THE PHILIPPINES is among the emerging markets that have spent little on social safety nets relative to the size of its gross domestic product (GDP), Moody’s Investors Service said in a report.
Philippine spending on social safety nets accounts for 0.7% of its GDP, similar to that of Niger and Sri Lanka, Moody’s said.
Average spending of the 28 emerging markets analyzed was 1.54% of GDP.
“Among our sample, countries with broad and well-targeted programs have been able to deploy more support during the pandemic, thus mitigating the impact on consumption and growth, and reducing credit risks associated with social discontent,” Moody’s said in a note Monday.
Moody’s said Ukraine spent 4.4% on social safety nets, the highest in the group studies, while Togo spent 0.2% to bring up the rear.
Moody’s grouped countries according to their spending programs to assess their fiscal impact. The Philippines was classified in the fourth group, which has “well targeted safety net programs but relatively low spending, which limits the effects on reducing poverty and income inequality.” Other Asian countries within the category are Bangladesh, Malaysia, and Thailand.
“For governments with fiscal space and relatively moderate debt burdens, expanding the reach of social programs to reduce poverty and income inequality can support their credit profiles by decreasing social risks,” Moody’s said.
In July, Moody’s maintained its credit rating for the Philippines at “Baa2” with a stable outlook, citing the country’s strong fiscal position in recent years, which it said will help shield it from the impact of the coronavirus crisis. It noted, however, that policy reforms could take a back seat due to the pandemic. — Luz Wendy T. Noble