Finance chief says fiscal prudence prepared PH to handle new COVID-19 surge

MANILA - The government’s “fiscal prudence” has put the Philippines in a better position to respond to the latest challenges in the fight against the COVID-19 pandemic, Finance Secretary Carlos Dominguez III said on Wednesday. 

Dominguez, who has been fending off lawmakers’ and economists’ calls for bigger stimulus spending, said the government was “never under the illusion that this challenge would be short.”

“We were prepared to fight a long battle, exercising prudence over the use of our fiscal resources. The worst we could have done was to run out of water before the fire went out,” the Finance chief said in an online forum organized by the Asian Development Bank.

Dominguez said the government may need to administer “vaccines for years until the virus becomes extinct.” 

“This is precisely the reason why we are committed to maintain fiscal prudence even as we try to stimulate the economy.” 

The Philippines has received some criticism for its stimulus spending in response to COVID-19, which is relatively smaller compared to the spending packages of other countries in the region. 

Some economists have called the government’s stimulus measures “stingy” while a business leader commented that the country’s stimulus measures were like a pistol, when what was needed was a bazooka. 

Lawmakers, including allies of the administration have proposed a P420 billion spending package, which they said would be more effective at stimulating the economy. 

Dominguez however has thumbed down proposals to further boost spending beyond what was programmed in this year’s budget. 

"We recognize that the present economic downturn cannot be fully confronted by throwing subsidies at everything in sight. This would only fuel inflation without driving expansion,” Dominguez said. 

He added that the more sustainable path to recovery is to foster the revival of enterprises and the restoration of consumer activity. 

Dominguez said fiscal prudence must remain a permanent fixture in Philippine budgeting and spending. 

"The world is never going to return to pre-pandemic conditions. We have become more aware that the harrowing public health crisis we have gone through will not be the last. We must be better prepared to deal with future outbreaks.” 

• Dissecting Data: The economy after a year into the COVID-19 pandemic

Last year, the Philippine economy suffered its worst contraction since the end of World War 2 as the government imposed one the strictest and longest lockdowns in the world to curb the spread of COVID-19. 

Economic managers have pushed for easing of quarantine restrictions to revive the economy, but the recent surge in COVID-19 infections has instead made local governments reimpose curfews and mobility curbs. 
 

- Report from Warren de Guzman, ABS-CBN News