GOVERNMENT revenue collections may fall by between P91 billion to P100 billion if disruptions caused by the coronavirus disease (COVID-19) drag on until June, with the budget deficit projected to balloon to as much as 3.6% of gross domestic product (GDP) this year, government economic managers said on Tuesday.
In a press conference following the Economic Development Cluster (EDC) meeting, Finance Secretary Carlos G. Dominguez III said the government’s borrowing program may be increased to plug the funding gap that is projected to widen this year.
“It’s financeable, and quite frankly, it is necessary. Despite these difficulties, we are not contemplating a reduction in our expenditures, our ‘Build, Build, Build’ will go full blast and so will all other programs of the government… and make sure the economy is humming along as it should,” Mr. Dominguez told reporters.
The government set a P3.49-trillion revenue collection target this year, alongside a P4.1-trillion expenditure program.
Socioeconomic Planning Secretary Ernesto M. Pernia said up to 1.2 percentage points could be shaved off this year’s gross domestic product (GDP) growth if the coronavirus outbreak drags on until yearend.
Earlier estimates by the National Economic and Development Authority (NEDA) showed GDP growth may be reduced by 0.5 to one-percentage point if the COVID-19 outbreak lasts until June. This would mean a lower full-year growth of 5.5-6.5% against the 6.5-7.5% official target.
Amid higher government spending, Mr. Pernia said fiscal deficit could hit 3.6% of GDP this year. This would be higher than NEDA’s initial estimate of 3.3-3.4%, but still above the 3.2% official budget cap.
Economists have suggested that higher government spending, particularly on infrastructure projects, will probably cushion the effects of the COVID-19 on the economy.
“It’s very (easy) for us to fund a P100 billion to cover the budget shortfall, that is not difficult at all… We assure you that we have enough in our toolkit to make sure that our expenditures are going to remain at what the plan levels are despite the fact that we might get a hit on our growth and revenues because of this COVID,” Mr. Dominguez added.
Mr. Pernia said the Development Budget Coordination Committee (DBCC) will review the official targets and assumptions when they meet later this month.
At the same time, Mr. Dominguez said the EDC recommended the approval of an additional budget worth P2.92 billion for the Department of Health (DoH), particularly for its “additional testing, augmentation of contact tracing and surveillance and additional personnel protective equipment for health workers at the national and local levels.”
The Finance chief said the additional funds for the DoH will be sourced from both foreign and domestic lenders. He said the Philippines, as a borrowing country, is at an advantage at a time of declining interest rates.
Asked if the economic team will release a “stimulus package” to boost growth and help affected sectors mitigate the impact of the outbreak fallout, Mr. Dominguez said: “as of now, we see the stimulus program as being just keeping our expenditure budget where it is despite the fact that our revenue is going down, so that in itself is already stimulus package.”
On food prices, Mr. Pernia said they expect month-on-month inflation rate to accelerate by 0.1-0.2 percentage points due to “supply disruptions in arrival of China-dependent food imports.”
In that same briefing, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila, Jr. said remittances sent home by overseas Filipino workers (OFWs) could also decline by 0.2 to 0.8 percentage points amid temporary ban on deployment of workers to China, Hong Kong, Macau and Taiwan. A three percent remittance growth target for this year was set prior to the COVID-19 outbreak.
Meanwhile, Labor Assistant Secretary Dominique Rubia-Tutay said 47 establishments with 4,416 workers nationwide have implemented flexible work arrangements while 19 businesses with over 300 workers have temporarily closed to cope with COVID-19 outbreak.
“Temporary displacements are coming from Regions 3, 6, 7, and 12, with Region 6 reporting the highest number of covered local workers affected, and also followed by Region 7. There are also OFWs, 734 who have been displaced particularly in Macau, some of them have been terminated while some are undergoing unpaid leave,” Ms. Tutay said. — Beatrice M. Laforga