Gov't readies ₱600-B for COVID-19 response, but more than half funded with loans

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Families receive food packs outside their homes

Metro Manila (CNN Philippines, April 7) — The Philippine government plans to spend up to ₱600 billion for its COVID-19 response, but more than half of the amount will be funded by loans, the Department of Finance said Tuesday.

Finance Assistant Secretary Tony Lambino said the economic team has diverted some ₱205 billion from the 2019 and 2020 national budgets to support the state's COVID-19 response. The amount is largely from planned construction and purchases this year which have been discontinued due to the public health crisis.

Half of the war chest will be sourced from a credit line from the Bangko Sentral ng Pilipinas, which unveiled a ₱300-billion bond repurchase deal — a form of short-term loan — with the Treasury.

Lambino added that about ₱50-100 billion will be borrowed from international lenders, which he said will likely be signed later this month. So far, the World Bank has approved a ₱5 billion loan, while the Asian Development Bank extended a ₱150-million grant to the Philippines to help in coping with the impact of the disease.

"Sa ngayon, meron tayong access to around ₱600 billion by the end of April... These resources are available, but we also have to be very prudent and careful about what we borrow, dapat talagang makatulong ito doon sa mga nangangailangan [This should really help the needy]," Lambino told CNN Philippines' Balitaan. "Either we will be paying for this in the (near) future, or future generations will be carrying the need to repay."

The amount is a huge jump from the initial ₱27.1 billion spending plan unveiled by authorities on March 16.

The Philippines spends more money than what it can generate from taxes and income streams to sustain growth and development, especially for critical infrastructure.

Lambino added that the state is looking for the "most responsible and optimal mix" of funding sources, but assured that the government can still afford to incur more debts.

President Rodrigo Duterte on Monday night told Finance Secretary Carlos Dominguez III to do what he can to raise more cash, even telling in jest to steal money if he had to.

"We will reallocate funds for assistance to local governments, assistance to MSMEs (micro, small, medium-scale enterprises) by subsidizing the salaries of their employees who are mostly what some would call lower middle class, support the DA/DTI in enhancing food production & availability," Dominguez said in a statement sent Tuesday morning, cautioning prudence as authorities "do not know how long this contagion will last."

Lambino said the Philippines can still afford to borrow more money given a relatively low debt burden and a favorable credit rating globally. Outstanding loans totaled nearly ₱8.17 trillion as of February, around 41 percent of the size of the entire economy.

What's available

The Bureau of the Treasury, which keeps track of all public money, said ₱101.64 billion can be released for now for the cash subsidies.

Of the amount, ₱100 billion has already been transferred to the Department of Social Welfare and Development for the first tranche of the state's two-month cash aid for 18 million poor families.

The government expects the entire program — which will give a ₱5,000 monthly subsidy to struggling households identified by local executives — to cost about ₱205 billion. The aid is ₱8,000 for families living in Metro Manila, factoring in the higher cost of living.

The Land Bank of the Philippines started handing out the cash aid last Friday, initially to families listed under the long-running Pantawid Pamilyang Pilipino Program for the poorest of the poor.

LIST: Qualified beneficiaries of COVID-19 subsidy

The government previously estimated that ₱275 billion could be made available for relief efforts. Presidential Spokesperson Salvador Panelo said in a virtual press briefing that Dominguez, along with Transportation Secretary Arthur Tugade and Trade Secretary Ramon Lopez, have been told to identify which projects can be dropped to free up public funds.

On top of the cash aid, the government has also earmarked additional funds for local government units (₱30.824 billion), subsidy to farmers (about ₱2.8 billion), subsidies to displaced workers (at least ₱1.2 billion), and additional testing kits and other equipment for the Department of Health (at least ₱3.1 billion).

READ: DOLE may give additional cash aid to displaced workers if COVID-19 quarantine is extended

The amounts may be funded through realignments as well as early cash dividends remitted by government-owned corporations, which have so far hit ₱78.64 billion, according to the President's April 6 report to Congress.

There are 3,660 confirmed COVID-19 cases in the country as of Monday afternoon, with 163 deaths and 73 recoveries. The Department of Health said it is still too early to say if local infections have peaked.

Duterte has extended the Luzon-wide quarantine to April 30 to contain the spread of the deadly disease.