Duterte's stimulus bills pile up on Senate as session resumes
MANILA, Philippines — Senators will resume session on Monday with clock ticking for the Duterte government’s proposed stimulus measures pending before the chamber, potentially spelling the success of a pandemic recovery next year.
Of the three crucial bills awaiting passage however, Senate President Vicente Sotto said the proposed P4.5-trillion budget for next year will take precedence over Corporate Recovery and Tax Incentives for Enterprises (CREATE) and Financial Institutions Strategic Transfer (FIST) bills.
Asked if CREATE or FIST can be passed this year, Sotto was non-committal and said in a text message that senators will extend their “best effort” to get the legislations enacted before the calendar shifts.
“We can continue with CREATE on Monday, Nov. 9, and if unfinished then budget starts Tuesday till perhaps last week of November. Then we take it (CREATE) up again together with other pending bills while the budget bicameral (conference) is ongoing,” Sotto explained. The bicam is the last step before the bill reaches the president’s desk.
That the proposed outlay will be prioritized over other bills is common practice. But the health crisis had made the timely passage of the 2021 spending plan more vital not only to give government a fresh funding leeway— authority to spend has been depleting— but also to ensure an economic rebound from the coronavirus remains on track.
But the budget is only one component of President Rodrigo Duterte’s so-called stimulus to buttress the economy back to growth. CREATE and FIST were similarly tagged as equally important, making the Senate’s job harder and critical as further delays in the two bills would also derail progress.
“I think that the mindset should be that key policy reforms should be pushed,” Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said in a text message.
The good news is both CREATE and FIST were already getting discussed at the plenary before the Senate went on a two-week break last month. But of the two bills, CREATE has become a sticking point among senators over how tax perks would be reduced, and which sectors will be affected in exchange for lower corporate taxes across-the-board.
The bill itself had undergone numerous changes, including its name, since getting filed back in 2017. When the pandemic struck, economic managers tinkered the measure anew to offer more concessions, including longer periods for existing incentives before they are ultimately dropped. For economist Sonny Africa, executive director of IBON Foundation, a think tank, CREATE is hardly a long-term fix.
“CREATE is not a stimulus package. It’s a bill giving companies tax breaks,” Africa said last June.
Senate has until December 18
Then there is FIST under Senate Bill 1849 a priority measure not only of government but the central bank. Under FIST, banks will be allowed to load off bad assets to a separate entity in order to protect their balance sheets and loan more to consumers and businesses battered by pandemic.
Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said FIST remains important despite banks’ gross non-performing loans (NPL), or those unpaid at least 30 days past due date, still low at 2.84% as of August, albeit slowly rising.
“In all our recessions/contractions in the past, NPL ratios tend to peak only years after a downturn,” Neri said in an online exchange.
“A lot of people have voluntarily decided to be conservative in spending even with the reopening (of economy. Not all businesses will be able to adjust to digital payments and get the needed volume online if their cash flows are not supported by guarantees,” he added.
Both CREATE and FIST already hurdled the House of Representatives and the Senate would have until December 18 once it resumes session if the chamber wants to pass the measures this year. As it is, both bills are already delayed, with CREATE alone supposedly already enacted as early as July.
Unlike CREATE as well, Duterte certified FIST as urgent, meaning legislators may pass it on two readings on the same day, instead of waiting for a typical 3-day gap between the two.
Barring a special session called by Duterte, Senate will go on a 28-day break after December 18 until January 17, 2021.
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