(Explanation of affirmative vote with grave reservations on the Bicameral Conference Committee Report on Bayanihan 2)
by Rep. Edcel C. Lagman, 1st District of Albay
Something is better than nothing.
I vote “Yes” to the Bicameral Committee Report on Bayanihan 2, but with grave reservations.
The pandemic is still raging with the Philippines currently with the highest number of confirmed Covid cases in Southeast Asia. Yet the appropriation for Bayanihan 2 is a measly P165.5 billion, which is less than 60% of the P275 billion appropriation for Bayanihan 1 when the contagion started, and is only 12% of the P1.3 trillion appropriation for the ARISE bill which the House has approved on third and final reading.
The appropriation of the relief and stimulus packages in Bayanihan 2 is pathetic despite the expanding war chest of the Philippines to address the pandemic.
It has been a double whammy for the country. Covid cases continue to surge despite the lockdowns. The economy flounders because of the lockdowns. Compared to the second quarter of 2019, the economy in the second quarter of 2020 fell by 16.5%, the deepest quarterly plunge in the history of national income accounting in the Philippines.
Addressing this double whammy demands an enormous amount of financial resources and responsive allocation.
The Philippines has the financial resources but the Congress and the Executive refuse or fail to allocate the requisite funds.
Bayanihan 2 does not include as sources of funding foreign grants and loans from multilaterals like the Asian Development Bank (ADB), World Bank (WB) and International Investment and Infrastructure Bank (IIIB), as well as domestic borrowings, all of which amount to billions of pesos or even over a trillion pesos.
Bayanihan 2 under Sec. 11 thereof discloses as sources of funding for the P166.5-B subsidy and stimulus package as follows:
“SEC. 11. Sources of Funding. – The enumerated subsidy and stimulus measures, as well as other measures to address the COVID-19 pandemic shall be funded from the following:
- 2020 GAA: PROVIDED, That funds for the herein authorized programs and projects shall be sourced primarily from the unprogrammed funds and savings realized from modified, realigned, or reprogrammed allocations for operational expense of any government agency or instrumentality under the Executive Department, including, but not limited to, travelling expenses, supplies and materials expenses, professional services, general services, advertising expenses, printing and publication expenses, and other maintenance and operating expenses in the 2020 GAA;
- Savings pooled pursuant to Republic Act No.11469 and Section 4 paragraphs (pp), (qq), (rr), (ss), (sss) and (ttt) of this Act;
- Excess revenue collections in any of the identified tax or non-tax revenue sources from its corresponding revenue collection target, as provided in the FY 2020 Budget of Expenditures and Sources of Financing (BSF);
- New revenue collections or those arising from new tax on non-tax sources which are not part of nor included in the original sources included in the FY 2020 BESF;
- All amounts derived from cash, funds and investments held by any GOCC or any national government agency;
- Amounts derived from the five percent (5%) franchise tax on the gross bets or turnovers or the agreed pre-determined minimum monthly revenues from gaming operations, whichever is higher, earned by offshore gaming licenses, including operators, gaming agent, service providers and gaming support providers;
- Income tax, VAT, and other applicable taxes on income from non-gaming operations earned by offshore gaming licenses, operators, agents, service providers and support providers.
“The tax shall be computed on the peso equivalent of the foreign currency used, based on the prevailing official exchange rate at the time of payment, otherwise the same shall be considered as a fraudulent act constituting under declaration of taxable receipts or income, and shall be subject to interests, fines and penalties under Section 248(B), 249(B), 253, and 255 of the National Internal Revenue Code of the Philippines.
“After two years or upon a determination that the threat of COVID-19 has been successfully contained or abated, whichever comes first, the revenues derived from franchise taxes on gross bets or turnovers under paragraph (f) and income from non-gaming operations under paragraph (g) shall continue to be collected and shall accrue to the General Fund of the Government. The BIR shall implement closure orders against offshore gaming licenses, operators, agents, service providers and support providers who fail to pay the taxes due, and such entities shall cease to operate.” (Emphasis supplied).
It must be reiterated that the foregoing funding sources for Bayanihan 2 do not include the available foreign and domestic borrowings, which could have adequately increased the relief and stimulus packages.
Likewise, the funding releases reported by the Department of Budget and Management (DBM) as of August 22, 2020, which amounted to P376.6-B in response to the health and socio-economic crisis caused by Covid-19, did not include as sources of the subject expenditures foreign and domestic borrowings.
More specifically, the DBM report enumerated the following as sources of the releases of P376.6-B:
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P266.5-B came from discontinued programs, activities and projects in the 2020 GAA amounting to P231.3-B and P35.3-B from the 2019 GAA.
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P9.8-B came from regular agency projects of which P9.7-B have been allocated under the 2020 budget and 187.2-M under the 2019 national appropriations.
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P100.2-B from Special Purpose Funds, including this year’s National Disaster Risk Reduction and Management Fund (P2.2-B), Contingent Fund (P553.1-M), Miscellaneous Personnel Benefits fund (P749-M), and unprogrammed appropriations (P96.7-B).
Why are these available foreign and domestic borrowings not used for a more responsive relief and stimulus package?
Are they also under lockdown? The Department of Finance, the Bureau of the Treasury, and Department of Budget and Management have a lot of explaining to do.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno on August 1, 2020 reported that foreign borrowings and grant assistance secured by the Philippine government for its anti-Covid 19 measures and to finance various projects reached $8.2-B as of end-June 2020.
Finance Secretary Carlos Dominguez disclosed on August 15, 2020 that the World Bank will approve financing for another $1.9-B in projects for the Philippines before year end to help the economy recover from the Covid-19 induced recession.
A study based on the ADB's policy database revealed that as of mid-July, the country's war chest against Covid-19 was $21.05 billion or roughly P1.023 trillion. Being the number one in Covid cases in Southeast Asia, the country should have the largest war chest in the region.
In fact, our war chest was only the sixth largest and, on a per capita basis, only the seventh largest. The country's war chest was 5.72% of its GDP, only the eighth highest in the region that had an average war chest-to-GDP of 9.63%. [Ben de Vera, Inquirer, July 18]
The updated war chest figure for 2020 is P1.844 trillion, which includes the current war chest of P1,501.45 trillion consisting of P275 billion from Bayanihan 1, P300 billion from a BSP loan, $8.203 billion or P410.15 billion from foreign loans, and P516.3 billion from RTBs or Progreso Bonds, as well as the forthcoming P342.75 billion consisting of P166.5 billion from Bayanihan 2, $1.9 billion or P95 billion from the World Bank, and $1.625 billion or P81.25 billion from the ADB. [Foreign loans: Laurence Agcaoli. Phil Star, August 1; World Bank loan: Ben de Vera, Inquirer, August 15; RTBs: Julito Rada, Manila Standard, August 14. The current P48.71 to the dollar exchange rate was used. Ben de Vera, Inquirer, July 23. The P50 to the dollar exchange rate is used." Note that the original exchange rate used was P48+ to the dollar].
In addition to the released and committed foreign grants and loans, the Bureau of National Treasury has raised P1.2 trillion as of June 30, 2020. Moreover, auctions for the Premyo Bonds (Retail Treasury Bonds) have fetched P516.3 billion in early August, 2020 and more will be generated because new auctions are scheduled.
Social media posts of doctors and nurses spending sleepless days and sleepless nights in vigil over their Covid patients, with some of the doctors and nurses trying to catch few minutes of sleep on hospital floors, are invariably heartbreaking. As some consolation, health workers deserve much higher salaries and hazard pay. The higher salaries and hazard pay will encourage many other health workers to join them in the medical crusade.
It must be recalled that DBM has released P376-B in Covid response as of August 10. This means there will still be P1.468 trillion (P1.844 - 376) for Covid response. [Ben de Vera, Inquirer, August 22].
We have contracted so much internal and external debt for our Covid response. It is bad enough that we will let our children and grandchildren be burdened by the principal and interest debt service payments that the loans entail. It will definitely be worse if they realize that they are shouldering payments for loans that were of little or no use to their parents and grandparents.
We have the financial resources. The urgent task is to mobilize them against the pandemic and the recession.