The coronavirus disease 2019 (Covid-19) health crisis has hit the Philippine economy in a hard way but the country is “well-prepared” to handle it, Finance Secretary Carlos Dominguez III said on Thursday.
In a televised meeting with President Rodrigo Duterte aired over state-run PTV-4, Dominguez praised Duterte’s economic policies for being able to withstand Covid-19’s negative impact.
Since the start of Duterte’s term in 2016, he said the country’s gross domestic product (GDP) grew on an average of 6.4 percent while tax collection increased, debts lowered, and inflation eased.
“Maganda ‘yung position ng economy natin so kaya (Our country is in a good position so) even though we have bad luck to have this Covid-19, we are very well-prepared,” he said.
However, Dominguez said the negative impact of the virus could result to a GDP growth of “zero or minus one percent” this year.
He said temporary unemployment could affect about 1.2 million workers, but stressed that this figure is comparable to the lowest unemployment rate the Philippines has experienced.
The budget deficit is expected to increase from 3.2 percent to 5.3 percent, he said, admitting that government “will be spending more than we will be collecting.”
“We are spending more in order to save the people and make sure that they have food on the table during this time,” he said.
He also pointed out that the debt to GDP ratio is expected to increase from 41 percent to 47 percent.
“Ang debt to GDP natin ho tataas from 41 percent, siguro aabot ng 47 percent, pero (Our debt will increase from 41 percent and will reach about 47 percent but) that is still very low in compared to our neighbors,” he said.
Since Duterte’s order has always been to manage the economy “for the welfare of the Filipino people”, he said the government was able to ensure “efficient” tax collections and “conservative” spending.
He expressed confidence in the government’s financial capability to bridge the problems arising from Covid-19.
The government is now working on a “recovery or bounce back program” which will begin by analyzing the health crisis’ damage to the economy.
“We have a survey and we have already received 44,000 respondents and we will analyze that para matingnan natin kung saan ang malaking damage sa tourism, manufacturing, at saka anong mga companies na natamaan nang masama, either small and medium enterprises or ‘yung mga big corporations (so that we can see where there is big damage in tourism, manufacturing, and which companies were hard hit, either small and medium enterprises or big corporations),” Dominguez said.
Moreover, he said government is also coming up with a program to continuously borrow more money to support the economy and the fight against the virus.
“Right now, tina-tap natin ‘yung mga kaibigan natin sa (we are tapping our friends at the) ADB (Asian Development Bank) at saka sa (and) World Bank and we will probably be borrowing mga USD5.6 billion from them,” he said.
If the funds were lacking, he said the government could also proceed to the commercial market since the country has achieved a BBB+ credit rating, the highest ever in the country’s history.
He, meanwhile, thanked Congress for passing the Bayanihan to Heal as One act or Republic Act No. 11469 which authorizes Duterte to realign the national budget.
The Finance chief assured the public that the government had enough funds, but had to spend it wisely.
“We want to assure all our citizens at this point in time, we have the money although we have to realize na hindi naman (that it’s not) endless ‘yung pera na ito. So we have to spend it correctly, hindi ‘yung (not) for wasteful expenditures,” he said.
Economic managers have set aside PHP1.17 trillion for its recovery program and fight against Covid-19.
“We have a long breakdown of how we have this — this program. But mostly it was to provide subsidies for the low income — low-income families and workers of the small and medium enterprises,” he said.
In a public address on Monday, Duterte asked Dominguez to look for additional sources of funds to the PHP275-billion budget for the Covid-19 response.
Under the Bayanihan law, the government has allocated a PHP200 billion emergency subsidy for about 18 million low-income families affected by the month-long enhanced community quarantine of Luzon.
These low-income households will be receiving financial assistance between PHP5,000 and PHP8,000.
The remaining PHP75 billion will be used for “health-related initiatives and other services.”