Coronavirus response depletes government cash

Prinz Magtulis - Philstar.com
Coronavirus response depletes government cash
Finance Secretary Carlos Dominguez III, the head of the Duterte government's economic team.
The STAR / Geremy Pintolo

MANILA, Philippines — Cash is running low in government coffers to fight the coronavirus disease-2019 (COVID-19), a rare admission from economic officials who for weeks have insisted there are sufficient funds to respond to public needs during the health crisis.

“So far, we have sufficient cash but we are already getting squeezed by our budget allowance,” Finance Secretary Carlos Dominguez III said in Fiilipino during a recorded briefing aired on Friday morning.  

Budget Secretary Wendel Avisado, in the same briefing with President Duterte, said government resources are “finite” even after the government unveiled a P1.4-trillion “economic strategy” against COVID-19 two weeks ago, which had come under intense public scrutiny. 

The likelihood of fund depletion comes at a crucial time as the government prepares to hand out the next tranche of P96-billion in aid to the poor next month, while also disbursing P50.8-billion in subsidies to displaced formal workers. 

While allocations for the programs were already set aside, Dominguez said the government is losing budget space to maneuver.

P4.1-trillion limit

This is because while Republic Act No. 11964 allowed Duterte to redirect funding to COVID-19 response, Avisado said the government is only authorized to spend up to P4.1 trillion this year, a budget crafted when COVID-19 was not yet a threat last year.

To make the matters worse, the entire P4.1 trillion is not all for Duterte to spend. Nearly a third of that amounting to P1.28 trillion were automatically set aside for debt payments, state pensions and share of local governments from national revenues, money which are mandated by different laws and were already released.

That leaves the government with only P2.8 trillion for the year to be divided on state employee salaries, office supplies and operations, and capital outlays on top of programs for COVID-19 response. 

Barely into the first half of the year, it remains unclear how much of the budget have been exhausted but Dominguez was clear not to touch allotments for the “Build, Build, Build” infrastructure program. “We are reserving funds for Build, Build, Build so that once the COVID-19 outbreak is over, we have the money to invest and we will create jobs and business opportunities,” he said.

Is there actual cash?

However, the current fund problem is so severe, that the budget department was forced to take back 10% of money already released to agencies early in the year. Under Circular No. 580, Avisado also told agencies that 35% of their budgets would be automatically realigned for outbreak programs.

A possible solution is to ask Congress for a supplemental budget to allow Duterte to spend beyond P4.1 trillion, but Budget Undersecretary Laura Pascua said the request can only be made if there are excess funds. “I’m not sure Treasury has that,” she said in a text message.

A limited authority to spend is one thing, but whether there is cold cash would be another. Based on Philstar.com’s independent fund monitoring, sources of P735.73 billion in cash had already been identified as of April 20, some of which already credited to state coffers. These include proceeds from Treasury bond sales, dividends from state corporations, and bond purchases from the central bank.

A total of P120.2 billion however is in the form of multilateral loans from the World Bank and Asian Development Bank (ADB), none of which had been remitted to the Treasury as of April 20. 

In fact, part of that cash from ADB worth $1.5 billion (P75.75 billion) was just approved by the agency on Friday, while the World Bank just gave its nod to another $100 million the day before. After approval, fund release schedules would still need to be finalized before the government gets its loans.

In total, the finance department had said it is seeking $5.7 billion in loans from ADB and World Bank for COVID-19 purposes, but sources of some money are yet to be made public as negotiations remain underway. While Duterte is open to the possibility, Dominguez said there is no need for asset sales to generate revenues for now. But the government’s fund problem is piling up.

“Always at the back of my mind, for those of you complaining about delays on fund releases, I am thinking where else can we go? And if we consider the possibility of a second wave, how would we finance that? That would require a lot of funding,” Avisado said.

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