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CONGRESS MANDATED ONLY P50B FUNDING

No such thing as P330-B stimulus plan — Angara

02/01/2009

A senator questioned yesterday the chances of the the Arroyo administration delivering on the P330 billion proposed funding for the stimulus package purportedly to shield the economy from the current global slowdown, saying all that was “legitimately” provided in the budget this year was P50 billion.

International credit ratings firm Fitch Ratings earlier expressed doubts on the ability of the government to put together the costly stimulus package.

Sen. Edgardo Angara said Fitch should have looked at the budget in which only P50 billion was appropriated for economic stimulus.

Angara, who is allied with the administration, indirectly questioned the funding for the plan to stimulate the economy which until now has not been fleshed out by Mrs. Arroyo through a reaction to comments made by Fitch Ratings on the stimulus plan.

“Someone should stand up and say ‘No. That’s not a stimulus fund. You judge the stimulus fund put together by Congress because that’s the legitimate way of appropriating money.’ Because as I understand it, under a system of government like ours only Congress can appropriate a spending package like that, unless someone now has invented a money printing press and

going to print P300 billion,” Angara added.

The government is putting up P50 billion for the package by drawing P12.5 billion each from SSS, Government Service and Insurance System (GSIS), Land Bank of the Philippines (Landbank), and the Development Bank of the Philippines (DBP).

The private sector is expected to raise a counterpart fund of P50 billion based on the plan drawn up by Malacañang.

Angara, however, doubted the capacity and the willingness of the private sector to bankroll the stimulus fund. Angara said expecting private funding for the package was a “ridiculous claim.”

He said the reason, precisely, why government is coming forward and will be spending tax money is because the private sector is not spending and will not spend.

He cited the situation now wherein there is so much money in banks and yet these banks are not lending.

The global financial crisis has resulted in a financial regime wherein the risk is too high, risk is almost endless and the end in sight is nowhere. “So why would the private sector put up P50 billion as claimed?” he asked.

Even Social Security System president Romulo Neri admitted that the pension fund SSS along with three other government financial institutions are investing P12.5 billion each to the stimulus program the details of which “has not been finalized.”

In a statement, Neri said SSS has not made any “formal commitment” but he quickly added that he felt “it’s a good program and the SSS would be willing to support it.”

He said the SSS will require full government guarantee on its infusions to the stimulus plan.

Fitch Rating should be commenting on the P50 billion stimulus fund put together by Congress since it is the legitimate way of appropriating money as embodied in the budget, Angara said.

“I have read reports on the comment of Fitch - one of the rating agencies who rates sovereign credit - doubting the capacity of the Philippines to put together and spend and disburse a stimulus fund. I thought I need to address this because it’s damaging to our country,” he said.

Fitch Rating was analyzing the announced P300 billion stimulus package and I myself is doubtful where the P300 billion will come from, Angara, who is chairman of the Senate committee on finance, said.

Fitch Ratings head of Asia Pacific Sovereigns James McCormack expressed doubts that the government can successfully implement the proposed P330-billion economic stimulus package citing questions on whether the fiscal stimulus of the government would actually be spent.

McCormack said since the government is small it would have less capacity to deliver the stimulus program. He also said that it will be difficult for the government to get the money spent. He also questioned the government’s capability to shore up its logistics and people.

Angara also pitched in a piece of advice to public officials during this time of financial crisis.

“This is a time of great uncertainty. Public officials, but specially, people from Congress who are putting the money together, must be clear and unambiguous about their statements. Because the people are already troubled and uncertain, we should not be the ones to add uncertainty to these uncertain times,” Angara said.

Malacañang, meanwhile, insisted that revenues from the expanded value-added-tax (E-VAT) will continue to insulate the country from the global crisis.

Press Secretary Cerge Remonde commenting on a proposal of economic group IBON Foundation to suspend the e-VAT as a measure to help the poor ride out the crisis said the measures, which President Arroyo stuck with even at the expense of her popularity to suffer had shown in the end to have helped the country to be insulated from the global economic crisis.

He added that the President had to muster political will to impose the fiscal measure.

Executive Secretary Eduardo Ermita had said the proponents for the suspension of e-VAT were free to express their recommendations but the measure would continue.

“I am sure that you are aware of the E-VAT windfall which in the first and second quarter of 2008 collected P4 billion, in the third quarter at P10 billion, and in the fourth quarter at P4 billion,” Ermita said.

“We are now using this ‘Katas Ng Vat’ for our pro-poor programs,” he noted.

Among the pro-poor programs of the Arroyo Administration which have benefitted from the Katas Ng Vat include the food and power subsidies which were distributed during the second semester of 2008 mainly to give assistance to families that were hard-up in meeting their monthly power bills and at the same stretch their family budget for basic food items including rice which reached record high prices last year.

Remonde added Malacañang is supporting a National Economic Development Authority (NEDA) proposal to postpone the government rationalization program as “good and timely and will have to be submitted to the cabinet body for approval.”

Remonde said that the proposal would likely be discussed in the Cabinet meeting on Tuesday.

Presidential Deputy Spokesperson Lorelei Fajardo earlier told Malacañang media that the Palace expected that almost all agencies of the government have done their rationalization program since the program was started several years back under Executive Order 366 which mandated all departments and agencies of the Executive, as well as government-owned and -controlled corporations, to scale down, phase out, abolish, deactivate, merge, consolidate and regularize any and all agencies that do not deliver “quality public service.” Riza Recio