Philippines faces risks of limited funding for pandemic response

The country remains vulnerable to another surge in COVID-19 cases.

The Philippines could suffer the risks of a limited funding allocation for pandemic response if further COVID-19 outbreaks emerge in the country in 2021, which could lead to a wider budget deficit, according to Fitch Solutions.

President Rodrigo Duterte signed the 2021 budget into law, approving a 9.9% rise in expenditure to $93.7b (PHP4.5t), around 25% of GDP as of 2020.

According to the Department of Budget and Management (DBM), the proposed national budget for 2021 will focus on containing the spread and mitigating the effects of COVID-19 whilst restarting the economy to help the nation reset, rebound, and recover from the pandemic.

The government allocated $4.60b (PHP221b) for pandemic response, around 4.9% of the total budget and only 1.1% of GDP. Fitch expects the Philippines to lag behind other Asia-Pacific economies in securing vaccines for the population.

“Given that the Philippines has experienced the second highest fatality rate in the South East Asia region after Indonesia, and the discovery of more contagious strains in the United Kingdom and South Africa, the Philippines remains vulnerable to another surge in COVID-19 cases,” Fitch said.

The 2021 budget would set aside $1.5b (PHP72.5b) for the purchase of COVID-19 vaccines, which the government targets to administer to the general population by Q2 2021. Of this, $520m (PHP2.5b) are lodged under the Department of Health, whilst $1.4b (PHP70b) is under unprogrammed appropriations, depending on the availability of government revenues.

About $5.8m (PHP283m) was also set aside for establishing the Virology Science and Technology Institute of the Philippines that would spearhead studies on emerging and re-emerging viruses, and $1.07m (PHP51.56m) for disease surveillance of coronavirus.