NEDA chief rejects Bayanihan III, looks to 2021 budget for typhoon repair

by Prinz Magtulis (Philstar.com), 23 Nov 2020

MANILA, Philippines — A third set of budget stimulus measures dedicated to funding reconstruction from recent natural calamity appears off the table for the Duterte administration.

“The priority is to fully spend the 2020 budget and Bayanihan II,” Acting Socioeconomic Planning Secretary Karl Kendrick Chua said in a Viber message last Friday evening.

Typhoon wreckage brings fiscal stimulus push to life

Chua’s position was the clearest sign yet that economic managers are sticking to their hallmark of controlling spending as the economy grappled to bounce back from the health crisis, a task that just got more complicated with the damage left by five typhoons that slammed in Luzon over the past 2 months.

At the same time however, government is cool to new stimulus while spending is slow. As it is, agencies have been sluggish in spending even the limited amount allocated them, foremost of which was the P140 billion in additional spending under the Bayanihan to Recover As One Act or Bayanihan II. As of November 14, only P84.97 billion of that amount had been released.

That said, former economic officials at an economic forum on Monday were still quick to notice how little the government is spending for recovery, failing to match outlays in the early days of the pandemic when a one-time cash subsidy was distributed to 17.9 million poor families. Spending had contracted since then.

“I would reiterate that fiscal policy should not be timid in this particular issue,” Diwa Guinigundo, former central bank deputy governor, said.

Former Socioeconomic Planning chief Ernesto Pernia, Chua’s predecessor, agreed. “The fear of losing our credit rating due to overspending is really unfounded.”

2021 budget to take care of calamity damage?

At present, the government is running under a P4.1-trillion outlay devised before the pandemic struck. Because the health crisis was not foreseen, projects like building quarantine sites and assistance to furloughed workers were funded by diverting allocations from existing programs by virtue of two Bayanihan laws.

Currently, only Bayanihan II is in effect, which apart from giving authority to realign budgets also added P140 billion in new spending to cover various subsidies, while supporting healthcare. Marikina Rep. Stella Luz Quimbo wants to add P400 billion to that through House Bill 8031 or the Bayanihan to Arise As One (Bayanihan III), which Senate President Pro Tempore Ralph Recto is backing up at the upper chamber.

But with 5 weeks before 2021 when a new budget will take effect, Chua believed any form of calamity response should be coursed through the proposed P4.5-trillion budget instead, and not filed as a separate measure.

“I understand Congress is considering these as they finalize the budget,” he said.

Nothing beyond P4.5 trillion

How will this be done however is unclear and can be tricky. At the House of Representatives, Speaker Lord Allan Velasco said the chamber would be recommending a P5-billion top-up to the proposed calamity fund of P20 billion for next year to reconstruct ravaged areas such as Cagayan and Isabela provinces.

Since the House already passed its version of the budget ahead, the proposal would be introduced during the bicameral conference committee when select House and Senate leaders consolidate their own versions of the outlay for the president’s signature. “(It) is imperative that we augment the calamity fund in next year’s spending plan,” Velasco said in a statement.

But Velasco’s proposal does not come without a price. Under the Constitution, lawmakers are prohibited to go beyond the amount of the overall spending plan of the Executive department for approval. This means that in order to stay within the P4.5 trillion proposal, any increase in calamity fund indicates a commensurate decrease in other funding priorities.

Senate President Vicente Sotto III, meanwhile, left open the likelihood of a so-called Bayanihan III measure, albeit with no firm commitment. “It would depend on the content of Bayanihan 3,” he said in a text message.