The government prioritized health and safety of the people, says Finance Secretary Dominguez
MANILA – Describing the year 2020 as “a punishing one,” Finance Secretary Carlos G. Dominguez III said the past year say the government imposing restrictions on movement to save lives from COVID-19 and at the same time building the country’s health capacity.
“We were fully aware, however, that such move would impose heavy costs on the government, on the economy, and on our people,” Dominguez told the Management Association of the Philippines (MAP) during its 72nd Inaugural Meeting and Induction of the 2021 MAP Board of Governors.
He added when the Executive Department opted to restrict the economy in the second quarter, GDP fell by 16.9 percent as the unemployment rate rose to 17.7 percent.
“The strict community quarantine measures cost the National Capital Region and nearby provinces some P2.1 billion in wages every day,” he added.
He explained improvements were seen with the gradual easing of the restrictions with the slower GDP contraction of 11.5 percent with the quarter-on-quarter basis, the economy grew by 8 percent with unemployment dropping to 8.7 percent. However, losses in wages still reached P700 million in wages daily in the NCR as well as the other neighboring provinces due to the general community quarantine.
Secretary Dominguez lamented the fact “some of the jobs lost may never return.” However, the pandemic provided the opportunity to accelerate the shift to digitalization to meet the needs of the emerging economy.
He added the government’s direct response to the pandemic reached P2.66 trillion or 14.7 percent of GDP. The amount includes the biggest social amelioration program that provided emergency cash grants to low-income families as well as wage subsidies to workers in small businesses.
“We urge banks to share the incentives granted to them by providing more loans to home borrowers at lower rates. This should help create jobs in the construction sector,” he explained.
As expected, the government projected much lower-than-expected revenue collections.
The deficit spending last year is expected to reach P1.38 trillion or 7.6 percent of GDP which is more than double the pre-pandemic deficit-to-GDP ratio target of 3.2 percent and the 2019 level of 3.4 percent.
Against this backdrop, Dominguez said they were able collect P2.8 trillion last year.
“This is just for tenths of one percent short of our total collection outlook for the year but lower by nine percent from the 2019 level and by 19 percent from the original target before the crisis struck.
“The total gross financing we raised last year amounted to P2.63 trillion. This excludes the P540 billion pesos-emergency short-term loan from the Bangko Sentral ng Pilipinas, which was already repaid in full in December and re-availed this month,” he said.
Speaking of the total borrowings, he said P1.91 trillion or 73 percent was sourced from the domestic market, which includes the P488 billion from the largest-ever retail treasury bond issuance last August. The remaining P721.1 billion in financing or 27 percent was sourced from development partners and the global bond market.
Secretary Dominguez remains confident the government “can easily fulfill our funding requirement for this year” due to the large structural liquidity in the financing system.
He added such a condition will enable them to continue prioritizing domestic financing to mitigate the build-up of foreign exchange risks. This augurs well with the BSP’s relaxation of reserve requirements to “further enhance” the structural liquidity of the system. (Melo M. Acuña)
Finance Secretary Carlos G. Dominguez III (File Photo/Melo M. Acuna)