THE Department of Finance (DOF) has so far secured nearly $10 billion in loans and grants from foreign lenders to fund the government’s Covid-19 response.
Finance Secretary Carlos G. Dominguez III told senators on Wednesday that the total financing secured by the government for its Covid-19 efforts reached $9.9 billion (or roughly over P480 billion) as of September 15.
“With our historically high credit ratings, we quickly accessed emergency financing from our development partners and the commercial markets at very low rates, tight spreads, and longer repayment periods,” Dominguez said at the Senate Committee on Finance hearing on the proposed 2021 budget of Department of Finance, with new appropriations amounting to only P16.01 billion, its lowest since 2017.
According to Dominguez, “These borrowings will help cover our revenue shortfall resulting from the slowdown of economic activity due to the lockdowns.”
Finance Undersecretary Mark Joven told the BusinessMirror the updated list already included the recently secured $458.95 million or 50 billion-yen Post Disaster Standby Loan Phase 2 from Japan International Cooperation Agency (Jica) and the $500-million disaster standby facility loan from Asian Development Bank (ADB).
Of the total financing secured by the government, the bulk came from ADB with budgetary support of $3.80 billion This was followed by the financing raised from the issuance of $2.35 billion in dollar-denominated global bonds and the budgetary support from World Bank, at $1.2 billion.
The remainder came from budgetary support from Jica ($917.9 million), Asian Infrastructure Investment Bank ($750 million), loans for Covid-19 specific projects ($595 million), budgetary support from Agence Française de Développement ($275.70 million), and grants for COVID-19 specific projects ($26.36 million).
As of end-August, Dominguez said total revenue collection reached P1.9 trillion, 8 percent lower compared to the same period last year.
“Eighty-six percent of the revenues came from tax collections, which registered a negative growth of 12 percent. We are optimistic that tax collections will improve in the coming months as we gradually reopen the economy,” he said.
Estate tax amnesty
In the same hearing, Dominguez said they are “not in favor” of the bill extending the availment period for estate tax amnesty.
Finance Undersecretary Antonette Tionko, who heads DOF’s Revenue Operations Group, fretted about the timing of the extension of the availment period for estate tax amnesty.
“In general, what we would have preferred for the amnesty law as it was already passed was to play it out first rather than, you know, having the deadline coming up maybe still next year and then you already extend it, so I think the timing is more the issue…,” Tionko said.
Last week, the House of Representatives endorsed the bill extending the availment period for estate tax amnesty from two years to four years. It now awaits Senate approval.
This was done in a bid to accommodate more taxpayers as House Ways and Means Chairman Joey Sarte Salceda said only 23,911 persons have availed of the amnesty, earning only P1.362 billion out of the potential P6 billion.
DOF budget
Meanwhile, Dominguez also presented before senators the proposed 2021 budget of DOF. While the DOF budget under the Duterte administration has steadily decreased since 2017, Dominguez said the department continued to collect record-high amounts of revenues to support implementation of government priority programs and effectively fulfill its mandate of prudent management of the country’s finances.
The Senate finance committee chaired by Sen. Sonny Angara endorsed the proposed DOF budget for plenary approval after only 80 minutes of questioning from several senators.
Image credits: Roy Domingo