More news about how the COVID-19 pandemic in the Philippines is being handled by the public and the government.
During the pandemic lockdowns, Cebu Pacific faced severe liquidity challenges and near bankruptcy as travel operations completely stopped. Commercial banks were initially hesitant to lend funds to airlines due to the high risk of corporate default.
When Covid-19 hit in early 2020, commercial aviation did not just slow down, the sector vanished. Across the globe, passenger jets were parked nose-to-tail on runways, engines capped, cabins sealed, and balance sheets bleeding cash by the hour.
In the Philippines, the crisis hit Cebu Pacific with crushing speed. The Gokongwei-led budget carrier had built its business on a high-turnaround model, relying on constant cash flow to fuel growth and service capital expenditure.
Suddenly, air traffic was grounded, with revenues plummeting to near zero while fixed costs like lease payments, maintenance, and administrative overhead remained high.
The immediate challenge for the airline was survival. A fleet of planes sitting on tarmac generates no revenue, but it continues to consume capital. Cebu Pacific found itself in an existential financial squeeze.
“During Covid, we were shut down,” Lance Gokongwei, chief executive officer of JG Summit Holdings and head of Cebu Pacific’s parent group, recalled. “Now, the liquidity part was very challenging, right? Because who’s gonna lend money to an airline? That could go bankrupt at any time.”
That question hung over the Philippines’ banking sector. Commercial lenders were facing their own stresses, bracing for corporate defaults in real estate, retail, and hospitality. Airlines, viewed as high-risk assets even in normal times, had become the “untouchable.” Standard risk models suggested pulling back, preserving liquidity, and waiting out the storm.
Yet, the domestic economy cannot function if its transport links and supply networks are allowed to fall apart. For the country’s oldest lender, Bank of the Philippine Islands (BPI), that crisis was a test of its core underwriting philosophy.
Cebu Pacific needed a restructuring package: a $250-million capital raise from international investors, ₱12.5 billion in convertible preferred shares, and a ₱16-billion long-term syndicated loan.
The problem was not just the size of the loan, but the mechanics of syndicated lending. In a high-risk environment, syndicate members rarely move first. Banks wait for a lead arranger to validate the borrower’s long-term solvency, structure the terms, and absorb the initial credit exposure.
“Nag hihintayan ang mga banks [The banks are waiting],” Gokongwei said. “Because who wants to be the first one to lend? But then BPI stepped up and said, ‘We’re gonna start the boat. We’re the arranger of this.’”
By agreeing to lead the syndicate and underwrite the debt, BPI gave the rest of the market the cover it needed to participate. The decision injected liquid capital back into the local carrier, allowing it to preserve its critical workforce, maintain fleet readiness, and ride out the prolonged period of mobility restrictions. When regional air travel eventually reopened, Cebu Pacific was positioned to restart flights immediately.
That single transaction shows how banking operates during a macroeconomic shock. When debt markets freeze, capital allocation stops being a purely quantitative exercise.
Anchoring stability through historical crises
The principle of maintaining support through economic cycles has been central to BPI’s strategy over its 175-year history. Founded in 1851 as the El Banco Español Filipino de Isabel II, the institution has navigated world wars, currency collapses, political transitions, and regional financial shocks.
“What allows an institution to remain relevant for 175 years?” BPI Chairman Jaime Augusto Zobel de Ayala reflected during the bank’s anniversary on Monday, Oct. 26. “Financial strength and the ability to adapt certainly matter, but I believe something more fundamental is at work—the trust that people place in an institution and the responsibility of keeping that trust.”
Zobel pointed to a lineage of executive leadership that shaped the bank’s modern footprint. When he assumed the chairmanship in 2004, succeeding his father, Jaime Zobel de Ayala (JZA), the bank was transitioning out of the 1997 Asian Financial Crisis era.
Under JZA and long-time executive Xavier P. Loinaz, BPI pursued an aggressive consolidation, acquiring smaller regional lenders to expand its national branch footprint while laying the early groundwork for core banking digitalization.
Subsequent leaders expanded that scope. Aurelio “Gigi” Montenola III broadened the bank’s operations into sustainable finance, bancassurance, and wealth management. Cezar “Bong” Consing later directed capital into digital infrastructure, investment banking, and capital market development—foundations that proved critical when the pandemic forced millions of retail customers and corporate borrowers onto digital channels overnight.
“BPI’s commitment to prudence, to integrity and to sound judgment has been tested through war and reconstruction, political and economic transitions, financial upheavals and more recently, a global pandemic,” Zobel noted. “This is the essence of stewardship... What we build and lead today, we hold on behalf of the generations that will follow.”
That long-term view directly informs how a balance sheet is managed during a downturn. In good economic times, liquid capital is cheap and readily available. In bad times, the ability to extend balance sheet capacity to important market participants requires an institution to hold significant capital buffers and execute rigorous long-term risk assessment.
Banking on trust, resilience, and future growth
For BPI Chief Executive Officer Jose Teodoro “TG” K. Limcaoco, the fundamental mechanics of commercial banking remain consistent, regardless of market shifts or technological disruption.
“When you look back over 175 years, it’s remarkable how much things have changed,” Limcaoco said. “And yet, the reasons people turn to banks are not different from what they were generations ago. People want a safe place for their savings. People want opportunities to grow their businesses. And people want the means to give their families a better life.”
Limcaoco noted that maintaining the bank’s credit distribution capacity during market panics relies heavily on the everyday execution of the bank’s frontline staff and credit officers. Evaluating risk when whole sectors are dark requires judgment that goes beyond standard financial metrics.
“Banking is not always easy,” Limcaoco noted. “Banking calls for some judgment, difficult decisions, and a deep sense of responsibility in the trust that has been placed in us.”
Looking ahead, the Philippines’ banking landscape is facing a rapidly changing competitive environment. Financial technology firms, digital-only banks, and decentralized payment rails are reshaping consumer expectations. Large portions of Filipinos remain underbanked, representing both a structural gap in the economy and a commercial growth market for institutions capable of scaling low-cost deposit and lending platforms.
“Millions of Filipinos still have limited access to formal financial services,” Limcaoco said. “Many entrepreneurs need the capital to move forward with the great opportunities they have to grow. And families across our country continue to look for more accessible and reliable ways to save, to pay, to borrow, and to protect their futures.”
Addressing those gaps will require ongoing investments in digital channels, credit scoring systems, and corporate lending. Yet as the 2020 aviation bailouts demonstrated, the primary asset of a systemically important financial institution is not just its digital network or branch footprint, but the capacity to deploy capital when liquidity dries up elsewhere.
“No one can predict exactly what banking might look like 25 years from now when BPI celebrates our 200th anniversary,” Limcaoco said. “But our story is not complete... for as long as there is an entrepreneur with an idea that needs capital, or a community that is recovering from a setback that needs support.”
The Bank of the Philippine Islands (BPI) broke the market deadlock by stepping up to lead and underwrite the critical debt syndicate. BPI's bold intervention provided the necessary market confidence and cover for other financial institutions to join the rescue.
A four-part report details Philippine Airlines' survival through the COVID-19 pandemic. Facing severe cash shortages and heavy debt from grounded flights, PAL initially relied on employee sacrifices, volunteer repatriation flights, and shareholder cash injections.
The airline successfully executed financial relief measures, including asset sales, lessor deferrals, and limited state aid. Finally, PAL navigated a U.S. Chapter 11 bankruptcy restructuring and local court filings, cutting liabilities while honoring employee benefits to secure its financial turnaround.
Parts one, two, three, and four can be read at those links.
During the COVID-19 pandemic, anthropologist Nice Marquez founded Hibla Philippines as a women-led social enterprise to support traditional weavers and seamstresses. The organization was created to provide skills development and livelihood opportunities for 14 indigenous and ethnolinguistic communities while actively documenting their traditional textile practices.
A blanket woven with intricate floral patterns is among the Philippine textiles on display at the Textile Museum of Canada in Toronto, where a new exhibition explores how fabric preserves stories of culture and identity.
Body & Head: Philippine Indigenous Blankets and Headscarves From the 20th Century and Beyond opened Oct. 28 and runs until Nov. 11, featuring traditional blankets and headscarves representing eight Indigenous and ethnolinguistic communities across the Philippines.
Presented in collaboration with Hibla Philippines and the Philippine Consulate General in Toronto, the exhibition examines how textiles reflect the histories, beliefs and everyday lives of the people who create them.
For Hibla Philippines founder Nice Marquez, the exhibition gives Filipino Canadians a chance to explore the Philippines’ diverse textile traditions and learn about the communities that have preserved them for generations.
“We’re more than the barong, we’re more than the Filipiniana,” Marquez said.
“We have so much more to present.”
Marquez founded Hibla Philippines during the COVID-19 pandemic as a women-led social enterprise supporting traditional weavers and seamstresses.
The organization currently works with 14 communities across the Philippines, providing skills development and livelihood opportunities while documenting textile traditions.
Marquez said preserving these practices involves more than maintaining old patterns.
Communities also need access to materials and equipment to continue producing their work.
In Negros Oriental, for example, cotton growers lack local facilities capable of processing harvested cotton into weaving yarn at scale.
According to the exhibition’s description of the Bayawan cotton weave, the fibre must be transported to the Department of Science and Technology’s Philippine Textile Research Institute in Metro Manila for spinning before returning to Negros for weaving.
The Toronto exhibition builds on Hibla Philippines’ previous collaboration with the Philippine Consulate General.
During a binakol weaving workshop in Toronto last year, organizers expected 12 participants but approximately 30 attended, prompting them to adjust the activities.
Marquez said the response reflected the interest among Filipino Canadians, particularly younger generations, in reconnecting with their cultural roots.
She hopes the exhibition encourages visitors to recognize the differences among weaving traditions across the Philippines.
“We forget that we’re an archipelago,” she said.
From the Inabel textiles of Ilocos to weaving traditions in Mindanao, different communities have developed patterns inspired by their surroundings and daily experiences.
Marquez said these designs also reveal the relationship between cultural heritage and the natural environment.
Patterns inspired by plants, animals and landscapes reflect the places where weaving traditions developed.
“Culture preservation is environment preservation, and vice versa,” she said.
For Filipino Canadians who may be more familiar with the barong or Filipiniana clothing, Marquez hopes the exhibition offers a starting point for learning about the country’s wider cultural diversity.
In addition to creating livelihoods during the crisis, Hibla Philippines works to ensure these weaving communities have the materials, equipment, and access needed to keep their heritage alive. This pandemic-born initiative ultimately led to international cultural collaborations, including the Body & Head textile exhibition at the Textile Museum of Canada in Toronto.
During the pandemic, business closures and job losses severely damaged the Philippines' productive capacity. Although GDP briefly rebounded, overall labor productivity fell below pre-pandemic levels.
The Philippines can no longer afford to mistake economic growth for economic transformation. The International Monetary Fund in 2024 reported that Philippine labor productivity remained below its prepandemic trend, while medium-term potential growth was revised downwards from 6.5 percent before the pandemic to 6.0-6.3 percent.
The 2024 Bangko Sentral ng Pilipinas study on total factor productivity (TFP) supports these findings, indicating that Philippine productivity was below its prepandemic level, with estimated TFP growth in 2022 ranging from -1.9 percent to 0.8 percent, depending on the trend estimate.
A critical question can be raised: Did the Philippines restore its productive capacity after the pandemic, or merely resume activity without rebuilding its foundations and making it resilient to external shocks?
The economy contracted by 9.5 percent in 2020, rebounded 7.6 percent in 2022, then slowed to 5.5 percent in 2023.
Yet, a recovering gross domestic product (GDP) does not necessarily mean a recovering productive potential. Growth has gone downhill since then.
During the pandemic, businesses closed, investment collapsed, workers lost jobs and firms’ accumulated knowledge, supplier relationships and production routines were disrupted.
These losses may have shifted the country’s production possibility frontier (PPF) inward, thereby reducing the economy’s productive capability.
As proof of this weakened productivity capability, the Asean+3 Macroeconomic Research Office initially reported that Philippine investment fell by about 34 percent in 2020 from the 2019 level. Pandemic scarring is later seen to have cut annual potential growth by an average of 1.69 percentage points from 2022 to 2024, with roughly two-thirds due to slower physical capital accumulation.
These losses compounded long-standing weaknesses. The Philippines has struggled to build a broad industrial base and move agricultural workers into higher value-added activities.
Consumption, supported partly by overseas Filipino workers’ remittances, stays central to domestic demand. Remittances are indispensable to households, but consumption cannot substitute for a productive economy generating technological progress, sustained productivity gains and better-paying jobs.
The strong GDP growth in 2022 offered an opportunity to rebuild the economy’s productive capacity. Instead of chanting growth, the government could have pursued a coordinated industrial strategy to restore investment, upgrade technology, develop skills and reconnect domestic suppliers to production networks.
Technology is central since machinery alone is insufficient. Productive capacity depends on firms’ ability to acquire, operate, adapt and improve technology, which decides whether investment raises productivity and enables more sophisticated production. Without it, the country risks being trapped in lower value-added activities despite participating in global markets.
A capability-driven industrial policy could have found and subsidized functionally upgraded industries that specialize in nonroutine jobs and produced incomes according to their ability to develop technological change, create domestic value and generate productive linkages.
To do this, public support must be conditional, transparent and time bound, tied to measurable improvements in productivity, technology adoption, workforce skills and export performance.
Crucially, these capabilities could have spread beyond large enterprises. Supplier development programs could have trained micro, small and medium enterprises to adopt technology, meet quality standards and become reliable suppliers to advanced firms.
Assistance could have been judged by capability improvements, not the number of beneficiaries. Investment, education, trade, innovation, development finance and infrastructure could have been coordinated to support this transformation.
Reforms beginning in 2022 required costly public investment, but wrong policies carried costs as well. Early intervention could have preserved viable enterprises, skilled workers and supplier relationships before deterioration made rebuilding harder. It could have accelerated productive investment and strengthened domestic firms before subsequent headwinds intensified.
A stronger industrial base would not have insulated the Philippines from global commodity price shocks, tighter monetary conditions or weaker external demand. However, more productive firms, diversified production and deeper domestic supply chains could have provided greater capacity to adapt, sustain output and protect employment. Better paid productive jobs would have strengthened household welfare and confidence.
Appropriate reform would necessarily have increased immediate government spending. Its potential advantage however, was lowering the longer-term cost of rebuilding lost capabilities while expanding the productive base from which future income and public revenue could grow.
This required disciplined support for viable firms, measurable performance targets, withdrawal of aid from persistent underperformers and safeguards against indiscriminate subsidies and corruption.
The pandemic did not cause all the structural weaknesses, but it exposed and deepened them. Not pursuing capability-building reforms decisively during the recovery left the country vulnerable to subsequent shocks and allowed further erosion of its productive potential.
The government must urgently move beyond managing the economy’s immediate pressures and commit to a disciplined industrial policy that builds productive capabilities, upgrades technology and diffuses them across domestic firms.
Every year of delay risks widening the gap between what the Philippines produces today and what a stronger industrial base could produce. Without decisive action, economic stagnation will no longer be merely a looming risk. It could become this administration’s defining legacy.
The post-pandemic recovery was misguided because it relied on consumer spending instead of industrial reform. Failing to rebuild these capabilities left the economy vulnerable to ongoing stagnation.
