'We have the money' for outbreak fightback —De Leon
MANILA, Philippines — As questions are raised on whether the government has sufficient funds to embark on a massive outbreak counterattack, the keeper of public money assured Filipinos money is not a problem.
“We have the money,” National Treasurer Rosalia de Leon said in a phone interview Tuesday evening.
As it is, De Leon said the coronavirus disease-2019 (COVID-19) outbreak, and the Luzon lockdown intended to control the virus spread, is easily the “most challenging situation we’ve faced,” but the government is not entering the battle empty-handed.
“We already have some experience on dealing with crisis before, and now we are even in a better position,” De Leon said.
Funding requirements to deal with the outbreak are huge. Apart from the initial P27.1 billion economic package unveiled early March to help key sectors like tourism and labor, a P200-billion social amelioration program was given a go-ahead by President Duterte last Monday, halfway through the month-long Luzon community quarantine. The Department of Finance is also preparing a new set of economic stimulus measures.
A week before Duterte launched the social amelioration program, economic officials went on a quick fund-raising initiative that involved the central bank purchasing P300 billion in government bonds, a $2-billion aid from multilateral agencies like the Asian Development Bank, as well as P190-billion local borrowing program from March to April.
Of the financing announced, only the P300 billion had been secured from the Bangko Sentral ng Pilipinas (BSP). The P190 billion, meanwhile, is now unlikely to be completed after the Bureau of the Treasury rejected bids for state securities worth P25 billion due to high interest asked by the bidders.
Asked if the failed bids would affect fund sufficiency for crisis response, De Leon said the rejection of high-interest bids by itself is a show of fiscal strength.
“You have to remember that we are coming from a safe position. We understand that investors would want to hold on to their cash or charge a premium for it, but in our part, we have the money and we don’t need it now so why would we pay that much?” she explained.
Multilateral agencies to lend more next month
The government borrows regularly to fund its budget deficit, which for this year was originally targeted to hit P671.2 billion before the health crisis manifested. While a deficit means the government is spending beyond its means, it is not necessarily bad if funds are invested on projects that ultimately can boost growth and generate future state revenues.
Apart from additional revenues from higher excise taxes and new levies that took effect in January, De Leon said the government is still using funds from the P311 billion raised from selling retail Treasury bonds last February.
“There is also new funding that will come in next month, including those coming from multilaterals,” De Leon said.
“Banks are also liquid, especially with the reserve cut from BSP. We anticipate some funds that will be released by the reserve cut will go to our auctions later on,” she added, pertaining to the BSP’s 200-basis-point cut in bank reserves seen to free up P200 billion for bank lending activities.
In a sense, the large borrowings are in anticipation of lower revenue collections last month. While the government was operating in a budget surplus of P23 billion as of January, that could have already been reversed last month, when a halt in business and commerce in Luzon likely resulted into lower revenue collections, all while spending surged to counter the outbreak.
“Of course, before we even came out with the social amelioration program, all of that were planned and we already determined where to get the funds,” she said.
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