Finance Secretary Carlos Dominguez III
MANILA – Department of Finance (DOF) Secretary Carlos Dominguez III has cautioned lawmakers against approving measures that the national budget cannot finance and increase the budget gap beyond acceptable level.
In a speech during the Sulong Pilipinas e-conference with the business community Monday, Dominguez said several stimulus measures have been filed in Congress that have provisions “that make the proposals fiscally unsustainable.”
He said economic managers have raised their concerns with the lawmakers, adding the Constitution mandates the presence of excess funds and new revenues for any supplemental budget.
“In running a business or a company, we know that borrowings or loans are not revenues. We appreciate the wisdom behind the Constitutional provision for in the absence of additional revenues or income, we jeopardize our fiscal sustainability,” he added.
Some of the stimulus measures that have been proposed are the PHP1.3-trillion Accelerated Recovery and Investment Stimulus for the Economy of the Philippines (ARISE) and the PHP1.5-trillion Covid-19 Unemployment Reduction and Economic Stimulus (CURES).
Dominguez said the huge amount of the program will push the government’s budget gap this year beyond what economic managers recently approved.
The inter-agency Development Budget Coordination Committee (DBCC) recently approved the increase of the budget gap projection to PHP1.56 trillion, or about 8.1 percent of gross domestic product (GDP).
This is higher than the already revised projection of 5.3 percent of GDP, which, in turn, has been hiked from 3.2 percent of GDP projection because of the impact of the coronavirus disease 2019 (Covid-19) pandemic.
Revenue projection has been cut to PHP2.61 trillion, lower than the PHP3.17 trillion approved by the DBCC during their meeting last March 27.
Disbursement is seen to rise to PHP4.18 trillion, or about 21.7 percent of domestic output, due to Covid-19 related spending.
Dominguez said the government currently does not have the extra budget that is required by the Constitution to finance these proposals, adding “we cannot use borrowings as a support for that.”
He said this year’s PHP4.1-trillion national budget includes a borrowing program and this is what the economic managers are following when they tap fund sources here and abroad.
“What we cannot fund from borrowing is additional spending over and above the budget,” he said.
Dominguez added the Philippine government cannot have a budget deficit that is higher than its neighbors because it does not show fiscal responsibility.
“The complemental issue is sustainability. And we believe we are strong enough because we have done a lot of reforms that is why we are in a very strong position,” he said. (PNA)
