DOF says COVID-19 emergency subsidy largest social protection program in PHL history

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The expanded but limited budgetary powers granted by the 18th Congress to President Duterte will let the government realign certain state funds to deliver P200 billion in emergency subsidies to 18 million low-income households that have lost their sources of income amid the pandemic spawned by the highly infectious virus known as COVID-19–the largest financial aid package ever granted to Filipino households.

Finance Secretary Carlos Dominguez III has said, “The P200-billion program for distribution in cash and basic needs over the next two months is the largest direct financial assistance program granted by the government to Filipino families in our country’s history.”

This is in keeping, said Dominguez, with the directive of President Duterte for his Administration to give top and urgent priority to providing a lifeline to Filipino families hit the hardest by the pandemic, which has brought the economy to a virtual standstill.

Enacted on March 24, 2020, Republic Act (RA) No. 11469, or the “Bayanihan to Heal as One Act,” has empowered the President to realign or reallocate savings generated from the 2020 national budget and extended 2019 budget as well as available funds from government-owned or -controlled corporations (GOCCs) for priority programs to combat COVID-19 and bankroll the P200-billion emergency subsidy program.

“We will urgently deliver this emergency subsidy to millions of our fellow Filipinos who live day-to-day on subsistence earnings or ‘no-work, no-pay’ arrangements,” Dominguez said.

He said “the subsidies will be delivered through various national and local programs in the form of food, cash, and other essentials for the next two months, as provided in RA 11469.”

Although he recognized the need for state support to businesses so they could be back on their feet once the pandemic is over, Dominguez said such assistance would have to take the backseat in the meantime in favor of the most urgent priority, which is to help an estimated 18 million Filipino households most affected by the virtual economic standstill resulting from the COVID-19 global crisis.

Said Dominguez: “We need to take care of our people first because that is the primordial duty of the government and society, especially during crises such as this pandemic that has claimed the lives of over 30,000 worldwide and battered the global economy.”

“We will eventually put in place programs for affected businesses so the economy could bounce back as soon as we beat this lethal virus,” he said. “For the moment, the government must attend to dislocated families and keep Filipino workers healthy so they are ready for the subsequent resurgence in economic activity.”

Through the subsidy program, the government will, under the new law, give P5,000 to P8,000 each month for two months to some 18 million Filipino households most vulnerable to the economic slowdown resulting from the COVID-19 crisis and are now unable to earn their living under the stay-at-home or community quarantine conditions.

Of these beneficiaries, 4.3 million families are recipients of the P2,150 average monthly subsidy from the Conditional Cash Transfer (CCT) component of the Department of Social Welfare and Development (DSWD)’s Pantawid Pamilyang Pilipino Program (4Ps) program.

“For those who are already receiving grants from various national and local programs, the government will provide them with a top-up or additional support to meet the P5,000 to P8,000 subsidy amount,” Dominguez said.

Beneficiary-families will each get a monthly subsidy of P5,000 to P8,000 for two months, to be computed based on the minimum daily wage rates in their respective regions.

The DOF estimates that around P97.4 billion is needed per month to finance the subsidy, or almost P200 billion for two months, plus administrative costs totaling P5.1 billion.

“Upon a quick review of our financial situation, we discovered that more than P200 billion can be made available quickly to fund this emergency subsidy. We have more than P100 billion-worth of cash and cash equivalents in various GOCC accounts, and another P100 billion more in various national government accounts outside the Treasury Single Account (TSA),” the Finance Secretary said.

Dominguez appealed to private-sector employers to do their part in protecting the welfare of some 6.6 million Filipino families dependent on their businesses and who belong to the formal economy.

“We urge business leaders and enterprise owners to support their workers who may have savings, but might need additional assistance during this difficult time,” he said.

“We will do what is necessary for the government to spearhead national efforts to overcome this crisis, which means we need to spend at levels that will definitely make us exceed our previously estimated 3.6 percent deficit threshold,” he said.

“Thus, we appeal to taxpayers who are able to file and pay their taxes early to do so, despite the one-month extension, so that we can fund these programs with the least amount of borrowing,” he added.

The government is also working on an economic stimulus package and a rehabilitation plan for the recovery of the country from the COVID-19 crisis.

“NEDA (National Economic and Development Authority) estimates indicate that the economy may shrink by 0.6 percent if no intervention is done. However, GDP (gross domestic product) growth can still reach 4.3 percent if the global health crisis gets resolved in three months’ time and we are able to provide a decisive stimulus,” Dominguez said.

“This planned stimulus package is already being crafted and will be responsive to the uncertainties of the situation,” he said. “At this point, nobody knows how bad this pandemic will get or how long it will last.”

The finance department considers the financing gap challenging, he said, but noted that the country is in a relatively better position now than it was during the 1997 Asian financial flu when the Philippines found it hard to access financing for its programs to deal with the crisis.

“A large part of our strength is because of the Comprehensive Tax Reform Program (CTRP), which allowed us to raise in advance additional revenues worth almost P200 billion in 2018 and 2019. We are now using such resources to protect the economy against risks such as COVID-19,” Dominguez said.

“We are in talks with the World Bank (WB) and the Asian Development Bank (ADB) for concessional financing of up to US$2 billion. More will be financed from loan syndications from the banks,” he added. “So far, the Philippine government has received a grant of US$3 million from the Asian Development Bank (ADB) and a loan facility of US$100 million from the World Bank (WB).

Other budgetary powers granted to the President under RA 11469 include the authority to:

1. Direct the discontinuance of appropriated programs, projects or activities (PAP) of any agency of the Executive Department, including GOCCs, in the 2019 and 2020 General Appropriations Act (GAA), and utilize the savings generated therefrom;

2. Appropriate any unutilized or unreleased balance in a special purpose fund, effective during the date of the declaration of the State of Public Health Emergency;

3. Allocate any unutilized or unreleased subsidies and transfers held by any GOCC or national government (NG) agency;

4. Reprogram, reallocate, and realign from savings from other appropriation items in the Executive Department’s FY 2020 GAA; and

5. Allocate cash, funds and investments held by GOCCs or any NG agency.