Spike in budget deficit triggers call for prudent funding vs. virus

Senator Franklin Drilon on Tuesday urged the government to drop its plan to spend P11.7 billion to hire 130,000 contact tracers in consideration of the country's growing budget deficit due to the COVID-19 pandemic.

"In light of the budget deficit, it behooves all agencies to exercise prudent judgment in the use of public funds," said Drilon, who was able to compel the Philippine Health Insurance Corp. to lower the cost of its COVID-19 testing package by 50 percent, saving the government a potential loss of P8.3 billion.

Drilon supported Senate President Vicente Sotto III's call for "more prudent" use of the country's funds. Sotto also asked the Department of Health to divert the P11.7 billion for the treatment of patients.

The minority leader remprimanded the DOH for insisting on its plan when it can find other ways "to do contact tracing without hurting the government coffers," adding that such a move "shows its insensitivity to [the] budget deficit."

"Given the increasing budget deficit, which is projected to reach P1.56 trillion or 8.1 percent of the country's gross domestic  product this year, this P11.7 billion should better be put to good use," said Drilon. (See related story on A4 – Editors)

Drilon reiterated his proposal for the DOH to mobilize civil society organizations and tap 400,000 barangay health workers and parent-leaders from the Pantawid Pamilyang Pilipino Program to carry out contact tracing.

This would save the government a huge amount of money, Drilon said.

"Time is of the essence and we must act expeditiously — tapping the above workers and leaders can save us precious time and help us combat COVID-19 efficiently," Drilon told Health Secretary Francisco Duque, in a letter, noting the warning issued by the World Health Organization (WHO) regarding the slow contact tracing efforts in the country.

"Since they are already organized, they can be quickly mobilized as contact tracers," he added.

Drilon emphasized the importance of tracking in containing the virus and winning the fight against the pandemic.

"Our objective to prevent the virus from spreading is based on our ability to efficiently identify the infected and notify those he or she has made contact with. Hence, contact tracing is a must and should never be neglected," Drilon said.

Metro Manila emerged on Monday from one of the world's longest coronavirus lockdowns as the country seeks to repair its badly damaged economy even as the number of new infections surges.

Streets in the capital were choked with traffic and limited public transport resumed as commuters flooded back to work in the city of 12 million after nearly three months of strict home quarantine.

Most businesses have been allowed to reopen in the city, but schools, bars, dine-in restaurants all remain shuttered.

The tough measures have hurt millions of workers in Metro Manila, which accounts for more than a third of the country's economic output. With AFP 

Its reopening comes after figures showed the Philippines' economy shrank 0.2 percent in the first three months of the year -- the first contraction in more than 20 years. With AFP

The country's economic pain will likely intensify as officials estimate hundreds of thousands of Filipino migrant workers will lose their jobs due to virus shutdowns around the world.

Their remittances account for a tenth of the Philippines' gross domestic product, and have long served as an economic lifeline for a country where millions live in deep poverty.

The government's outstanding debt jumped by P869 billion or 11.2 percent since the start of the year to reach P8.6 trillion as of end-April, the Bureau of Treasury said Tuesday.

Data showed that in April, government debt increased by P122.89 billion or 1.4 percent from the March level of P8.48 trillion as the government issued more domestic securities and took out external loans to raise funds for coronavirus response efforts.

"To date, government debt grew by 11.2 percent for the first four months of the year driven by the 5.1-percent increase in external debt and the 14.4-percent increment in domestic liabilities," it said.

The Treasury said that of the total outstanding debt stock, 33 percent was sourced externally and 67 percent was domestic debt.

Domestic debt increased by P736 billion or 14.4 percent since the start of the year to P5.8 trillion as of end-April, while foreign debt went up by P133 billion in the four-month period to P2.7 trillion as of end-April.

The Bangko Sentral ng Pilipinas said net issuance of domestic government securities amounted to P50.82 billion in April while the peso appreciation diminished the value of onshore dollar bonds by P0.17 billion.

"For April, net availment of external loans amounted to P87.34 billion as part of the government’s effort to raise concessional financing to address the 2019 coronavirus disease pandemic," the Treasury said.

Currency adjustments trimmed foreign debt by P15.10 billion, particularly through local currency appreciation.

Total government guaranteed obligations decreased by P4.14 billion or 0.9 percent month-on-month to P477.68 billion in April. The lower level of guarantees was due to the net redemption of both local and foreign guarantees amounting to P3.24 billion and P0.10 billion, respectively.

Data showed that on a year-on-year basis, the government’s outstanding debt surged by P813 billion or 10.4 percent from P7.786 trillion in April 2019.

Also on Tuesday, Albay Rep. Joey Salceda told the Interagency Task Force for the Management of Emerging Infectious Diseases it must be unambiguous in risk management and have foresight to save lives and prevent the total destruction of the economy.

“Clarity in risk management and foresight will save lives and restart the economic engine,” Salceda said as he advised the IATF to “foresee uncertainties in Covid-19 management to help the economy barrel through.”

These, Salceda said, will boost business and consumer confidence and help the floundering economy recover faster.

He recommended group testing as a mass testing strategy, and sought the inclusion of “relevant information for contact-tracing in enrollment forms.”

The government incurred a record monthly budget deficit of P273.9 billion in April as tax collection came to a halt because of the enhanced community quarantine imposed by the government to contain the coronavirus pandemic.

Data from the Bureau of Treasury showed that the April deficit was a reversal of the P86.9 billion surplus a year ago. Revenue collection tumbled 39 percent while expenditures surged 108 percent during the month.

The April deficit brought the cumulative budget shortfall in the first four months to P347.9 billion, significantly higher than the P3.4 billion deficit in the same period last year.

“As expected, the budget deficit widened substantially as revenue collection was all but nonexistent for both BoC [Bureau of Customs] and BIR [Bureau of Internal Revenue] while expenditures understandably rose 108 percent as the government rushed to help alleviate the dire situation caused by the pandemic,” ING Bank Manila senior economist Nicholas Mapa said in a report.

Mapa said cash outlays, subsidies and expenditures related to health care needs pushed spending to bloat. He said that timely, substantial and targeted spending could translate into a faster pickup in the gross domestic product which would help limit the widening of the budget deficit to GDP ratio as growth outpaces the increase in spending.

The Treasury said revenues amounted to P187.8 billion in April, down by 39.17 percent from last year’s P308.7 billion. Of the total, tax collections made up 67 percent or P124.9 billion while non-tax sources contributed 33 percent or P62.8 billion. This resulted in a year-to-date revenue collection of P963 billion, lower by 3.36 percent or P33.4 billion from a year ago.

The Bureau of Internal Revenue posted a steep 61.56 percent year-on-year decrease in April collections with only P90.5 billion.

“The slower outturn was attributed to the Luzon-wide enhanced community quarantine, which was also implemented in other provinces, and the extension of deadlines for the filing and payment of income and other taxes due for the month amid the pandemic crisis,” the Treasury said.

BIR’s aggregate collection from January to April declined 20.5 percent to P559.3 billion from P703.7 billion a year earlier.

Collections by the Bureau of Customs fell 33.38 percent to P34.4 billion in April from P51.7 billion raised in the same month last year. Total BOC collection in the first four months went down by 7 percent to P179.7 billion from a year earlier.

"The virus is frightening but it's either you die from the virus or you die from hunger," salesman Himmler Gaston, 59, said as he entered the train station where commuters had their temperatures checked.

Normally packed train carriages had plastic sheets covering some seats and markers on the floor to ensure passengers kept their distance from each other.

Despite the risk of being exposed to the virus on his way to work, 27-year-old barista Paul Escala said the train was still safer than riding his bicycle.

"It's safer here. If I'm taking the bike, I have two opponents: the virus and unruly motorists," he said.

Quarantine measures to contain the virus vary across the Philippines, but the strictest and longest lockdown has been in Metro Manila, the center of the country's outbreak.

It shut down in mid-March at about the same time hard-hit France and Spain issued their stay at home orders.

While those countries have steadily loosened their restrictions in recent weeks, Manila only started allowing outdoor exercise two weeks ago.

Even now children and the elderly have to stay home unless they are out getting essentials or headed to work. – With AFP

Topics: Franklin Drilon , COVID-19 pandemic , Philippine Health Insurance Corp.
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