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Deficit rise from new Bayanihan ‘affordable’ (Sabong News)

Deficit rise from new Bayanihan ‘affordable’
Author Jovee Marie de la Cruz
Date MAY 24 2021
AS plenary debates on House passage of the third Covid-19 response package open this week, an economist-lawmaker has argued that the government can afford to ramp up its deficit spending to fund the proposed P405.6-billion Bayanihan 3. In an interview, House Committee on Ways and Means Chairman Joey Sarte Salceda admitted that the country’s  projected deficit will increase more or by .2 percent with the passage of the Bayanihan to Arise as One Act, or Bayanihan 3. Still, Salceda said Bayanihan 3 is more fiscally responsible than past supplemental funding measures. “I think adding .2 percent to the current [projected] deficit is very reasonable. We can afford it because it’s for the people,”  Salceda said. “It is reasonable to fund health, regulatory and fiscal interventions that can help the country’s recovery from the impact of the Covid-19 pandemic,” he added. The House tax panel chairman, however, emphasized the need to keep an eye on the country’s finances. “I nonetheless reiterate the need for continued fiscal vigilance as the Philippines is already at the front end of the pack for deficit spending in Southeast Asia. Although we can accommodate some expansion in deficit spending coming from a low pre-pandemic debt stock (with an all-time low of 39.6 percent of GDP in 2019), deficit spending should not be a substitute for full recovery through an effective national vaccination strategy and a safe reopening of the economy,” he added. The committee report on Bayanihan 3 is expected to be approved Monday (May 24) at the House Committee on Economic Affairs. It will be immediately endorsed to the plenary for approval. Earlier, the Development Budget Coordination Committee (DBCC) adjusted upwards its projection for the country’s deficit-to-GDP ratio this year to 9.4 percent from 8.9 percent previously as it now expects disbursements to reach P4.74 trillion, higher than its previous estimate of P4.66 trillion. The rise in disbursements for this year is mainly due to funding requirements to support Bayanihan  II, including the procurement of Covid-19 vaccines, among others. Revenue collection for this year is still expected to hit P2.88 trillion. Finance Secretary Carlos G. Dominguez III earlier expressed concern on the projected rise in the country’s fiscal deficit. To fund this supplemental social support, the finance chief said the fund can be sourced from savings in the 2020 national budget and additional dividend remittances from government-owned and -controlled corporations (GOCCs). Last Friday, Treasury Director Dominick Mariano said the BTr is ready to issue a certification of availability of fund for the Bayanihan 3, but “we can only certify if there’s any excess revenues or if there is corresponding new revenue sources.” The P405.6-billion Bayanihan 3 is divided into three phases. Phase 1 would amount to P167 billion, Phase 2 with P196 billion and Phase 3 with P42.6 billion. Bayanihan 3 has a revenue provision in Section 34, which authorizes the Bangko Sentral ng Pilipinas (BSP) to make additional direct provisional advances with or without interest to the national government. These direct advances would be used to finance expenditures, which are authorized by law, to address the Covid-19 situation in the country. Section 35 of the bill would also mandate some government-owned and -controlled corporations (GOCCs) recommended by the Joint Executive-Legislative Bayanihan Council to increase their dividend remittances to help fund appropriations of the proposed measure. Other sources of revenue include the capital withdrawal from “obese” GOCCs, e-sabong and Philippine Offshore Gaming Operations taxes.

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