By Beatrice M. Laforga, Reporter
THE Philippine government has set aside $23 billion (P1.165 trillion) so far for its battle against the coronavirus disease 2019 (COVID-19) pandemic, but Finance Secretary Carlos G. Dominguez III said they have “a lot of headroom” to spend more.
On Wednesday, the Finance chief said the economy will likely post flat growth or even shrink by as much as 0.8% this year, as economic activities in Luzon remain at a standstill due to the Luzon-wide enhanced community quarantine that will last until April 30.
He said $6 billion (P304 billion) has already been allotted to assist the “most vulnerable” sectors, while the bulk of the funds, $16.4 billion (P830.272 billion), will go to programs that will “support the economy.”
“To support the most vulnerable in our communities… We have allocated a total of $6 billion for that. We are then also allocating $650 million (P32.905 billion) to the frontliners and [to] supporting the battle against the virus. And finally, together with our monetary authorities, we have allocated $16.4 billion for support of the economy, so the total value is about $23 billion so far, or between five and six percent of the GDP,” he told CNBC.
To fund this, Mr. Dominguez said the government is negotiating $5.7 billion worth of loans from multilateral lenders including the World Bank, the Asian Development Bank and the Asian Infrastructure Investment Bank.
The Finance chief said the government might see its debt stock jump to at least 46% of GDP amid higher borrowings, from its record-low level of 41.5% in 2019.
“Our debt to GDP is only 41%. This is down from over, above 54% 10 years ago. So we have a lot of headroom. Right now, we probably will increase this debt-to-GDP ratio to slightly over 46% in view of this crisis,” he explained.
Under Republic Act No. 11469, or the Bayanihan to Heal as One Act, the President can realign budgetary allocations into COVID-19 efforts.
At least P100 billion in dividends from government-owned and -controlled corporations (GOCCs) will also be used, although Mr. Dominguez said the government can also tap commercial markets to plug the funding gap.
“Our original funding was really for two months. While we were not sure how long the COVID will last, we think the estimate would be until around the end of May. So we are ready until the end of May,” he said.
While there are no immediate plans to raise taxes, Mr. Dominguez said the government may consider new taxes “in a year or two.”
Meanwhile, the government may also seek the approval of Congress for a bigger budget this year, which is set at P4.1 trillion, as well as for 2021, which is initially programmed at P4.586 trillion.
“We will be putting together a comprehensive package, and it is likely that we will go to our Congress to seek a higher budget for the rest of the 2020 if needed, and most likely for 2021,” he said.
Currently, the economic team is assessing the impact of the lockdown and health crisis which will help them craft a “bounce back plan” for the economy. Mr. Dominguez said this will help them determine the aid they can provide to different sectors.
“We are projecting a zero to possibly 0.8% negative growth this year. Definitely businesses are impacted, especially businesses in the tourism sector, as well as the retail sector,” the Finance chief said.
The estimated 0.8% contraction in gross domestic product (GDP) is lower than -0.6% to 4.3% growth range by the National Economic and Development Authority (NEDA), prior to the extension of one-month lockdown until April 30.
NEDA last month said the low-end of its growth estimate for this year, a contraction of 0.6%, is “still too high” if the ECQ is extended beyond one month “or if the spread of COVID-19 is unabated even after the ECQ.”
Mr. Dominguez said the government’s tax collections will certainly be lower than the programmed P2.576 trillion, but assured that “these are things that we can finance.”
“Our economy has been growing steadily for the last 10 years at an average of 6.3%. Our revenues to GDP is highest since 23 years, it’s at 16.9% now. Our inflation rate is 2.5% and our debt to GDP is only 41.6%. Now we have a lot of room to maneuver here,” he said.
“The policies of the President have left us with ample fiscal headroom. And we are now responding very quickly to this coronavirus.”
Nearly P10 billion worth of cash assistance will be given out to poor families in Metro Manila covered by the social amelioration program (SAP) this month, the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF-EID) said.
IATF spokesperson and Cabinet Secretary Karlo Alexei B. Nograles said the Department of Social Welfare and Development (DSWD) National Capital Region has already facilitated the disbursement of checks to be released for the month of April.
The cities that have received the checks are:
– Quezon City, P3.02 billion;
– Caloocan, P1.72 billion;
– Manila, P1.48 billion;
– Pasig, P750.93 million;
– Taguig, P739.97 million;
– Parañaque, P621.39 million;
– Marikina P449.88 million;
– Muntinlupa, P430.68 million; and
– Mandaluyong, P368.37 million.
Around 18 million families affected by the COVID-19 crisis will receive cash subsidies ranging from P5,000 to P8,000 a month, for April and May.
Meanwhile, a legislator is proposing a P1-trillion stimulus package for the government to continue its “social and labor amelioration assistance and to provide a lifeline for distressed businesses.”
“In a telephone conversion today (April 8) with Secretary Ernesto (M.) Pernia of the National Economic Development Authority (NEDA), we agreed that not only micro, small and medium enterprises (MSMEs) need assistance but also major corporations like airlines, shipping, land transport, hotels, export firms, and manufacturers, among others, need lifelines to recover and stay afloat,” Albay Rep. Edcel C. Lagman said in a statement Wednesday.
He added that the package will include assistance to vulnerable families, displaced workers and households belonging to the middle class.
Mr. Lagman noted that the funding for the P1-trillion stimulus can be sourced from the following: monetization by the Bangko Sentral ng Pilipinas (BSP) for budget support of an allowable portion of the country’s foreign reserves; issuance of bonds by the Bureau of the Treasury (BTr); extension and expansion of the “Tax Amnesty Act” or Republic Act 11213; grant of tax credit or special tax discounts for advance tax payments; and sale of government assets.
Other sources of funds also include the advances of dividends due to the national government from GOCCs; additional contributions from the Philippine Amusement and Gaming Corp. (PAGCOR) and the Philippine Charity Sweepstakes Office (PCSO); savings from the 2019 and 2020 General Appropriations Acts (GAAs); and reduction in personal services (PS). — with Genshen L. Espedido and GMC