Section 61 of RA 7653 The New Central Bank Act, known as the Guiding Principle, states that The Monetary Board shall endeavor to control any expansion or contraction in monetary aggregates, which is prejudicial to the maintenance or attainment of price stability. The primordial role of the Bangko Sentral ng Pilipinas (BSP) is to maintain price stability conducive to balanced and sustainable economic growth. It also seeks to preserve monetary stability and the convertibility of the peso. BSP influences price stability through interest rates, the quantity of money, exchange rates, favoring economic activities, and a general increase in prices.
A continuous slowdown of economic activity starting from Taal Volcano erupted in January to placing the island of Luzon under enhanced community quarantine (ECQ) to slow the spread of COVID-19. Quarantine imposition held up cargoes and hindered delivery trucks carrying food and other basic items needed by people in Luzon. This restrained agricultural product movement resulted in increased food waste due to spoilage of highly perishable goods, lower farmgate price of agricultural/ fishery products, and the higher retail price of food commodities. The closure of restaurants and other food chain establishments created huge food surpluses such as vegetables, poultry, and dairy products.
Similarly, manufacturing firms have not been able to operate at full capacity because of problems in delivering raw materials, late shipments, canceled export or import orders, loss of buyers or suppliers, and the increase in their logistics cost. Even medical items, including personal protective equipment, ventilators, and test kits, were blocked and stocked in the Manila port because of custom processes. Retail businesses have been affected by the closure, reduced foot traffic (for non-essential establishments), and the price freeze brought about by the ECQ. Many key products and essential supplies have gone out of stock in supermarkets and grocery retailers due to consumers' panic buying. Tourism and business travel have also ground to a halt.
Also, public and private schools at all levels have been ordered closed. While some schools managed to complete the school year's requirements, some students still lack some credentials to move on to the next level. Despite the closure, private schools continued paying for their personnel's salaries even if some had to offer tuition fee refunds.
The imposition of ECQ resulted in the temporary closure of many establishments and many displaced workers. Based on the Department of Labor and Employment data, a total of 1.19 million workers (as of April 12) are affected by COVID-19. Most affected are those working in the education, manufacturing, hotel, restaurant, and tourism-related sectors. The ban on main transport vehicles, coupled with the various checkpoints, rendered people immobile that even establishments like supermarkets, groceries, drugstores, and similar service-oriented centers that have been allowed to open could not fully operate. Overseas remittances have also been either delayed or discontinued because overseas Filipino workers (OFWs) in countries affected by the pandemic have quit work and have come home. The coronavirus crisis has affected the jobs of about 343,000 OFWs, and In a worst-case scenario, around 1 million OFWs may end up losing their jobs due to COVID-19, said DOLE.
There are drastic changes with the country’s economic activities due to COVID-19 that can affect and indicate the price stability. Price stability prevents these costs from arising and brings about important benefits for all citizens. Employment is one of the indicators of an economy. Where in employment also affects consumer confidence. The consumer confidence index is a survey that measures how positive or negative consumers are regarding their anticipated financial situation. The more confident the consumer, the more they spend.
It is observed that the moment a place is under lockdown or imposing enhanced community quarantine, producers are cut back on production and trade. Lesser production of goods and services since producers will assume that some of the consumers will stay at home and have no income nor do not have enough savings, therefore less money in the circulation. Moreover, to fulfill the primordial role of BSP is to make an Expansionary Policy. This type of policy is used to stimulate spending and pump prime the economy to induce people to put money into the economy to bring it back to life. For instance, the cash aid and subsidy are given to people for the economy to bring it back to life.
As community quarantines are being lifted, people must adapt to the new normal; in many service-oriented organizations in the private and public sectors, flexible work arrangements, specifically, work from home, will have to be implemented under strict social distancing protocols—part of the new normal means working and interacting virtually instead of face-to-face. Workspaces will need to be re-configured to address the need for physical distancing. Working from home has both advantages and disadvantages. The following are advantages
Working from home can lessen or prevent travel time and saves money from transportation;
There is a flexible schedule, taking breaks at any moment; and
They can wear cozy clothes while working.
Disadvantages of working from home are following
Boredom and slow working,
Difficulty sticking to a routine,
interruptions and Distractions,
Lack of necessary resources to adequately work at home,
and Technical problems and internet connection interruptions.
In connection to the price stability, work from home indicates that the economy is now moving. The consumer confidence index might increase because they will feel secure in their financial situation. Also, People will have a source of income, resulting in an increase of money in circulation. However, because of the limited supply of commodities compared to the continuous increase in demand for commodities, this will now result in an artificial increase in commodities prices. To solve this action by the BSP, they can enact a Contractionary Policy. This type of policy is being implemented when there is too much money in circulation chasing too few goods and services, thereby creating an artificial increase in commodity prices. For instance, lessen the money in circulation. The prices of other commodities increase like oil, and when the price of oil increases, the price of other commodities related to oil will also increase.