By CHINO S. LEYCO
The government is not capable to fund the ambitious economic stimulus approved by the House of Representatives, the National Economic and Development Authority (NEDA) admitted yesterday.
Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the House-approved P1.3-trillion spending plan to jumpstart the economy following the devastation from the coronavirus disease (COVID-19) pandemic is “not be fundable.”
Chua explained the proposed Accelerated Recover and Investments Stimulus for the Economy (ARISE) Philippines Act will require new revenues sources, which the government currently do not have.
He also said that funding the stimulus plan through borrowings is not a prudent approach given the budget deficit spending limit of the national government.
“We are in discussion with the congressman that such an amount would not be fundable because any supplemental budget or standby appropriate requires new revenue sources and that is very limited and financing or borrowing is not a revenue source,” Chua said.
Instead, the NEDA chief proposed that the lawmakers should consider allowing President Duterte’s various fiscal, budgetary and monetary measures to support the economy.
“What we are proposing to Congress is to maximize the impact of our various policy tools,” Chua said, noting their current P130 billion stimulus plan remains appropriate and fiscally responsible.
Under the 130-billion stimulus, P70 billion is earmarked to go to the Development Bank of the Philippines, Land Bank of the Philippines, and the Philippine Guarantee Corp.
“If we provide for instance P10 billion worth of capitals to Land Bank, Land Bank can leverage that up to 8.5 times. So what that means is that we can provide lending support at low interest rate at the amount of P85 billion,” Chua explained.
“In the same way if we give a credit guarantee of 10 billion for instance, the Philippine Guarantee can leverage that up to 20 times… or P200 billion. That will allow us to reach as many clients as possible,” he added.
“If we [the government] give the money directly as a subsidy, or a loan, it will just be P10 billion,” the official concluded.
For this reason, Chua said that they will meet with the lawmakers to discuss the fiscal impact of their P1.3 trillion economic stimulus proposal.
“They will have to meet in the Bicam [Bicameral Conference Committee] to address those concerns. In terms of the timing, we’re reviewing the bills from the House and the Senate and we will furnish them with our comments and also the office of the President,” he said.