ECONOMIC managers warned of the need for prudence in the use of emergency funds to stretch them out for the long haul because the pandemic’s continuing effects on the economy cannot be foreseen.
Finance Secretary Carlos G. Dominguez III said the Philippines’ solid fiscal position does not mean that its financial capacity is “inexhaustible” and called for “prudent” management of the emergency funds during the coronavirus disease 2019 (COVID-19) outbreak.
“The President’s fiscal policies since the start of his administration… vastly improv(ed) our revenue flows. (We have also been) very judicious with expenditures and investments, (placing) us in a good position to meet the financial challenge posed by COVID-19,” Mr. Dominguez told reporters in a Viber message on Tuesday.
“We must realize, however, that we do not know how long this contagion will last and that our funds are not inexhaustible. We must therefore prudently marshal our resources and prepare for all eventualities,” he added.
President Rodrigo R. Duterte said in a televised speech late Monday that the P270 billion in budget realignments authorized for dealing with the emergency might not be enough.
Mr. Duterte said the government has been tapping its resources and ordered the Finance department to source additional funds before government reserves are depleted.
“The economy is not moving, standstill, so wala tayong kita. Ang ginagamit natin ito na ‘yung nireserba natin na pera (We don’t have income; what we are using is our reserves),” he said.
“I would like to be honest… P270 billion for two months as they are estimated, hindi talaga tatagal ‘yan (it will not last),” he added.
Finance Assistant Secretary Maria Teresa S. Habitan said the Finance and the Budget departments are still evaluating how much will be needed to roll out all programs under Republic Act. No. 11469 or the Bayanihan to Heal As One Act, and which budgets will be realigned.
Ms. Habitan said economic managers cannot provide specific figures on the funding needed as the estimates are still “moving numbers” but they assured that the P200 billion for cash aid to low-income families is already in place.
“What we are doing is costing the Section 4 provision of the Bayanihan Act and working with DBM to find how much is required by the Bayanihan Act to be implemented properly,” she said via phone yesterday.
She said assessments are focusing on the scope and volume of the economic package that will be provided to aid micro, small and medium-sized enterprises (MSMEs) affected by the lockdown, which may include credit guarantees.
Despite the setbacks and budget limitations, Mr. Dominguez said the administration is still keen on maintaining its flagship Build, Build, Build program “which will help our economy recover quickly” after the pandemic.
UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the government could spend as much as P1.1 trillion on relief and recovery if it allows the budget deficit to hit 7% of GDP (gross domestic product).
“Economic managers (have said that) that the economy can carry about a budget deficit of up to 7% of GDP. So using GDP 2018 at $331 billion (P16.7 trillion at $1 to P50.65), the government can spend up to PhP1.1 trillion to potentially address the negative effects of COVID-19 on the economy and society,” Mr. Asuncion said via e-mail.
In separate interviews with ABS-CBN News Channel (ANC) earlier, central bank Governor Benjamin E. Diokno said the government can manage a 5-6% deficit equivalent to 5-6% of GDP this year while former economic planning secretary Cielito F. Habito said the economy can briefly handle a deficit of as much as 7% of GDP.
“What we need now to do is meet the emergency needs because we also have possible social upheaval if we don’t meet the needs of our people who are suffering the most on this lockdown and coronavirus itself. A 7% deficit GDP ratio would be acceptable (but) we don’t want to stay at that level for too long,” Mr. Habito said.
Mr. Dominguez has said the government is planning to tap multilateral lenders for up to $2 billion worth of financial support to fund the government’s programs against COVID-19.
So far, the Asian Development Bank has provided an $8-million grant and pledged another funding package worth at least $1.6 billion for the Philippines, while the World Bank committed to extend a $100-million loan. — Beatrice M. Laforga