The House of Representatives on Friday approved on third reading a measure providing P1.5-trillion for infrastructure projects over three years, intended as a program to minimize unemployment.

However, the executive branch weighed in by saying that such amounts cannot be funded without new sources of revenue, and expressed hopes for a reduced package when the legislation is reworked in bicameral session.

With 210 affirmative votes, seven negatives and no abstentions, House Bill No. 6920, the “COVID-19 Unemployment Reduction Economic Stimulus (CURES)” Act of 2020 has hurdled the chamber. It is intended to address workers displaced by the coronavirus disease 2019 (COVID-19) crisis.

The bill will establish a special fund focused on infrastructure projects in key priority areas, such as health, education,aAgriculture, local roads and infrastructure, and Livelihood.

It will appropriate P500 billion annually for three years, which Congress may later extend, modify or terminate.

“Infrastructure projects would include barangay health centers, municipal and city hospitals, digital equipment for COVID-19 testing, telemedicine services to post-harvest facilities, trading centers, and farm-to-market roads,” Majority Leader and Leyte Rep. Ferdinand Martin G. Romualdez said during the session.

The bill was one of the anti-COVID-19 measures approved by the chamber before it adjourned on June 5, which also includes the P1.3 trillion Accelerated Recovery and Investments Stimulus for the Economy of the Philippines (also known as the proposed ARISE Philippines Act).

ARISE Philippines focuses on protecting workers, including those engaged in micro, small and medium-sized enterprises.

Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the government has no funds to support stimulus packages pending in the House and Senate.

“We are in discussion with the congressmen that such an amount would not be fundable because any supplemental budget or standby appropriations would require new revenue sources and that is very limited and financing or borrowing is not a revenue source,” Mr. Chua said in an online briefing on Friday when asked if the stimulus bills, amounting to around P1 trillion, proposed in both chambers of Congress can be funded.

“They will have to meet in the bicam to address those concerns,” he added. — Charmaine A. Tadalan

The Department of Budget and Management (DBM) said the 2020 infrastructure spending target has been reduced to P833 billion from P989 billion to account for funding realignments to contain the pandemic, though 2021 spending plans have been expanded to stimulate growth.

Budget Undersecretary Laura B. Pascua told BusinessWorld that the new infrastructure spending target for 2020 is estimated to be equivalent to 4.6% of gross domestic product (GDP).

The P883-billion target represents an increase from the estimates of P728.1 billion in early May and P800.6 billion in March, after a consensus hardened withn the economic team to protect infrastructure from further cuts in order to help revive the economy.

The new target remains lower than the P1.05 trillion spent in 2019.

In 2021, the infrastructure spending target is P1.131 trillion or 5.3% of GDP, according to a statement issued late Thursday by the Budget department.

The expanded infrastructure program for 2021 is expected to account for 0.9 percentage points of GDP next year.

GDP this year is still officially projected to contract by 2-3.4%.

The projected economic growth range for 2022, meanwhile, was lowered to 6-7% from the 7-8% estimate given previously.

The Development Budget Coordination Committee (DBCC) approved on May 27 the new projections and fiscal program , revising some of estimates made on May 12.

The DBCC increased the budget for infrastructure next year “to push the completion of a number of major flagship projects for 2021 and 2022,” which are estimated to create 140,000-220,000 additional jobs both directly and indirectly.

It also proposed a higher cash-based budget ceiling for next year of P4.335 trillion, or 20.2% of GDP.

“The higher proposed cash-based budget for next year aims to support the ‘Build, Build, Build Program’ to help stimulate economic growth. With higher infrastructure investments, the country’s recovery from the COVID-19 pandemic can be better assured by generating more jobs in 2021,” it said.

The DBM said the higher 2021 budget will support programs, activities and projects that will improve the country’s capacity to respond to the coronavirus pandemic by boosting the health system, ensuring food security, digitize government transactions and assist communities to adapt to the “new normal.”

“The FY 2021 budget will also give priority to crucial and shovel-ready infrastructure projects that will promote better health services, ease of transportation and mobility of essential goods, as well as IT infrastructure that will lead to the establishment of an ICT-enabled government,” it said. — Beatrice M. Laforga

The clock ran out on the Senate to approve a measure that will immediately reduce the corporate income tax to 25% from 30%, with Senators entering the adjournment promising to pass the legislation in August.

In a joint statement issued by the Senators late Thursday, the chamber said it will resume in July deliberations on the revised version of Senate Bill No. 1375, now known as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.

“You also have our word that we will take up the bill upon the resumption of the session in July and work to pass it by the month of August,” they said.

The bill was among the chamber’s priorities along with the proposed Bayanihan 2 Act, which extends the special powers granted to President Rodrigo R. Duterte to address the coronavirus crisis.

The bill, however, failed to obtain Senate approval before Congress adjourned on June 5.

“We endeavored to pass CREATE with a mind for urgency,” the senators said.

“We regret, however, that we were unable to tackle this before the sine die adjournment… given the lack of material time, along with the pressing need to deliberate a plethora of other equally important national measures.”

The bill is the revised version of the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA). The new version accelerates the reduction in CIT to 25%.

This will further be reduced by 1 percentage point annually beginning 2023 until 2027. The CITIRA version of the bill proposed to gradually reduce the rate until it reaches 20% in 2029.

The new version will also extend the sunset period for enterprises enjoying incentives to four years from the 2-7 year period under CITIRA.

House Ways and Means Committee chair and Albay-2nd district Representative Jose Ma. Clemente S. Salceda has renewed his call for a special session to tackle CREATE as well as the proposed Accelerated Recovery and Investments Stimulus for the Economy bill, in light of the increasing job losses.

Mr. Salceda said the stimulus package is expected to generate 1.5 million jobs, while the proposed tax measure will create 1.1 million jobs over the next five years.

“We will also need to pass CREATE soon. I asked the President to call for a special session of Congress to get these bills passed, and I reiterate that request,” he said in a statement.

Finance Secretary Carlos G. Dominguez III and Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua are both considering recommending a special session to tackle COVID-19 measures.

“We are in discussions with the Office of the President,” Mr. Dominguez told reporters in a phone message Friday.

Mr. Chua said the economic team will seek guidance from the President as it prepares its recommendations on the stimulus package. — Charmaine A. Tadalan

Moody’s Analytics said it expects the Philippine economy to contract 1.8% in 2020, assuming no coronavirus second wave late in the year.

“[I]n our judgment the peak of the last economic expansion was January 2020, with the nadir of the recession in May 2020,” Mark Zandi, chief economist at Moody’s Analytics said in a report, “Handicapping the Paths for the Pandemic Economy” issued Friday.

The report contained an updated outlook for the Philippine economy in 2020 to a contraction of 1.8%, against a growth estimate of 4.9% issued in March. Before the outbreak, Moody’s Analytics had a base-case forecast of 6.9% growth in January.

The revised forecast is more upbeat than the 2% to 3.2% contraction in GDP expected by the government’s economic managers. First quarter GDP came in at minus 0.2%, the first contraction since the 3% drop in 1998 during the Asian Financial Crisis.

In 2019, the economy grew 6%.

According to Mr. Zandi, near-term recovery will depend on how quickly demand returns.

“This in turn depends on the collective psyche of businesses and consumers, and their willingness to invest and spend,” he said.

The Philippines is slowly easing restrictions, with parts of the country transitioning to more permissive forms of quarantine starting June.

Mr. Zandi warned that the pandemic may have caused long-term damage to the global economy.

“Even when the pandemic is over – after an effective vaccine or therapy for the virus is widely distributed and adopted – the global economic recovery will not be a straight line forward. There has already been too much structural damage to the economy,” he said. — Luz Wendy T. Noble

The government remains on track to hit its target poverty rate of 11% by 2022 despite “temporary” setbacks in poverty-reduction efforts due to the economic fallout of the pandemic.

National Economic and Development Authority (NEDA) Acting Secretary Karl Kendrick T. Chua said Friday that the poverty rate is expected to increase due to the pandemic but there remains a “strong chance” poverty will hit target levels in the next two years.

“Given the virus, and the pandemic, (poverty) is expected to go up but there are many indications that this is only temporary, and we have a strong chance to still hit the targets that NEDA has set forth, the new targets, around 11%,” Mr. Chua said at an online briefing.

The government’s economic team adopted in January a more ambitous poverty-rate target of 11% by 2022, after actual poverty incidence dropped to 16.6% in 2018 from the revised 23.3% in 2015. The recent poverty gains mean 5.9 million Filipinos have recently emerged out of poverty.

He said more parts of the country have relaxed their lockdowns to more premissive general community quarantine, indicating that more local economies are opening up.

He said poor in the rural areas were not severely affected by the pandemic and farmers continued to plant and sell their produce as markets for food remained active, supply chains were “not disrupted” and inflation remained low.

“So there is no supply problem… and I think, that is a good sign,” he said.

The poor segment of the population in the National Capital Region is estimated at 1.8% of the total, significantly lower than 30.15% in the rest of Luzon, 23% in Visayas and 45.1% in Mindanao, according to the 2018 Family Income and Expenditure Survey.

He said the increase in underemployment to 18% was not significant and still relatively low due to the subsidy programs rolled out by the government.

Underemployment is defined as those holding jobs who are seeking more work

“The combination of all these factors suggest that there might be a temprorary deterioration of poverty but I think given the policies in place, we are on track to still further improve our poverty numbers,” Mr. Chua added.

The jobless rate surged to 17.7% in April, equivalent to 7.25 million unemployed, against 5.1% a year earlier, when around 2.27 million were unemployed. This meant roughly five million lost their jobs when the lockdowns were in full force.

NEDA Undersecretary Rosemarie G. Edillon said at the briefing that despite the setbacks, measures are in place to gradually restore the five million jobs lost.

“We are coming up with concrete measures at the very least to get back, hopefully, 5 million (jobs),” Ms. Edillon said.

She said there are short-term opportunities for the jobless once the global supply chains normalize, pointing to more work becoming available in the electronics sector. — Beatrice M. Laforga

THE Philippine economic recovery is expected to lag the region due to its poor performance in containing the coronavirus outbreak, Oxford Economics said.

In a Research Briefing issued Friday, Oxford Economics said some Asia- Pacific countries are “moving in the right direction” while others like the Philippines are in a “more precarious” situation.

“We expect other APAC countries, that have made less progress with COVID-19 containment, to lag the upturn,” according to the briefing note, “Asia Pacific: Mixed progress towards recovery from COVID-19.”

It said the Philippines “has been struggling” after recording a growing number of cases.

The note updates a May 12 report in which Oxford Economics concluded that countries that had “convincingly contained” the COVID-19 outbreak could see workplace mobility bouncing back close to normal levels, or would “move in that direction.”

“We expected these economies to lead the economic recovery,” it said, noting that economies where workplace mobility is picking up as restrictions eased include China, South Korea, Taiwan, Hong Kong and Vietnam while those “moving in that direction” are Australia and Thailand.

“The situation is more precarious elsewhere. After having reported a relatively low number of new daily cases for a long time, the Philippines has been struggling with sharply rising caseloads since late May,” it said.

It said the “200-300” daily cases were “relatively modest” laregly due to the strict lockdown in Luzon while the spike in new cases reported by the end of May could be partly due to easing lockdown restrictions earlier that month in some parts of the country.

“The government has also ramped up both its testing capacity and the actual number of tests carried out,” it said.

“The path to sustainable economic recovery is thus more challenging and exposed to risks in these four countries,” it said, saying that the outbreak has not yet been contained in Singapore and Indonesia while infections continue to rise in India as well as in the Philippines. — Beatrice M. laforga