THE current account surplus strengthens the argument for the government to mitigate the impact of the economic crisis by spending more, according to Representative Jose Ma. Clemente S. Salceda, chairman of the House Ways and Means Committee.
Mr. Salceda made his remarks in a statement issued in response to an economic bulletin released by the government showing a current account surplus of $8.7 billion, equivalent to 2.4% of gross domestic product, for the first nine months of 2020.
Mr. Salceda said a large current account surplus indicates a tendency to save rather than invest, which he called a “troubling sign” during an economic crisis.
“If we don’t induce firms to invest more by ramping up government spending, we’re in for extended economic sluggishness,” Mr. Salceda said, noting that the government must step in when this happens and engage in a bout of “countercyclical” spending.
The current account balance was in deficit last year but turned positive due to a slump in import demand. As a result, the peso strengthened from its end-2019 level of P50.8 to the dollar to around the P48 level.
“There is this misguided notion that having fewer imports than exports, and having more savings than investment, is always a good idea. Not during a demand-side crisis. And certainly not in our stage of development, where we need high-value goods and services to jumpstart new industries,” Mr. Salceda, who also chairs the House economic recovery cluster, said.
Mr. Salceda said a third stimulus package, or Bayanihan III, is needed to put money in people’s pockets. “Supply will follow if people have the money to spend on things,” he said.
Mr. Salceda said the extension of the validity of funds authorized under Republic No. 11194 or the Bayanihan to Recover as One Act (Bayanihan II) would give the country a chance to “redeem” itself by providing an opportunity to spend the funds allocated.
“The principle should be simple: Spend quick. Spend wisely. Spend enough,” he said.
Two versions of Bayanihan III legislation have been filed in the House.
Mr. Salceda’s House Bill (HB) No. 8059, or the proposed Bayanihan to Rebuild As One Act, allocates P247 billion for emergency response and economic recovery programs.
HB No. 8031 or the proposed Bayanihan to Arise as One Act, which was filed by Marikina Rep. Stella Luz A. Quimbo, provides for an additional P400-billion stimulus package incorporating recovery programs for parts of the country hit by typhoons late this year. — Kyle Aristophere T. Atienza