P86B package sought to mitigate Ondoy impact

The government must immediately announce a multibillion relief package if it wants to mitigate the economic toll of tropical storm Ondoy, a Palace economic adviser said. An P86-billion "demand side liquidity package," said Albay Governor Jose Ma. Clemente "Joey" S. Salceda, will provide relief to typhoon victims while injecting much-needed liquidity. "Cash is the best form of social and economic relief after a disaster since victims know better their needs, beneficiaries would be more judicious in their procurement, [and the] benefit is direct and immediate," he said in a statement. The proposed relief package consists of: * a one-year repayment moratorium for all salary and housing loans of Government Service Insurance System (GSIS) and Social Security System (SSS) members (P32 billion); * home loans of P150,000 for eligible members of the Home Development Mutual Fund or Pag-IBIG (P15 billion); * three-month advances of the monthly average reimbursement by Philippine Health Insurance Corp. (Philhealth) to accredited hospitals (P4 billion); and * P35 billion worth of a five-year special rediscounting window for banks to refinance loans to individuals, entrepreneurs and small businesses at 91-day T-bill rates plus 2%. "These four measures are designed to inject liquidity into the system... "[It is] a decisive response to mitigate the widespread social damage and overturn the potential economic drag of Typhoon Ondoy." The former Cabinet official and stockbroker claimed these measures had helped the province of Albay, which was devastated by typhoon Reming in 2006. He said the one-year repayment moratorium would benefit around 700,000 GSIS and 4.8 million SSS members. The loan deferment at a concessional 5% imputed interest rate would cost P4 billion for GSIS and P28 billion for the SSS. "This will provide them (the typhoon victims) disposable income. They (the GSIS and the SSS) do not have to worry about the impact of this since it would only delay the payment of the loans," Mr. Salceda said in a telephone interview. "A global repayment moratorium is more pervasive and direct in impact — more take home pay, easier to execute, less effort for members and less paperwork for SSS and GSIS." The P150,000 home loan from Pag-IBIG, meanwhile, could benefit some 100,000 members, while Philhealth’s three-month advance of monthly reimbursements would help hospitals care for the injured and disease-stricken victims. The rediscounting facility is intended to assist small businesses hit by the typhoon. Mr. Salceda said he was confident that President Gloria Macapagal-Arroyo would consider his proposal. Officials of the concerned agencies were not immediately available for comment. State-run institutions, however, have announced that they will be implementing programs aimed at assisting calamity victims. In a statement, the GSIS said it was allotting P5 billion worth of emergency loans to affected members. "Members can apply for GSIS emergency loans starting Thursday, October 1," it said. The emergency loan — worth P20,000 — can be tapped by government workers living in areas declared under "state of calamity." It can be paid over three years with 8% annual interest. Areas placed under a state of calamity include Metro Manila, Mt. Province, Ifugao, Benguet, Pangasinan, La Union, Ilocos Sur, Isabela, Quirino, Nueva Vizcaya, Aurora, Nueva Ecija, Zambales, Pampanga, Bulacan, Tarlac, Bataan, Cavite, Laguna, Batangas, Rizal, Quezon, Occidental Mindoro, Oriental Mindoro, Marinduque, Catanduanes, Camarines Norte, and Camarines Sur. The SSS, meanwhile, is proposing a salary loan scheme payable in two years. "We are contemplating early loan renewal for members who have been paying regularly. For example, if a member borrowed P24,000 and has paid P14,000 and has a balance of P10,000, he can borrow P14,000 so his loan balance goes back to P24,000," SSS President and Chief Executive Officer Romulo L. Neri said. Pag-IBIG, meanwhile, said it would prioritize loan applications made by typhoon victims. Under the Pag-IBIG Calamity Loan Program, members can borrow as much as 80% of their total savings with an interest rate of 10.75% per year. The loan has a five-month grace period and is payable in two years. State-run Land Bank of the Philippines, for its part, said it was studying ways to help. "These include the institution of remedial actions for ... loan clients in the form of extension of maturity and/or refinancing and the facilitation of the release of guarantee claims," it said. - Alexis Douglas B. Romero, BusinessWorld