By Alyssa Nicole O. Tan
THE NATIONAL Economic and Development Authority (NEDA) said businesses need to be allowed to operate under less restrictive rules to encourage banks to release funds into the economy.
“The more sustainable way to help businesses is to first open the economy,” Secretary Karl Kendrick T. Chua said at a Senate hearing Wednesday. “We have restricted them for more than 18 months already.”
“Once we are able to open (the economy), then we would have this virtuous cycle wherein those businesses that need financing or grants… will be (supported) by the financial sector,” he added.
He said banks are currently risk-averse because there is no assurance they will have reliable revenue over the life of the loan, noting, “There is a lot of hesitation and uncertainty.”
Senator Pilar Juliana S. Cayetano, who chairs the Committee on Ways and Means, sought proposals for more financial assistance, which Mr. Chua called insufficient to deal with the problem and likely to trigger a “chicken-and-egg cycle.”
“The businesses don’t operate, tax revenues fall, then we do not have additional revenue to provide more targeted support,” he said. “If we had to provide ayuda (cash aid) every month and every time, we would have easily run out of money.”
Mr. Chua said the underlying necessity is the opening of the economy. “Otherwise, we will be putting or lending money to firms or people that cannot turn that money around and become productive.”
NEDA Undersecretary Rosemarie G. Edillon noted the need to “COVID-proof” businesses, adding that economic planners are working with the Department of Trade and Industry to reconfigure places of business to minimize confined spaces with poor ventilation, crowded places with no physical distancing, and close-contact settings with face-to-face interaction.
