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Aid Distribution During the COVID-19 Crisis

Author

Listed:
  • Alvin Ang

    (Department of Economics, Ateneo de Manila University)

  • Ser Percival Pena-Reyes

    (Department of Economics, Ateneo de Manila University)

Abstract

This paper highlights a large informal economy, a low propensity to save and invest, and widespread financial exclusion as factors that expose Filipinos to financial vulnerability. These factors could, in turn, make the distribution of government aid all the more challenging in the midst of the COVID-19 crisis. The sheer number of displaced informal economy workers, combined with economy-wide low savings and investment rates, would call for a massive amount of financial aid. Because of widespread financial exclusion, cash handouts are probably the quickest way to deliver the aid, which would expose local government units (LGUs) to considerable risks of wrong targeting, late delivery, and incomplete accounting. To ease the burden on LGUs, at least on the accounting aspect, it might be beneficial to consider enlisting the services of other channels, such as microfinance institutions, pawnshops, payment centers, and domestic money transfer service providers, to assist in the distribution of financial aid. Consumer awareness of these facilities appears to be high among the masses. Also, by involving the private sector, the government can take advantage of the efficiency of existing systems. The administrative costs to deliver the funds can be reduced, and the funds can also reach the beneficiaries faster.

Suggested Citation

  • Alvin Ang & Ser Percival Pena-Reyes, 2020. "Aid Distribution During the COVID-19 Crisis," Department of Economics, Ateneo de Manila University, Working Paper Series 202006, Department of Economics, Ateneo de Manila University.
  • Handle: RePEc:agy:dpaper:202006
    as

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    File URL: http://ateneo.edu/sites/default/files/downloadable-files/ADMU%20WP%202020-06.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    COVID-19 pandemic; financial vulnerability; social amelioration;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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