PASSAGE of the Bayanihan to Arise as One Act or Bayanihan 3 will not improve the country's rating prospects, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno told reporters over the weekend.

What will improve the country's standing among credit watchers, especially after Fitch Ratings' move, is a streamlined and effective vaccination program, the governor said.

"The wisdom of whether the government should legislate Bayanihan 3 now that Bayanihan 2 has lapsed should be decided upon by the Executive Department and Congress. That is not within the mandate of the BSP. I disagree, however, that legislating Bayanihan 3 will help us to improve our ratings prospects after Fitch downgraded the country's outlook to 'negative' from 'stable,'" Diokno said.

Last week, international credit watcher Fitch Ratings revised its outlook on the Philippines's current rating citing the strong impact of the pandemic on the economy, which could potentially result in scarring effects to the country. However, it affirmed the country's rating at "BBB."

What needs to be done right now, Diokno said, "is to accelerate the vaccine rollout, pursue the structural reforms the government was pursuing before and during the pandemic, and continue aggressively with its BBB program." Such measures, he stressed, "will immensely improve the Philippines' growth prospects and its ability to attract foreign direct investments."

In its report, Fitch said while supplies of vaccination have been coming to the country in recent months, it may not be enough to reach the government's target.

"The authorities aim to vaccinate up to 70 percent of the eligible population by end-2021, which Fitch views as ambitious because under 3 percent of the population was fully vaccinated as of the end of June," Fitch said.

Bullish on vaccines

Diokno, however, expressed confidence in the country's vaccination program.

"I'm positive that the vaccination program is on the right track. First, the Philippines is getting a steady supply of vaccines from multiple sources; other countries have only one or two sources. Second, it has shown its capacity to administer the program effectively and massively. Third, there's strong private sector support for the vaccination program. Finally, there appears to be no vaccination hesitancy on the part of Filipinos," Diokno told reporters.

"The success of the vaccination program is the key to a strong and sustained economic recovery. With its success, future surges in virus incidence can be avoided. In turn, there would be no need for lockdown measures which have proven to be costly economically here and abroad," he added.

This, the governor said, is key to keeping a favorable image especially to credit watchers, and not necessarily the passage of the Bayanihan 3.

"The rationale for Bayanihan 3 fades with the submission of next year's President's Budget within a month or so. Additionally, as a result of the Supreme Court ruling, more fiscal resources will flow to LGUs starting January 2022, less than half a year, from now. LGUs may be in a better position to address the needs of their local constituents who are affected by the pandemic," Diokno said. He was referring to the Mandanas ruling that upheld the LGUs' right to a bigger share of the internal revenue allotment from the national government.

"If local officials don't want to overburden their fiscal position as a result of high incidence of Covid-19 in their community, then they should exert more effort to contain the virus through strict enforcement of health protocol and more aggressive contact tracing. This is what we call ' incentive-compatible.' Moving forward, I see the likelihood of stricter local lockdowns, if at all, rather than regional lockdowns," he added.

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