Finance Secretary Carlos Dominguez III on Monday assured the public of enough funds if the government decides again to extend the enhanced community quarantine in Luzon beyond April 30, 2020.
“We will make sure that there will be enough funds to support those decisions. But again, we are watching this very carefully, as most countries in the world are. And we are watching this very carefully, and we are moving very conservatively,” Dominguez said in a television interview over CNN Philippines.
“We have actually planned until the end of May for financing. I am not saying that we will extend it [ECQ] beyond April 30, but our plan has been really to fund our requirements to beat this COVID from April and May,” Dominguez said.
He said the second tranche of support would be for the assistance to the most vulnerable sectors in May. Dominguez said he was hoping that by early May, “we can start to open the economy as announced by Secretary [Carlito] Galvez earlier.”
He said it was important for the government to know the potential risks of opening or restarting the economy. “Should we expect additional infections? Will these infections overwhelm our hospitals? Will there be additional deaths? That is why we have to be very careful when we evaluate how and when we are going to open up our economy,” he said.
Dominguez also assured the “Build, Build, Build” infrastructure program would remain a focus of the government, saying it would pump-prime the economy going forward despite the setbacks posed by the pandemic.
“We have not downgraded our ‘Build, Build, Build.’ That is going to be the fuel that will push, that will fuel our bounce back,” Dominguez said.
The Finance Department earlier said about 1.2 million Filipinos might lose their jobs because of the pandemic. The enhanced community quarantine in Luzon was implemented by middle of March 2020 and was supposed to end April 12. This was extended until April 30 by the government to contain the spread of the disease.
Dominguez said the country was in a very good position to take the hit from the Covid-19 problem, although GDP growth this year might be flat or zero and probably even “minus point eight [-0.8 percent] or eighth tenth of one percent.”
“We are coming from a very strong financial performance. In the last three years, we have grown our economy by an average of 6.4 percent per year. We have a very good credit rating,” Dominguez said.
He said President Duterte managed the economy in the rational way and particularly increased the revenues per year, but only spent in the past in projects that were economically viable.
“We are in a very strong financial position now,” Dominguez assured.
He said the budget deficit would most likely rise from 3.5 percent of GDP last year and an average of less than 3.2 percent of GDP in the last two years, to 5.3 percent of GDP.
“However, our debt-to-GDP ratio is very healthy, from a high of 70 percent in the early 2000s, we are only now 41 percent. We will probably increase the debt-to-GDP ratio to 47 percent, something we can very well afford,” Dominguez said.
He said the government would borrow first from the Asian Development Bank, the World Bank and the Asian Infrastructure and Investment Bank before going to the commercial market to finance the country’s needs.
He said the total amount of borrowing “will probably be around $5.7 billion.”
Dominguez said the Bayanihan to Heal as One Act addressed the middle class concerns first by requiring banks not to collect loans immediately, by giving them a period to delay the payment of amortization and by not allowing banks to charge interest on interest.
When asked if the middle class would also be given financial assistance, Dominguez said: “I doubt it at this point in time because when we defined middle class, we define middle class, first of all, for those people who have regular jobs.”
Dominguez said the middle class who were working for the micro, small and medium enterprises would receive a cash support.
“We believe that they will be around 3.5 million people involved there. And the total cost will be between P35 billion and P51 billion. So that part of the middle class, yes they will receive support,” Dominguez said.
