DOF: House-approved ₱1.3-trillion stimulus package unconstitutional

The proposed ₱1.3-trillion economic stimulus packages, which has already been passed by the House of Representatives, should be funded by government savings, not by new borrowings, the Department of Finance (DOF) said Monday.

Without savings, Finance Secretary Carlos G. Dominguez III said the economic stimulus proposals are deemed unconstitutional because they will be funded by additional borrowings by the government.

Dominguez explained that the government is not allowed by the Constitution to earmark additional

expenditures on top of the annual general appropriations law unless these are financed by revenues and savings.

“The Constitution says, we cannot have a supplemental budget that is not supported by additional revenues, or savings,” Dominguez said.

Dominguez clarified that “loans do not qualify as additional revenues or savings.”

The Bureau of Treasury currently has zero savings following the emergency spending for the government’s coronavirus response, the finance chief admitted.

“Right now we have no savings because we have used them all up and we have no additional sources of revenues in the horizon,” Dominguez said.

Asked if he considers the Houseapproved economic stimulus packages as a form of supplemental spending,

Dominguez said yes “because they require spending over and above our current budget.”

Dominguez also denied that the he is against the economic stimulus proposals only because the DOF does not want to incur additional budget deficit despite the government’s favorable credit ratings.

“Let me just tell you that this administration has borrowed the most amount of money in any five-month period compared with any administration in the past,” he said.

‘Not fundable’

Last Friday, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the government is not capable of funding the ambitious economic stimulus approved by the House of Representatives.

Chua said the House-approved ₱1.3-trillion spending plan to jumpstart the economy following the devastation from the coronavirus disease pandemic is “not fundable.”

He explained the proposed Accelerated Recover and Investments Stimulus for the Economy (ARISE) Philippines Act will require new revenue sources, which the government currently do not have.

He also said that funding the stimulus plan through borrowings is not a prudent approach given the budget deficit spending limit of the national government.

“We are in discussion with the congressmen that such an amount would not be fundable because any supplemental budget or standby appropriate requires new revenue sources and that is very limited and financing or borrowing is not a revenue source,” Chua said.

Instead, the NEDA chief proposed that the lawmakers should consider allowing President Duterte’s various fiscal, budgetary, and monetary measures to support the economy.