) will be the one that will be given the burden of deaths, and also the disease and hospitalization in our different hospital facilities. For example, if we will be giving the booster for 29 million, you are depriving 29 million of first shots.”
The suggested response is for us to continue wearing face masks.
The other roadblock is the implementation of health measures, testing, tracing, and treating those who are infected with the current and forthcoming viruses. Who will handle our pandemic mitigation activities?
Until now, based on the claim of the Alliance of Health Workers, three months have passed but the Government has yet to release their COVID-19 benefits. These benefits include Special Risk Allowance, Active Hazard Duty Pay and Meal, Accommodation and Transportation benefits. If our frontliners decided to symbolically padlock the main gate of the office of the Department of Health in Manila last week, would the Government’s response be equally symbolic?
If the Government fouls up on this latest test of competence and resolve, it’s anybody’s guess whether we could deliver on the 4-5% target for 2021. While Finance Undersecretary Gil Beltran was correct when he scored private analysts whose economic growth forecasts were generally some distance away from the actual third quarter performance, he might not have another opportunity to rebuff. Under the emerging circumstances, forecasters worth their salt ought to be more circumspect about our capacity to mitigate the pandemic.
Last Wednesday’s stock market plunge by nearly 254 points on account of Omicron demonstrates that so much is outside the control of our health and economic authorities.
Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.