PH ‘financially able’ to meet COVID-19 challenges, Finance chief says
Robie de Guzman • April 13, 2020 • 341
MANILA, Philippines – The Department of Finance (DOF) has assured that the Philippine government is financially ready to meet the unexpected challenges brought about by the novel coronavirus disease (COVID-19) crisis.
In a statement, Finance Secretary Carlos Dominguez III said the government’s conservative economic policies have enabled the mobilization of P1.17 trillion-worth of fiscal and monetary measures to date to help defeat the COVID-19 crisis and provide relief to the poor and other sectors heavily hit by the situation.
The Finance chief attributed this to President Rodrigo Duterte’s policies of “maintaining fiscal discipline and exercising prudence in state spending” since the beginning of his term.
“The President’s judicious spending policies have kept the country’s macroeconomic fundamentals strong, with gross domestic product (GDP) growth averaging 6.4 percent since he assumed office in 2016,” Dominguez said.
“The government’s revenue effort or collection from taxes and other sources reached 16.9 percent in 2019, which is the highest in 22 years,” he added.
Dominguez thanked the Congress for enabling the administration to meet the new set of priorities triggered by the COVID-19 outbreak by providing the president with the power under Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act to realign and reallocate savings from the 2019 and 2020 national budgets.
He said these savings were used to finance the emergency subsidies for vulnerable sectors most affected by the crisis and boost the capability of the country’s healthcare system.
“We want to assure all our citizens that at this point we have the money. Although, we have to realize that our funds are not endless so we need to spend it correctly, and not on wasteful expenditures,” Dominguez said.
With the economy taking a hard hit as a result of the COVID-19 emergency, the administration’s economic team projects the GDP growth to dive to -0.8 to 0.0 percent this year, and the budget deficit to rise to 5.3 percent.
“With a bigger deficit, this means we will be spending more than we will be collecting. But we are spending more in order to save the people and make sure that they have food on the table during this time,” he said.
The Finance chief also sees a rise in the country’s debt-to-GDP ratio to about 46.7 percent of GDP, but he assured that this will still enable the government to borrow more money from multilateral institutions to support the economy and fight COVID-19.
If the P1.17 trillion worth of monetary and fiscal actions are not enough to fight COVID-19, Dominguez said the government is ready to tap the commercial markets for additional funds.
“We have a good credit rating, it rose, we are now ‘BBB Plus’ –the highest we have ever achieved,” he said.
Duterte earlier floated the possibility of selling government assets should the country need more funds for its COVID-19 response.
Dominguez also shared that an economic bounce-back program is also in the works, “which is why the government is undertaking a survey among businesses and consumers to assess the damage of COVID-19 to the economy.”
“We will analyze that (survey) to determine where the biggest damage lies– in tourism, in manufacturing–and the companies hardest hit —either small and medium enterprises or the big corporations,” he said.
“We are confident that we have the financial capability to bridge this problem that the COVID-19 has brought us,” he added.
MANILA, Philippines – The Philippines and Japan signed an agreement for a 50 billion yen (around P23.3 billion) standby loan which aims to quickly disburse funding support for the government’s response to national calamities or health emergency, the Department of Finance (DOF) said.
In a statement, the DOF said Finance Secretary Carlos Dominguez III and Japan International Cooperation Agency (JICA) Chief Representative Eigo Azukizawa signed the deal Tuesday on the second phase of the post-disaster standby loan (PDSL).
Under this agreement, the DOF said the disbursement of the standby loan to the Philippines will be triggered by either of the following circumstances: the declaration of a state of calamity; or the declaration of a state of public health emergency.
In the case of the current COVID-19 pandemic or any other public health emergencies, the imposition of an enhanced community quarantine (ECQ) or its equivalent in the National Capital Region (NCR) or in any other highly urbanized area in the country will also trigger the disbursement of the loan, it added.
“The ongoing pandemic underscores the need to further improve our policy and institutional framework for disaster risk reduction and management. It likewise emphasizes the need to build our financial resilience against disasters and similar emergencies,” Dominguez said during the ceremonial signing of the loan deal at the DOF office in Manila.
The loan will be available for quick disbursement in tranches within three years once it is declared effective. It may be extended for an additional three-year period for up to four times.
The financing package under PDSL carries a fixed interest rate of 0.01 percent with a maturity of 40 years, inclusive of a 10-year grace period.
Japanese Ambassador to the Philippines Koji Haneda welcomed the agreement, saying that “as a calamity prone country like the Philippines, Japan fully understands the value of safeguarding lives, infrastructure and livelihood.”
The signing of this loan accord comes after a separate 50-billion yen loan inked by both countries in July for the COVID-19 Crisis Response Emergency Support Loan, which aims to assist the Philippine government’s efforts to contain the spread of the coronavirus disease and aid Filipinos most affected by the pandemic.
MANILA, Philippines – Taxpayers who have yet to pay their liabilities will now be able to settle them without an audit, the Department of Finance (DOF) said Monday.
In a statement, the DOF said it has issued Revenue Regulations No. 21-2020 for the implementation of the Voluntary Assessment and Payment Program (VAPP) for the taxable year 2018.
“The VAPP allows taxpayers to voluntarily pay their unpaid internal revenue tax liabilities–with or without an ongoing audit of or investigation into their finances– and those who do so will no longer be audited or investigated for 2018 for the tax types availed,” it said.
The finance department said the VAAP program covers all internal revenue taxes due for the taxable year ending December 31, 2018, and for fiscal year 2018 ending on the last day of July 2018 to June 2019.
It likewise covers one-time transactions (ONETT) such as the payment of estate taxes, donor’s taxes and capital gains taxes (CGT), as well as ONETT-related creditable withholding taxes (CWT) or expanded withholding taxes and documentary stamp taxes (DST), it added.
The DOF, however, said that taxpayers who wish to avail of the VAPP must generally pay the higher of a certain percentage of 2018 gross sales or 2018 taxable net income, based on the increase or decrease in total taxes paid from taxable years 2017 to 2018, subject to minimum amounts based on subscribed capital.
The department expressed hope that the program will increase its tax collections while providing taxpayers an easy and affordable way to settle their unpaid tax deficiencies.
The program will run until December 31, 2020, the DOF said.
MANILA, Philippines – The Duterte administration’s economic team has urged Congress to quickly approve the proposed P4.5 trillion national budget for next year to ensure funding for government’s plans to battle novel coronavirus disease (COVID-19) pandemic.
In a statement on Sunday, Department of Finance (DOF) Secretary Carlos Dominguez III said the swift enactment of the 2021 budget bill would help rebuild the economy and defeat the pandemic.
The House of Representatives’ appropriation committee started last week its deliberation on next year’s record high spending plan while the Senate finance panel is set to tackle the measure this week.
On top of the proposed 2021 General Appropriation Act, the administration’s economic managers are also urging lawmakers to approve several economic priority measures which aim to accelerate economic recovery and make support available for businesses, workers and families that were hit hard by the coronavirus pandemic-induced global crisis.
Dominguez reiterated that among the measures that require prompt congressional action are the proposed Financial Institutions’ Strategic Transfer (FIST) Act, the Government Financial Institutions’ Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE), and the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE).
The proposed FIST Act will allow banks to dispose of bad loans and non-performing assets (NPAs) through asset management companies, while the GUIDE bill seeks to allow state-run banks to form a special holding company that will infuse equity, with strict conditions, into strategically important companies facing insolvency.
The CREATE bill seeks to immediately lower the corporate income tax (CIT) rate from 30 to 25 percent once made effective and will enhance the flexibility and efficiency of the incentives system for businesses, Dominguez said.
“The swift enactment of CREATE, FIST, GUIDE and the 2021 budget will serve to accelerate our economic recovery. We should not delay providing urgent and necessary relief to our people,” he said.
The Duterte administration will also continue to work with the legislature in passing the remaining packages of the comprehensive tax reform program (CTRP) that will, among others, institute reforms in property valuation and in the taxation of the financial sector, the finance chief further stated.
He said economic recovery also rests on sustaining President Duterte’s signature program “Build, Build, Build,” as sound infrastructure investments provide the largest multiplier effect on the economy in the form of more jobs, increased consumption, and the generation of additional productive activities.
Dominguez said that unlike past crises when legislation and spending restored confidence in the economic sector, the current one caused by COVID-19 “cannot be ended with a knock-out punch until a safe and effective vaccine becomes readily available for mass distribution.”
Thus, he said, the government should have the fiscal stamina to endure the expected drawn-out battle against the pandemic.
“How a country’s economy performs during COVID-19 and how quickly it can bounce back once the crisis is over will depend on its economic resilience,” Dominguez said. “This is why we have been consistent with our approach: we will do what is necessary, but we will not be wasteful.”
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