MANILA, Philippines—The government is looking for where to get P75 billion in funds to also vaccinate teenagers and buy booster shots for up to 85 million Filipinos in 2022, Finance Secretary Carlos Dominguez III said on Thursday (May 13).
President Rodrigo Duterte’s Administrative Order (AO) No. 41, which tasked agencies with finding savings from the P4.1-trillion 2020 national budget whose validity had been extended until end of 2021, was aimed at reallocating funds in light of the emerging possibility that more Filipinos needed to be vaccinated, according to Dominguez, who heads the government’s economic team.
Dominguez said finance offiicals had to determine how much budget savings AO 41 would yield.
The government had set aside P82.5 billion for vaccine procurement and rollout this year:
- P70 billion in unprogrammed appropriations from loans and excess revenues, of which P58-billion was already borrowed from the Manila-based Asian Development Bank (ADB), the Beijing-based Asian Infrastructure Investment Bank (AIIB) and the Washington-based World Bank
- P2.5 billion in the Department of Health’s (DOH) budget
- P10 billion released to the DOH last February under the Bayanihan to Recover as One Act or Bayanihan 2
The government had deemed the amount enough to buy 140 million vaccine doses, or two doses each, as needed for at least 70 million adult Filipinos as shots had not been recommended by experts for those below 18 years old.
However, “with the announcement that some countries will inoculate teenagers and the expectation that we eventually will follow suit, we are anticipating an additional expenditure of about P20 billion to vaccinate the approximately 15 million kids aged 12 to 17,” Dominguez said.
“As we are also anticipating acquiring booster shots for next year for about 85 million teenagers and adults, we will be needing another P55 billion,” Dominguez added.
“To fund this but still maintain an acceptable fiscal deficit, we most likely will need to reallocate funds,” the finance chief said.
Dominguez said a “conservative” estimate would entail starting vaccination among teenagers this year. “But the final decision will be with the health authorities,” he said.
Last April, Dominguez said the national government planned to wind down its budget deficit starting in 2022 to bring the gap back to pre-pandemic levels amid rosier economic prospects seen boosting government revenues.
As the government ramped up spending, especially for COVID-19 response, while revenues remained weak due to the prolonged pandemic-induced recession, the Philippines’ fiscal deficit—the balance of expenditures over tax and non-tax collections— ballooned since 2020 beyond the usual below 4 percent annually before the pandemic struck.
The Development Budget Coordination Committee (DBCC) had programmed a deficit equivalent to 8.9 percent of GDP in 2020. It meant a record P1.78-trillion gap, with P2.88 trillion in revenues exceeded by P4.66 trillion in expenditures expected by yearend.
Economic managers initially rejected additional stimulus spending without first finding funding sources, as they wanted to keep the budget deficit in the middle of the pack among economies with similar investment-grade credit ratings as the Philippines to keep borrowing rates low.
The government ramped up borrowings to finance its war chest against COVID-19, taking advantage of low interest rates in commercial markets as well as concessional financing from bilateral and multilateral sources.
Since the government wanted to sustain robust spending, especially on infrastructure, in the near term, the return to a smaller budget deficit would mainly come from the revenue side, even as Dominguez said there will be no new taxes before President Rodrigo Duterte steps down in 2022.
Dominguez had said that fiscal consolidation will come from “a combination of a reduction in the disruptions due to the [COVID-19] contagion, increase in public and private investments, drop in unemployment, increase in consumption, increase in taxable profit, [and] return to solid investments-led growth of the economy.”
But the economy slid to its fifth-straight quarter of recession during the first quarter of 2021 — the longest since the Marcos-era debt crisis in the 1980s — amid the lengthiest and most stringent ongoing COVID-19 quarantine in Asia. Gross domestic product (GDP) shrank by 4.2 percent year-on-year during the January to March period, the government reported this week.
Amid sluggish mass vaccination and lack of fiscal stimulus, most private-sector economists believed GDP cannot grow by 6.5-7.5 percent in 2021 as the government had targeted, drawing a scenario in which the Philippines would be the region’s laggard in economic recovery.