By CHINO S. LEYCO
Depending on the duration the coronavirus disease (COVID-19) pandemic, Finance Secretary Carlos G. Dominguez III said yesterday that the crisis will drag down the nation’s growth, but the government is prepared to deploy its resources to rescue the economy.
Citing preliminary estimates by the National Economic and Development Authority, Dominguez said that the country’s gross domestic product (GDP) may contract by 0.66 percent or could grow at a much slower pace of 4.33 percent this year.
Dominguez said the impact of the expected slower GDP on the national government’s revenues would be substantial, thus it requires additional borrowings to cover the shortfall.
Under the zero growth scenario, the Department of Finance (DOF) estimated that it would cost ₱286 billion in foregone revenues, while around ₱318 billion would be incurred if GDP contracted by one percent.
Amid the expected huge losses to COVID-19, Dominguez said that the Duterte administration has lined up several mitigating measures to help the economy recover from the pandemic that locked down the nation’s main region.
“I tell you we are willing to do as much as it takes,” Dominguez said in a teleconference with Finance reporters yesterday, citing the fiscal and monetary measures already announced by the government and the Bangko Sentral ng Pilipinas (BSP).
“We’re like in a battle. The first part of the battle, we must take care of the essentials and then as the battle develops, we will take a look at the damage to the economy and therefore that’s the time when we will plan on what we are going to do for the stimulus program,” he added.
Dominguez said that the Duterte administration intends to work within the ₱4.1 trillion national budget for the year, but would realign the appropriations to curtail and eliminate the COVID-19 threat.
“We are currently in negotiations with multilateral agencies for $1 billion up to $2 billion for funding support for this. We have to realize, we are looking at a drop in revenues. So we have to cover that gap somehow so that we maintain our pace of spending,” he said.
Asked how much deficit spending the government is willing to take, Dominguez said that it would be around four percent as of the moment but it will still depend on the magnitude of the impact on revenues.
Despite the government’s spending spree, Dominguez said that the Duterte administration is not yet abandoning its “A” credit rating status target by the end of its term in 2022.
“We we will still go on that road but we have to dig our way around or go around this landslide so in the meantime the priority is not the goal but how to get through this landslide that blocked our way,” Dominguez said.
“The [‘A’ credit rating] goal is still there. We have not changed it. We just have to dig our way out of this one,” he added.