COVID-19 lockdown extension plus budget limits equals scramble for funds
The government is scrambling for more money to fund COVID-19 response amid uncertainty when the pandemic will be contained, which was made worse by budget constraints that persist despite the need to keep the poor and displaced workers from starvation during the new lockdown extension.
Budget Secretary Wendel E. Avisado on Friday (April 24) said that of the P397 billion in realigned funds from the 2020 national budget and 2019 continuing appropriations, P352 billion was already spent on social amelioration programs and workers’ wage subsidies.
“There’s only very little left,” Avisado said, speaking in Filipino.
If a second wave of COVID-19 infections swept communities, more money would be needed and this could come from supplemental budget for 2020, he added.
But Avisado told the Inquirer that the Department of Budget and Management (DBM) cannot pitch for supplemental appropriations to Congress just yet because the Department of Finance (DOF) was still collecting additional funds.
The DBM earlier ordered all government entities in the executive branch to tighten their belts and defer non-essential spending to generate savings.
The DBM had also included “for release later” items—legislators’ realignments worth at least P80 billion in the P4.1-trillion 2020 national budget for their pet projects—in the savings pool.
Finance Secretary Carlos G. Dominguez III said that the P352 billion spent so far had been partly from tax collections, which were also declining due to the ill effect of the pandemic on businesses, trade and industries.
Also delaying collection of much-needed taxes was the string of deadline extensions for filing and payments that went with extended lockdowns.
Since the enhanced community quarantine (ECQ) was further extended in many parts of the country on top of general community quarantine (GCQ) imposed elsewhere until May 15, Internal Revenue Deputy Commissioner Arnel S.D. Guballa told the Inquirer that the BIR was “now doing the necessary adjustments to align with the IATF’s [Inter-Agency Task Force on Emerging Infectious Diseases] pronouncement.”
Dominguez said the balance of financing COVID-19 needs was being funded by loans from multilateral lenders like the World Bank and the Asian Development Bank (ADB).
This week, the Washington-based World Bank approved a $100-million loan for the Department of Health’s (DOH) COVID-19 response, while the Manila-based ADB on Friday gave the go-ahead for $1.5 billion in budgetary support for programs and projects to fight the disease.
The government planned to borrow an additional P310 billion from foreign lenders to augment COVID-19 funds on top of the programmed record-high P1.4-trilion borrowings in the 2020 budget to finance a widening deficit of P990.1 billion, equivalent to 5.3 percent of gross domestic product (GDP).
In March, Cabinet-level Development Budget Coordination Committee (DBCC) projected total tax and non-tax revenues this year to reach P3.173 trillion, just slightly up from P3.138 trillion in actual collections in 2019, Budget Undersecretary Laura B. Pascua said.
Spending on public goods and services in 2020 was expected to jump to P4.163 trillion from P3.798 trillion last year, Pascua added.
“So far, we have sufficient cash but we’re restricting on our budget allowance,” Dominguez said.
“That’s our problem now—we have cash but we don’t have authority to spend that much,” he said.
As such, Dominguez said that the government was prudently spending money, targeting financial assistance only at those who need it the most.
The government was nonetheless reserving budget funds for infrastructure projects in its ambitious “Build, Build, Build” program, which Dominguez said will create jobs and business opportunities after the lockdown.
At a recorded address to the nation on Friday morning, President Rodrigo Duterte again said that the government may have to sell prime properties such as the Cultural Center of the Philippines (CCP) along Roxas Boulevard when funds get depleted.
But Dominguez reiterated that “we have not reached the point at which we are considering sale of major government assets.”
Dominguez said that the economic team will revisit its 2020 GDP projections in light of the 15-day lockdown extension.
Earlier DBCC projections showed GDP posting zero growth or contracting by up to 1 percent this year, as the lockdown froze nearly all economic activity.
Edited by TSB
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