SENATE minority leader Franklin Drilon yesterday agreed with the country’s economic managers that government is not allowed to use loans to fund COVID-19 recovery programs.
Drilon issued the statement after Malacanang on Tuesday said there can be no stimulus packages for COVID-19 recovery programs without revenue sources amid a bill passed by the House Representatives seeking to allot P1.3 trillion to revive the economy badly affected by the pandemic.
Drilon, however, said there are still ways that government can produce funds for that purpose.
“Without a supplemental budget, the stimulus package can be funded only thru saving and realignments of existing programs and projects under the 2019 and 2020 GAA (General Appropriations Acts). Loan proceeds cannot be used for a supplemental budget to fund a stimulus fund,” Drilon said.
Drilon said that Article 6, Sec. 24 (4) of the Constitution was clear in saying that any appropriations other than the annual GAA must be supported with funds that are actually available in the National Treasury.
“Thus, under the Constitution, borrowings are not allowed to fund a supplemental budget.
It has never been done, to my recollection. The only sources allowed are additional revenues (on top of programmed) and/or new sources of revenue,” he said.
He said the reason behind this is “fiscal responsibility.”
“Congress may unduly increase the enacted budget for the year by passing special appropriations measures funded by borrowings. That can only widen the deficit and increase the debt burden, especially at this time when borrowings have to be resorted to fund the current budget due to serious cash constraints,” he said.
The House of Representatives last week approved on third and final reading House Bill No. 6815 or the proposed Accelerated Recovery and Investments Stimulus for the Economy of the Philippines (ARISE) Act. The measure seeks to allot P1.3 trillion for programs that would jumpstart the economy that was stalled by the lockdowns to contain the spread of COVID-19.
The country’s economic managers said the proposed House measure was “unconstitutional” and not fundable due to lack of revenue sources.
Senate president pro tempore Ralph Recto should government should consider the proposal of the Senate to have standby funds of P140 billion that was included in the Bayanihan to Recover as One Act that was passed on second reading before Congress adjourned on June 5.
“Our proposal for a standby authority should be welcomed by the Executive (branch). It gives them the authority to spend for better health infrastructure, protect jobs, provide relief to workers who lost their jobs and credit to businesses including MSMEs (micro, small, and medium enterprises),” Recto said.
“It can be funded by increase in duties, which they have done for oil, new revenue source, borrowings, realignment and repurchase agreements with the Central Bank etc.,” he added.
Sen. Panfilo Lacson said Congress can propose any amount of stimulus package it deems necessary to revive the economy but it will depend on the funds at hand.
“We cannot squeeze blood from a turnip. No matter what amount Congress wants to push to stimulate the economy, without an accompanying revenue measure or a certification from the national treasury that money actually exists, a supplemental budget cannot be passed into law,” Lacson said.
He said funding for the stimulus packages can be sourced from both domestic and foreign loans “but even that takes time before the cash is made actually available.”
“Pump priming of the economy by legislative initiative may only start once money is available. That is a hard fact,” he added.