Thread by @KenAbante

[THREAD: DO WE HAVE CASH TO FIGHT COVID-19?]

INSIGHT 1: YES, WE HAVE CASH TO FIGHT COVID-19.

As of end-June 2020, gov't raised P3 trillion in cash from revenues (A) and debt (C). Gov't "spent" P2 trillion (B).

Net cash raised (A+C-B) is P988 billion.

2/n

1.1. We should thank our career officials for raising P3 T in cash:
P1.45 T is from tax and non-tax revenues
P1.55 T is financing from domestic (80%) and external (20%) sources

Borrowing cash is okay as long as:
1. We need the money. We do.
2. We can pay it back. We can.

3/n

1.2. Gov't spent P3 T in cash. P410 B of this is cash transferred to LGUs' bank accounts.

We urge LGUs to follow Gumaca, Quezon's example and report COVID-19 spending. In the last President's Report (June 29) only P5.5 B of P37 B in Bayanihan LGU Grants is reported spent.

4/ Here's Gumaca, Quezon's budget tracker, co-developed with our @covidbudgetph team.

facebook.com/permalink.php?…

1.3. Bottom line: We do have cash to fight COVID-19. The most important thing is we do not lose cash, so we can spend on COVID-19 response and recovery.

5/ INSIGHT 2. Taxes dipped double digits, lower than Q1 GDP drop at 0.2 percent.

My guess: Q2 GDP drop closer to tax drops:
- Tax revs down 12 percent.
- BIR taxes down 10 percent. Firms lose money, workers lose jobs, we spend less.
- Customs down 16 percent. Trade slowing.

6/ Tax revenues ebb and flow depending on economic growth. This is not surprising since we imposed a lockdown in Q2, but do expect a larger drop in the economy in Q2.

My guess (though one can never be sure!): GDP drop in Q2 will be closer to the tax revenue drop figures.

7/ INSIGHT 3. EVEN IF GOV'T SPENDING IS UP BY 20+ PERCENT, WE HAVE NOT FLATTENED THE CURVE.

Gov't spending increase reflects covid-19 emergency spending. But as of June 29, only two-thirds of the P390 billion budget is spent.

There has been no President's Report since June 29.

8/ We should demand more info about how gov't spends Filipino taxpayers' money.

We do need to spend more to save lives and stop covid:
- test, trace, isolate patients
- protect our frontliners
- stop hunger through cash transfers
- draft service contracts for transport workers

9/ We need to spend more to:
- create protected bike lanes and walkway networks
- buy devices and make internet available for our schoolchildren so they can study
- many other important public investments to strengthen our NG and LGUs' implementation capacity

10/ INSIGHT 4: WE CAN AND SHOULD ALLOCATE MORE THAN P140 BILLION IN THE BAYANIHAN EXTENSION PENDING IN THE SENATE.

This is allowed in the Constitution. It is the responsible thing to do for our economy and our people.

11/ Why the P140 billion budget constraint?

In an article by Ben De Vera, DOF Sec Dominguez said the Constitution “specifically requires the certification of excess funds and new revenue sources to support the passage of any supplemental budget…"

newsinfo.inquirer.net/1288342/doming…

12/ Sec Dominguez points to "Article VI, Section 25, Paragraph 4 of the 1987 Constitution"

“A special appropriations bill ... shall be supported by funds actually available as certified by the National Treasurer, or to be raised by a corresponding revenue proposed therein.”

13/ We disagree with the DOF interpretation. Our @covidbudgetph legal counsel studied this provision.

Our opinion: there is nothing in the Constitution that says the special appro should be supported by “excess" funds or "new" revenues.

We have P988 billion in net cash raised.

14/ Congress has the power of the purse. Congress can pass bills increasing debt and raising funds to support appropriations.

Article VI, Section 25 of the 1987 Constitution should be read together with Section 24.

15/ Investing more than P140 billion this year will save lives and allow the economy to restart faster. We can spare a few more points of GDP in debt and deficit without being profligate.

This precedent will establish special appropriations as a policy tool for future pandemics.

16/ Our conclusion: The constraint is neither cash nor the Constitution, but the capacity of the bureaucracy to implement and use funds in the last six months of 2020.

Bottom line: the Bayanihan 2 budget should be increased. It will save lives. It is the right thing to do.

We welcome constructive criticism of this analysis. Please email our @covidbudgetph team via:

[e-mail].

For the latest status of where the P390 billion covid-19 budget went (as of 29 June 2020), visit bit.ly/testtracetreat… / bit.ly/covidbudgetph.