The Philippines remains in a strong fiscal position to meet the financial challenges posed by the coronavirus pandemic and ride out the global economic crisis, the Department of Finance (DOF) said.
Finance Secretary Carlos G. Dominguez III said the government has the financial muscles to reboot the shuttered local economy owing to game-changing reforms of President Duterte and Congress over the past four years.
Dominguez said the government will keep its elevated deficit spending until next year to implement programs that will help the economy bounce back from the pandemic and preserve jobs while creating more employment opportunities.
“We are in a good financial position and we can finance the deficit that we have. We have not cut the budget. We also don’t cut the budget because if you cut the budget, you will make the situation even worse,” Dominguez said.
Dominguez said the reforms, such as the Tax Reform For Acceleration and Inclusion Act (TRAIN) and the Rice Tariffication Law (RTL), to name a few, enabled the government to be financially prepared for the challenges of the coronavirus-induced global crisis.
“We are not under stress,” Dominguez said. “We have a good economy. What is happening is that this very strict quarantine is holding it back. We have to really open the economy more.”
Dominguez said the government will cover the budget deficit this year through three sources: improving tax collections, securing foreign and domestic borrowings, and higher dividend remittances from government-owned and -controlled corporations (GOCCs).
The Development Budget Coordination Committee (DBCC) earlier projected this year’s deficit to widen to 9.6 percent of gross domestic product (GDP). For 2021 and 2022, the deficit is expected to go down to 8.5 percent and 7.2 percent of GDP, respectively.
Dominguez reported to the President that from January to September, the Bureau of Internal Revenue and Bureau of Customs have collected P1.82 trillion, above by 8.26 percent compared with the downscaled target of P1.68 billion for the period.
“Our collections are good. The BIR and the Customs are doing a good job. Of course, the total collections compared to last year are lower because of less business activity this year,” Dominguez said.
Dominguez added that the financing support from the country’s development partners and the commercial markets also helped fund the emergency spending needed to fight COVID-19 and keep the economy afloat, which now stood at $9.9 billion.
He said the government was able to secure loans from the country’s development partners at lower interest rates and longer repayment terms.
To further supplement the financing for the pandemic response effort, Dominguez said the DOF was also able to collect at end-August a record P128 billion in dividend contributions from GOCCs, which is 85 percent higher than the P69.2 billion collected in 2019.