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DOF seeks DOJ help to resolve Congress deadlock on funding stimulus

Ian Nicolas Cigaral - Philstar.com
DOF seeks DOJ help to resolve Congress deadlock on funding stimulus
President Rodrigo Roa Duterte updates the nation on the government's efforts in addressing the coronavirus disease (COVID-19) at the Malago Clubhouse in Malacañang on March 30, 2020.
Presidential Photo / King Rodriguez

MANILA, Philippines — The finance department asked the justice department to finally put to rest the issue on whether borrowings are considered revenue sources and therefore, can be used to fund stimulus measures the government said it cannot afford.

“Secretary (Carlos) Dominguez (III) called me up today to request an opinion on whether borrowings, whether domestic or foreign, may be used as funding support for a supplemental budget,” Justice Secretary Menardo Guevarra told Philstar.com in a text message on Monday.

“DOJ (Department of Justice) is currently studying the issue,” he added.

A legal opinion from the justice department could break the impasse between the Executive and legislative branches over their preferred mode of stimulus to buttress economic recovery. On one hand, legislators have pushed for two stimulus bills worth more than P3 trillion to finance post-pandemic programs until 2022. On the other, the Duterte government wants to keep spending limited to the P4.1-trillion budget approved early in the year, first because of fiscal restraint, but mostly because of its belief it cannot spend more without new revenues.

The specific constitutional provision supposedly providing the limitation was Article VI, Section 25 which stated that a “special appropriations bill” would need to be supported “by a corresponding revenue proposal therein.” Both the Bureau of the Treasury and the budget department shared the finance agency’s view that debts do not qualify as revenues, and Dominguez said any stimulus on top of the budget is a supplemental outlay requiring new income sources.

“We also have a constitutional limitation. Loans do not qualify as additional revenues,” the finance chief said in an online briefing.

ARISE, CURES bills

How Guevarra views the provision would be crucial on how the government’s pandemic response would go forward. For the past three months, the Executive and legislative departments have proceeded with separate and differing stimulus proposals, all for the purpose of helping the economy bounce back from its 0.2% slump in the first quarter.

The different strategies were pursued until last week’s recess in Congress that saw all stimulus proposals getting stuck at various levels of enactment, at a time they are needed the most. Dominguez said economic managers are in talks with legislators, but there is one specific matter he would want to make clear: the government cannot afford the bills filed by lawmakers.

He specifically pertained to House Bill 6815 or the P1.3-trillion Accelerated Recovery and Investments Stimulus for the Economy (ARISE) bill, which is now on the way to the Senate after getting approval from the Lower House before their break. 

“The fundamental decision is not on the size of stimulus bill, but on the level of fiscal deficit,” Finance Secretary Carlos Dominguez III said in a virtual press conference on Monday.

“This is a political decision. How will it look to the ordinary people? 'Oh we promise you so much, knowing that it is not fiscally sustainable,’” Dominguez added.

But the bill’s authors, Albay Rep. Joey Salceda and Marikina Rep. Stella Luz Quimbo, were unperturbed. “We will try to fight for our version, which has 266 co-authors,” said Salceda, chair of the House ways and means committee.

“Now is not the time to be gun-shy when it comes to government spending,” Quimbo said in a text message. “Now is the time to make good use of our country’s strong macroeconomic fundamentals and financial health... and embark on a debt-financed growth strategy in the short run.”

Apart from ARISE, representatives also passed the P1.5-trillion COVID-19 Unemployment Reduction Economic Stimulus Act (CURES) bill last week. The proposal targets to allocate P500 billion in key infrastructure in health, agriculture and local roads over the next three years.

Stalemate

“We cannot afford P1.3 trillion,” Dominguez said of ARISE bill. Instead, he repeated his push for Congress to pass Senate Bill 1564, or the Bayanihan to Recover as One bill, which only provides for an additional P140 billion in new spending.

The strength of the so-called Bayanihan II lies on the bill extending President Rodrigo Duterte’s powers to move funds within the budget without the need for Congress approval. Bayanihan II, plus the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill that lowers corporate income taxes are the government’s preferred stimulus measures.

The bills were supposedly enacted before Congress adjourned last week, but the deadlock on how much spending can the government take, and is willing to spend, has partly caused the delay on their passage.

“I can’t say the likelihood of the President calling a special session (to pass the bills)… For me, as soon as Congress resumes their session” we would like the bills passed, Dominguez said. — with Prinz Magtulis

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