Cash being raised to fund Duterte's budget tinker
MANILA, Philippines (UPDATE 2 1:56 p.m., April 8) – Economic managers have highlighted President Duterte’s newly-acquired powers to tinker on the budget as an assurance funding is sufficient for a coronavirus disease-2019 (COVID-19) response, with culled data showing the government already raising nearly P800 billion for that purpose.
In a statement on Tuesday, Finance Secretary Carlos Dominguez III pointed to Republic Act 11469 or the Bayanihan Act which empowers Duterte to redirect budgets of state agencies and corporations to COVID-19 response programs.
“The President’s fiscal policies since the start of this administration, of vastly improving revenue flows as well as being very judicious with expenditures…have placed us in a good position to meet the financial challenge posed by COVID-19,” Dominguez said in a statement.
Central bank Governor Benjamin Diokno agreed with Dominguez, saying in a separate text message that the country has “ample monetary and fiscal space to overcome whatever adverse impact the pandemic has on the Philippine economy.”
On paper, the government appears to be well-oiled to weather the health crisis. RA 11469 gave Duterte a far-reaching leeway to reallocate budgets originally approved by Congress before the year started.
In fact, that power had already been exercised. In his report to Congress on Monday, Duterte said a total of P189.82 billion in funding from the 2020 budget and continuing appropriations in the 2019 outlay will be “discontinued” and be funneled to “response measures” against COVID-19.
The bulk of those funds will come from unused capital outlays of agencies amounting to P160.42 billion, which means instead of funding roads and bridges, money will be repurposed for COVID-19 programs.
But a black-and-white diversion of funds does not mean actual cash is readily available to finance these transfers. Budget Secretary Wendel Avisado said allocations are subject to certification from the Treasury that funds are available. In short, what is money on paper does not automatically mean cash on hand.
“We are just identifying the possible sources first,” Avisado said in a text message.
Funds trickling in
As it is, the government has already embarked on numerous fund-raising activities two weeks ago to raise money for COVID-19 response. While a full funding report from the government remain unavailable, Philstar.com research showed a total of P625.39 billion in cash from loans, bond sales, and dividends have been generated or pledged to the government as of April 6.
A big part of this— P300 billion— was already remitted by the Bangko Sentral ng Pilipinas through Treasury bond purchases last week. Meanwhile, state-run corporations and financial institutions also contributed P78.64 billion in advance dividends to the government as of April 1, the President’s report stated.
Loans from the Asian Development Bank and World Bank had also been secured, although it remains unclear if some funds were already credited. More loaned funds would come in later this month.
Another P25 billion was added to the fund pool through the sale of Treasury bills on Monday. According to Treasury borrowing plans, a total of P145 billion in T-bills and T-bonds are scheduled to be bid out for the rest of April, although the government may refuse to award them if investors charge high interest, similar to the first two auctions in previous two weeks.
The government is not yet done fund raising. In an advisory to government corporations last April 2, National Treasurer Rosalia de Leon asked companies to remit more funds to the Treasury’s bank accounts. A total of P100 billion is reportedly being eyed, including the remittance of about P78 billion as of April 1.
“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,” Dominguez said.
Editor's note: We updated and corrected the chart for this article to reflect that Asian Development Bank approved a $3-million grant, not $300 million as earlier stated. The Bureau of the Treasury said the fund is yet to be credited to government coffers as of Tuesday.
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