Under heavy pressure from Finance Secretary Sonny Dominguez, the Senate approved a token P140 billion economic stimulus fund or just a tenth of the P1.3 trillion rescue package approved by the House.
Multiple Bilyonaryo sources said senators were forced to approve a tiny stimulus budget as Dominguez, and his economic management team, put their foot down that the government could not afford to go into debt even if it meant an imminent economic collapse.
“Senators all wanted a bigger stimulus package of up to P670 billion but economic managers complained, claiming they could not afford it especially after the massive spending for Bayanihan first phase,” the Bilyonaryo source said.
“So the senators agreed that the P140 billion would just be the first salvo and called it a ‘mini stimulus program’ with more hearings to be conducted on a bigger stimulus,” the source added.
Another source said senators were not left with much choice as Dominguez, through an intermediary, warned that President Rodrigo Duterte would veto a stimulus package that would exceed his suggested amount.
In contrast, the House approved a P1.3 trillion stimulus package to help the economy rise quickly from the pandemic lockdown through wage subsidies and cash-for-work programs for displaced workers, zero-interest loans for companies, and loan guarantees for banks.The bulk or P700 billion of the package would be spent in 2020 with the balance to be deployed from 2021 to 2022.
Based on his proposal, Dominguez wanted to limit the package to P131 billion – P10 billion for mass testing, P30 billion for wage subsidies (House version P110 billion), P21 billion for Tulong Panghanapbuhay sa Displaced/Disadvantaged Workers (TUPAD), and P70 billion loan guarantees (House version P20 billion). Dominguez has stuck to his miserly “playbook” (most of the government spending so far has been mere realignments of existing budgets, as he was more concerned about keeping debt levels.
The House package had all of these plus P70 billion for transportation, P66 billion for agri-fishery, P58 billion for tourism, P50 billion interest-free loans, P45 billion loans for micro, small, and medium-scale enterprises, P44 billion for industry and service sectors, P33 billion emergency loan for students, P130 billion for enhanced “Build, Build, Build” projects in 2020.
An analyst warned that the government’s decision to remain in spending “stasis” could lead the Philippine economy to three straight quarters of negative growth, a deep recession. The analyst said this deep recession could inflict heavy damage on the economy which could take years to recover from.
Local and foreign business groups have expressed their support to the House’s stimulus package dubbed Accelerated Recovery and Investments Stimulus for the Economy (ARISE).
They cited the need for “swift and substantial intervention to approximate or exceed” the package spent by the country’s neighbors.
As of May 18, the Philippines has spent $19.823 billion ($185.86 per capita) for the COVID-19 response, the least amount among ASEAN’s Big 6 – Singapore spent $45.062 billion ($7,991 per capita), Thailand spent $84.092 billion ($1,211 per capita), Malaysia spent $35.474 billion (($1,125 per capita), Vietnam $26.396 billion ($276.28 per capita), and Indonesia spent $64.274 million ($240 per capita).