Economic team preparing to fund aid for prolonged lockdown

ECONOMIC MANAGERS are studying sources of funds for a fresh cash aid program in the event that the lockdown imposed on the capital region and nearby provinces is extended once more or expanded to more areas.

Budget Secretary Wendel E. Avisado confirmed that the economic team is studying funding for another round of cash aid if called on to do so in a third stimulus bill.

Budget Undersecretary Laura B. Pascua has said that the Development Budget Coordination Committee (DBCC) approved a new cash aid program but did not authorize a breach of the deficit cap, set at the equivalent of 8.9% of gross domestic product (GDP).

Mr. Avisado made the remarks at the Kapihan sa Manila Bay forum Wednesday.

Mr. Avisado said possible funding sources are realigned agency budgets, the early remittance of dividends from government-owned and -controlled corporations (GOCCs), and other sources that can be tapped by the Department of Finance (DoF).

The proceeds will support another stimulus bill following the passage of the Bayanihan I and II laws last year, but added that the size of the aid program will be subject to funding availability.

“What about the other regions who may yet to experience the same kind of reclassification later on (who were not given the P1,000 cash aid). That’s the thing we’re also preparing for and by then, we would be needing the assistance of Congress for an enabling law similar to Bayanihan I and II,” he said.

“We’re trying to really look at what would be the approximate amount the DoF can raise and those that we can also gather from available funds from various National Government agencies to help finance a Bayanihan III law,” he added.

GOCCs remitted a combined P21.44 billion worth of dividends to the Treasury in the first quarter as state-owned firms remitted their dividends ahead of schedule.

The DoF last week raised the equivalent of P24 billion from a three-year Samurai bond issue and is planning to tap the US bond market soon before rates rise.

Mr. Avisado said the economic team is also working on an Executive Order that will instruct agencies to reduce nonessential expenses, similar to instructions issued last year.

Much of the redirected funds are likely to come from budgets for maintenance and other operating expenses, including money for travel and seminars, as well as the cancellation of programs not yet implemented.

Mr. Avisado said funds for the flagship Build, Build, Build program will not be reduced because infrastructure projects are deemed important in driving the economic recovery. The government budgeted P1.2 trillion for infrastructure projects this year, out of an overall P4.5-trillion spending plan.

He said the overriding goal is to keep the sovereign credit rating in the middle of the pack in the region, in order to keep borrowing costs low.

“We are also very much concerned about our capability to ensure that our economy gets going. It cannot just be that we’re putting all our energies into health but (strike a balance) to ensure that our economy is still moving ahead,” Mr. Avisado said.

The lockdown in Metro Manila, Bulacan, Cavite, Laguna and Rizal was extended for another week to April 11 after daily coronavirus cases surged past the 10,000 level. A further extension of the enhanced community quarantine is unlikely and restrictions in these areas will likely be eased next week, the Palace has said.

Economic managers expect the two-week lockdown to have set back GDP growth by about 0.8 percentage points, to below the official projected range.

The DBCC has set a 6.5-7.5% growth target for this year and projected 8-10% growth in 2022. The economy contracted by a record 9.5% in 2020 as the Philippines implemented one of the world’s longest and strictest lockdowns. — Beatrice M. Laforga