Published on : Monday, February 22, 2021
Revitalizing Philippines tourism whose domestic sector had been majorly impacted by global and local movement restrictions in the middle of the prolonged pandemic would involve fiscal stimulus, mainly infrastructure development, the IMF said.
To quote the IMF, “Fiscal support can help offset some of the losses in the economy. Asean-5 (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam) is an instructive case, as countries in the region are somewhat diversified and some fiscal space is available. Tourism in the Post-Pandemic World: Economic Challenges and Opportunities for Asia-Pacific and the Western Hemisphere.”
Before the fiasco of COVID-19 happened, the earnings of the tourism sector of Philippines were equivalent to over 20 percent of GDP and accounted for a fifth of the country’s total employment.
“Fiscal stimulus can at least temporarily shift employment and spending into other segments of the economy, as well as support the tourism sector,” the IMF said.
“Member-countries of the Asean-5 have differing amounts of fiscal space [some much more limited than others] but could still consider this sort of stimulus because of the extraordinary circumstances of the pandemic,” the IMF added.
The Cabinet-level Development Budget Coordination Committee
in the Philippines had programmed a budget deficit. This was equivalent to 8.9 percent of GDP this year to keep its fiscal gap in the midst of the pack across ASEAN and among economies with similar investment-grade credit ratings.
In Asean-5, “fiscal stimulus will be more beneficial when directed toward aiding the recovery and transition of the tourism sector,” the IMF said.
Specifically, “infrastructure investment directed at regions more dependent on tourism can help update facilities or shift the local economy into new areas and, unlike other subsidies through public consumption, provide a longer-term increase in economy-wide productivity,” it said.
Tags: philippines tourism