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On IMF report saying PH still has fiscal space

April 20th, 2021

Salceda on IMF report saying PH still has fiscal space: Good for Bayanihan 3, better vaccine rollout

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that the statement by the International Monetary Fund (IMF) that the Philippines still has fiscal space for additional government support “strengthens the case for a third Bayanihan Act and for more funds for better vaccine rollout.”

Salceda, a principal author of Bayanihan 3, was responding to an IMF pronouncement that the Philippines still has fiscal space which it could utilize to support its recovery from the coronavirus-induced crisis.

“The IMF staff advises that fiscal policy should ‘continue doing its part this year.’ The Philippines still has some fiscal space and can and should maintain its fiscal support to recovery,” IMF Representative to the Philippines Yongzheng Yang said in a statement.

“The IMF’s statement shows that we can approve Bayanihan 3 with little adverse consequence on our credit standing. Together with the revenue-generating efforts of the House, we should be alright,” Salceda said.

Salceda not satisfied by DOH answers on vaccine rollout funding

Salceda says that more fiscal support, particularly for vaccination, is important, adding that he was not satisfied with the answers of the Department of Health (DOH) to earlier questions on the budget for vaccine rollout during the Bayanihan 3 hearings.

“The answer they gave was P4-5 billion, which is totally inadequate to do mega-vaccination, when the global supply becomes looser after July. So, we in Congress will need to have some foresight and prepare fiscal space for vaccine rollout requirements,” Salceda said.

“I get the impression that the DOH has not simulated the costs of mass vaccination well. That worries me. We need to be ready to authorize more funding,” Salceda added.

“The experience of countries like the United States is that for every dollar spent on vaccines, you need at least 80 cents more to get it injected. Transport, storage, personnel costs, and syringes are not cheap.”

“So, with more fiscal space, as validated by the IMF, we can authorize more funding for vaccination efforts. There is no way back to the old normal without mass vaccination. And if the funding for vaccine rollout is not there, vaccines procured will go to waste. To waste vaccines in this crisis is an offense to humanity,” Salceda said.

Earlier this week, Salceda cited that average interest rate payments per peso of debt, has actually gone down during the COVID-19 pandemic, leaving more room for fiscal support by the government.

“We have significant fiscal protection from a credit rating downgrade, and the decline in interest payments is further proof of this downside buffer. In fact, the average interest rate on national government (NG) debt declined from 4.67% in 2019 to 3.88% in 2020. In other words, despite an increase in debt burden, we are actually paying lower interest peso-on-peso,” Salceda said.

“Coupled with the revenue measures the House has already passed, and with the reforms like higher GOCC remittances that we are pushing for, Bayanihan 3 should pass without affecting our credit standing,” Salceda added.

Household income protection remains primary priority

Salceda also says that protecting household incomes while the vaccines have not been administered en masse is the most urgent priority of Congress.

“Ultimately, because we are a consumption-driven economy, when household income goes down, the economy suffers severely. So, our priority is really to support household income with government aid, protect jobs by supporting businesses, and try to stabilize prices so that real income does not suffer,” Salceda said.

“That’s why Bayanihan 3, particularly its universal basic income component, is very important,” Salceda added.

“We need the vaccines to protect people from dying of COVID-19. But we need to extend aid to prevent people from dying of something more basic: hunger,” Salceda added.

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