The Department of Finance Secretary Carlos Dominguez III explained why President Rodrigo Duterte always says the government is running out of money for COVID-19 response.
Dominguez said the Philippines has money, but its spending capability is limited by what the legislators have approved under the law.
“In government kasi, in government, you have cash and you have budget. Even though we have the cash, we can only spend what the legislator allows us to spend, so we have a budget,” Dominguez said during the Kapihan sa Manila Bay virtual forum.
The President in January signed into law the P4.1-trillion General Appropriations Act (GAA) for 2020, with P654.6 billion allotted to the education sector.
“Wala tayong pera ngayon [we don’t have money now],” Duterte said last Monday citing he would look for additional funds to purchase radios for far-flung areas in line with the distance learning.
“Our budget for this year is P4.1 trillion, but we certainly have the cash. Unfortunately, we don’t have the budget space, so we are making do with what we can,” he said.
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“The other consideration also is that like any household, we cannot spend more than what we earn, and that is called a deficit. That is what you spend more than taxes,” explained Dominguez.
Currently, the government said it plans to cap the deficit at as much as 9% of the gross domestic product (GDP) from about 3.5% in 2019.
“We expect this deficit this year to be already 8.4%. We can go up to 9%, but beyond that is already very dangerous for us just like any household, so we have to watch that,” said Dominguez.
According to Finance Secretary Dominguez, the Philippines already borrowed P1.2 trillion and $4.8 billion to boost the government’s COVID-19 response.
“Even though we have the cash, we also have to reserve the cash for a second round, and we don’t know when the COVID virus is going to be defeated. Many countries have already had a second wave,” he said.
“We might have a second wave. I hope we don’t, but we have to prepare for that, and we have to prepare for the long run. So like any family, you also have to make sure that you have enough for the future,” added Dominguez.