‘ Stimulus package not a priority’

FINANCE Secretary Carlos Dominguez 3rd has rejected the clamor of business organizations and chambers for a fiscal stimulus package that would support the Philippine economy as it deals with the coronavirus disease 2019 (Covid-19) pandemic, saying it is not a “priority.”

“I have told the people who had come out with that proposal [for] a stimulus package [that it] is not our priority at the moment,” Dominguez told reporters in a video call this week.

His remarks come days after these groups — which include the Philippine Chamber of Commerce and Industry, Management Association of the Philippines, Makati Business Club, Bankers Association of the Philippines, Chamber of Thrift Banks, American Chamber of Commerce of the Philippines, and European Chamber of Commerce of the Philippines — said the government could and should adopt a fiscal stimulus program that would raise the country’s deficit-to-gross domestic product (GDP) ratio to close to 5 percent.

Assuming that GDP growth slows to 4.5 percent, a 5-percent deficit will be P1 trillion. Subtract the programmed deficit of 3.6 percent (P720 billion), and there is room for a P281-billion fiscal stimulus program, they said.

Assuming that GDP growth slows to 3 percent, a 5- percent deficit will be P987.5 billion. Subtract the programmed deficit of 3.6 percent (P711.3 billion), and there will be room for a P277-billion fiscal stimulus program, they added.

Dominguez believes the proposed package could be discussed later.

“[O]ur priority now is support the people who have lost their daily livelihood; protect the people who are the frontliners and expand our capacity to deal with this on a physical basis; and to provide liquidity to the economy,” he said.

The Finance chief said the government was willing to tap all sources to meet these goals.

On top of the emergency powers of President Rodrigo Duterte and the liquidity injections of the central bank, he said the government was also looking to borrow as much as $2 billion from multilateral agencies, including the World Bank, Asian Development Bank and the China-backed Asian Infrastructure Investment Bank.

Borrowings are necessary to maintain the pace of government spending, Dominguez said, since revenues are expected to drop due to the economic disruptions caused by the coronavirus’ spread.

State revenues are projected to drop by P286 billion if the economy posts zero growth this year or by P381 billion if growth contracts by 1 percent.

All these measures, he explained, are likely to result in a budget deficit- to- GDP ratio of more than 4 percent this year, wider than the 3.2-percent ceiling set by the government.