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Philippines: No funds for economic stimulus bills — NEDA
MANILA, Philippines — The executive branch yesterday stood its ground that the economic stimulus packages proposed by Congress – including the P1.3-trillion ARISE Philippines bill – cannot be funded in the absence of new revenue sources.
The House of Representatives passed on third reading last month the Accelerated Recovery and Investments Stimulus for the Economy of the Philippines (ARISE Philippines), designed to help the economy recover from the pandemic in four years by providing wage subsidies, cash-for-work programs, zero-interest loans for companies, and loan guarantees for banks.
Speaking during the virtual hearing of the House committee on economic affairs yesterday, acting Socioeconomic Planning Secretary Karl Chua said funding this stimulus measure would need additional sources of revenue which the government does not have right now.
Funding the measure will also breach the spending limit of the national government.
“If we are going though the route of a supplemental budget or stand-by appropriation, it is our view that these can only be provided by new revenue sources or additional revenue source. And we think that is not likely,” said Chua when asked by bill’s principal author, Marikina 2nd district Rep. Stella Quimbo about any reservations by the executive branch on the bill.
“We have actually used that provision to fund Bayanihan 1 and we have some more additional revenue left for Bayanihan 2. But we also have to rely on the use of savings in the current budget and to reallocate priorities so we are within that ceiling that Congress has passed which is P4.1 trillion. As we prepare the budget for next year, then maybe then we can consider a higher ceiling,” Chua added.
He noted that the government has so far been able to fund various measures to support the economy amid the pandemic through the use of revenue sources, savings and borrowings.
Even with borrowings, Chua noted that this must be done prudently to preserve the country’s good credit standing with international lenders.
“It is our opinion in the executive, the economic team, that we are able to fund actually a lot of the stimulus programs but we need to do this in a fiscally sustainable manner. We cannot sprint right now if we don’t know how long the virus will last. It could take years and we would have to make ourselves as adaptive as possible,” Chua said.
“Internally, we have set the prudence level to where the mid-point of our comparator countries are because if this virus will last years, we will need our good credit rating to access cheap financing to support the economy.”
Arguing for the bill, Quimbo said there has to be a more direct intervention by the government to jumpstart the economy partly because of the expected “liquidity trap” that can occur between financial institutions and businesses in which lenders will be reluctant to lend and borrowers will also be wary of taking out loans.
This, in turn, can prevent businesses from restarting their operations and hiring more workers, aggravating the unemployment situation in the country.
Congress, she said, is willing to work with the executive branch of the government to pass the stimulus bill.
“ARISE is still not yet cast in stone because it will still have to go to the Senate for deliberation and the bicam. We will be happy to work with the executive in coming up with a common ground,” Quimbo said.
Source: https://www.philstar.com/business/2020/07/03/2025264/no-funds-economic-stimulus-bills-neda