Typhoon wreckage brings fiscal stimulus push to life
MANILA, Philippines — Calamity damage prompted legislators to push the envelope for a bigger stimulus, a move likely to usher fresh disagreements with the Duterte administration that until recently would not budge on its hardline stance against larger deficit spending.
The good news is Finance Secretary Carlos Dominguez III appeared to have softened his position against a bolder spending package if a government assessment showed it is needed. The bad news is time is running out for both Congress and the Executive department to finalize a deal that meets both objectives of a fiscal push and discipline.
“Typhoon Ulysses complicated our problem with the pandemic,” Marikina Rep. Stella Luz Quimbo said in Filipino on Tuesday.
At the House of Representatives, Quimbo formalized talks of a fresh “Bayanihan” measure by filing House Bill No. 8031 dubbed as the “Bayanihan to Arise as One Act” that would authorize P400 billion in additional expenditures to alleviate the impact of recent natural disasters.
At the upper chamber, Senate President Pro Tempore Ralph Recto promised to get the ball rolling by filing his own counterpart Bayanihan III bill soon. “I support the need to spend more,” he said in a text message.
Quimbo’s bill takes off from two “Bayanihan” predecessors enacted into law in March and September, respectively to grant government the firepower to convincingly address an unprecedented pandemic. The first two “Bayanihan,” which literally means unity in civic duty, gave President Rodrigo Duterte the power to move around funds in the P4.1-trillion national budget, but only measly top that up with P140 billion despite rising public needs amid the pandemic.
Quimbo, whose initial P1.4-trillion ARISE bill was opposed by economic managers, said it is about time to give more than just a drop in the bucket. “This is a rescue boat for Filipinos flooded with crises. Bayanihan III will ensure that there is enough funding for critical programs and that plans are right for a stronger economy.”
If passed as is, Bayanihan III would give a quarter of the P400 billion to cash subsidies to displaced workers as well as fund overtime pay for employees working in staggered shifts. Pension contributions of small firm workers would likely be subsidized.
The rest of the package would be divided as follows: P100 billion to capacity building of strategic sectors needed for growth, P70 billion as subsidies to COVID-19-hit households, P50 billion for repair of infrastructure damaged by typhoons, P30 billion for cash-for-work programs, P25 billion for COVID-19 vaccines, and P20 billion for direct cash assistance to calamity-stricken families.
But while Dominguez seemed to be open to another stimulus, Malacanang remained unconvinced new spending is needed now. “We haven’t seen what would be the shape and form of the proposed budget for 2021,” presidential spokesperson Harry Roque told a news briefing.
“Maybe these proposals are already in the 2021 budget,” Roque said.
Economic officials are yet to complete their assessment of economic damage from weather disturbances, but Finance Undersecretary Gil Beltran said it alone may not be enough to justify larger spending.
“We have to study that…, but we already factored in 20 typhoons in our medium-term program. It’s not something unusual. We already know that historically, they cut off 1-2% of GDP every year,” he said.
Weakest in Southeast Asia
Indeed, any Bayanihan proposals would have to share depleting session hours with the proposed P4.5-trillion outlay for next year that already passed the House, but currently tackled at the Senate. On top of that, senators would also have the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill to worry, although they made no promises that the priority bill will be passed this year.
With clock ticking to December 18, the last day of session, Senate President Vicente Sotto nonetheless did not discount rushing a fresh stimulus bill to enactment. “We will most likely support if necessary. We’ll cross the bridge when we get there,” he said in a text message.
Any new fiscal stimulus would be welcomed by an economy currently underperforming Southeast Asia in terms of recovery. Apart from an 11.5% year-on-year economic slump last quarter, Oxford Economics, a think tank, pointed out that local manufacturing and retail performance lagged behind other emerging markets like Vietnam and Malaysia.
“In Asia’s EMs, industrial production has recovered to levels above or approaching that of December 2019, although industrial output in the Philippines is still way below that benchmark,” Oxford Economics said in a research note.
For Recto, loss of jobs and lives are something irreplaceable. “It is only proper for government to provide assistance and to help in the economy’s recovery,” he said. — with Ian Nicolas Cigaral
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