Listen to IMF, use wide fiscal space for recovery–salceda

House Committee on Ways and Means Chairman Joey sarte salceda said the Duterte administration should maximize the fiscal space noted by the International Monetary Fund (IMF) for more funds for better vaccine rollout.

Salceda echoed the IMF’S view that the Philippines still has an elbow room to recover from the health crisis that has spilled over to the economy.

“The IMF’S statement shows that we can approve Bayanihan 3 with little adverse consequence on our credit standing,” he said. “Together with the revenue-generating efforts of the House, we should be alright.”

IMF Representative to the Philippines Yongzheng Yang said in a statement the IMF staff advises that fiscal policy should “continue doing its part this year.”

“The Philippines still has some fiscal space and can and should maintain its fiscal support to recovery,” Yang said.

With more fiscal space as validated by the IMF, the solon said the government can authorize more funding for

vaccination efforts.

“The experience of countries like the US is that for every dollar spent on vaccines, you need at least 80 cents more to get it injected: transport, storage, personnel costs and syringes are not cheap,” Salceda said. “There is no way back to the old normal without mass vaccination.”

The lawmaker added that if the funding for vaccine rollout is not there, “vaccines procured will go to waste.”

“To waste vaccines in this crisis is an offense to humanity,” Salceda said.

The lawmaker, however, said he was not satisfied with the replies of health officials to earlier questions on the budget for vaccine rollout during the Bayanihan 3 hearings.

“The answer they gave was P4-5 billion, which is totally inadequate to do ‘mega-vaccination,’ when the global supply becomes looser after July,” he said.” So, we in Congress will need to have some foresight and prepare fiscal space for vaccine rollout requirements.”

Salceda said he received “the impression that the DOH [Department of Health] has not simulated the costs of mass vaccination well.”

“That worries me. We need to be ready to authorize more funding,” he added.

More room

SALCEDA also cited that average interest-rate payment per peso of debt has actually gone down during the Covid-19 pandemic, leaving more room for fiscal support from the government.

“We have significant fiscal protection from a credit rating downgrade, and the decline in interest payments is further proof of this downside buffer. In fact, the average interest rate on national government (NG) debt declined from 4.67 percent in 2019 to 3.88 percent in 2020. In other words, despite an increase in debt burden, we are actually paying lower interest pesoon-peso,” Salceda said.

“Coupled with the revenue measures the House has already passed, and with the reforms like higher GOCC remittances that we are pushing for, Bayanihan 3 should pass without affecting our credit standing,” the lawmaker added.

Last week, Salceda said funding for the Bayanihan 3, which now stands at P370 billion, will be derived from “obese” government-owned and -controlled corporations (GOCCS) and other tax measures.

But Speaker Lord Allan Velasco said economic managers are still studying potential funding sources for Bayanihan 3, a proposal seen as a “lifeline” as Covid-19 cases continue to spike and lockdown measures has nearly pushed the economy to tank.

Household income

SALCEDA said protecting household incomes while the vaccines have not been administered en masse is the most urgent priority of Congress.

“Ultimately, because we are a consumption-driven economy: when household income goes down, the economy suffers severely. So, our priority is really to support household income with government aid, protect jobs by supporting businesses, and try to stabilize prices so that real income does not suffer,” he said.

“That’s why Bayanihan 3, particularly its universal basic income component, is very important,” Salceda added.

The lawmaker emphasized the need for vaccines to protect people from dying of Covid-19.

“But we need to extend aid to prevent people from dying of something more basic: hunger,” Salceda added.