Gov’t ramps up spending to fight COVID-19
To better fight COVID-19 and fast-track recovery from the pandemic-induced recession, the government plans to spend a bigger amount of P2.33 trillion during the second half of this year.
The latest quarterly fiscal program for 2020 released by the Cabinet-level Development Budget Coordination Committee showed that the national government programmed to spend P1.26 trillion in the third quarter, or 29 percent of the P4.34-trillion expenditures program for the year, equivalent to 23 percent of gross domestic product (GDP).
Nominal GDP had been projected to drop to P18.9 trillion by year’s end from P19.5 trillion last year as the economy is expected to contract by 4.5-6.6 percent in 2020 amid the COVID-19 pandemic.
Disbursements in the fourth quarter will amount to P1.07 trillion, or 24.6 percent of the 2020 program.
During the first half, the government spent P2.01 trillion—P849.2 billion in the first quarter, on top of a bigger P1.16 trillion in the second quarter—at the height of the longest and most stringent COVID-19 lockdown in the region.
Also, the government will spend more on infrastructure during the second half—P181.6 billion in the third quarter and P225.5 billion in the fourth quarter.
Actual infrastructure spending in the first quarter amounted to P191.7 billion, before slowing to P186.7 billion in the second quarter.
During the enhanced community quarantine imposed in Luzon and other parts of the country with high COVID-19 cases from mid-March to May, public infrastructure projects were put on hold, except for the health and quarantine facilities built to contain the coronavirus from further spreading.
The government is programmed to spend a total of P785.5 billion on infrastructure in 2020, including projects in local government units as well as carryover expenditures from last year’s budget.
“Our strategy for recovery rests on sustaining the ‘Build, Build, Build’ program. Investing in sound infrastructure has the largest multiplier effect in the economy. It creates jobs, fires up consumption and spurs productive activity,” Finance Secretary Carlos G. Dominguez III told senators on Wednesday, referring to the Duterte administration’s ambitious infrastructure program.
On the other hand, tax and nontax revenues were expected to be weaker in the second half as the government targets to collect P516.8 billion in the third quarter and P549.7 billion in the fourth quarter, lower than the actual take of P763.1 billion in the first quarter and P690.2 billion in the second quarter.
For 2020, total revenues had been projected to reach P2.52 trillion or 13.4 percent of GDP.
“Given all that has happened in the past months, we expect to collect significantly less revenue than projected at the start of the year, even as we spend more for our people,” Dominguez told senators.
As such, the 2020 budget deficit had been programmed to swell to P1.82 trillion or 9.6 percent of GDP “as the government spends more to beef up our health system and to provide relief to individuals and sectors hardest hit by the pandemic,” Dominguez said.
“The deficit-to-GDP ratio will decline to 8.5 percent in 2021 and 7.2 percent in 2022. We aim to keep our deficit below or at the median of our Asean neighbors and credit-rating peers so that we can continue to access financing at highly concessional terms on behalf of the Filipino people,” Dominguez added.
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