Gov. Arthur Yap, who managed to attend a webinar, even if he was in quarantine, bares the keys on how local government units (LGU) can engage in efficient and effective spending during this time of Coronavirus disease (Covid).
Yap joined the webinar facilitated by the Department of the Interior and Local Governments (DILG) on Oct. 2, 2020.
Diligent as he is, right after the webinar, the governor marked his comments on how to take care of funds while the whole country is reeling with the effects of the pandemic.
Yap told the participants of the webinar that, “This Covid 19 pandemic has been described as a perfect storm because it hit the global economic system’s supply and demand structure. Because of the Covid response to generally keep society isolated, production and supply was affected, work schedules were affected, raw materials were blocked, manufacturing was disrupted, retrenchments also followed. Because we were asked to stay home and maintain isolation and stay in different states of quarantine and lockdown, consumption and demand also suffered greatly.”
The governor continued with his comments by saying, “Therefore the response to the crisis which was to heavily spend on medical supplies, systems and equipment, so that we can stabilize the Pandemic status of our country was correct. We actually need to spend more on connectivity, contact tracing and prevention moving forward.”
In the same webinar, the governor added, “But how long can we keep up with this system of just spending to stabilize the Covid 19 situation? Keeping expenditures focused in food assistance dole-outs will bankrupt our economy very soon.”
The governor stressed that “The National Government (NG) must spend but not only spend alone, but in tandem with the LGUs. In the DILG presentation, the total (internal revenue allotment) IRA of the Philippines’ LGUs are in the amount of about 700 billion. Leveraged just 5 times, the impact on the economy is about 3.5 trillion. If that is spent together with Bayanihan 2’s 160 billion fund, that will be a total of 4.3 trillion invested and spent in the local economy through salaries, capital investments and (Maintenance and Other Operating Expenses) MOOE funds.”
The governor also emphasized his point by saying, “So we must stress that spending together for greater impact is key.”
“Today, nobody can spend with greater effect except the NG and the LGUs, especially if done together,” he bared in the webinar.
Moreover, he said, “The monetary policy of the central bank through lower interest rates, lower reserve requirements and rediscounting rates, have released more than 300 billion in liquidity in the local market, and yet to date, that amount remains locked up in the system. Banks are wary to lend out funds and businessmen are also hibernating. With that reality, only Government can provide the anti-dote of creating consumption demand through expenditures and investments.”
The governor also pointed out in his comments during the webinar that, “The critical thing to do now is to ensure that the Bayanihan 2 funds are downloaded and spent and leveraged with LGU spending as Mayor (Carlo) Medina of Vigan said. There must be greater trust on the LGUs. (It is) because at the end of the day, the LGUs are accountable for the protection and the development of their constituencies.”
He also said, “The NG and the (government financial institutions) GFI must also take into consideration that if the NG is very conservative in spending with the LGUs, they must at least support and allow the LGUs to spend on their own. It does sound well and good listening to the very expansive and extensive presentation of the resource people this afternoon, but the reality is, leveraged LGU spending through loans is a very tedious and long drawn out process. In regular times, we may survive this, but in our situation today this will not be possible.”
Then, he cited our province as an example by saying, “Bohol has a lot of experience in loaning from the (Department of Finance) DOF’s Municipal Development Fund Program, as well as borrowing today from the (Development Bank of the Philippines) DBP and the Landbank and still, with the lengthy requirements, the process is indeed very tedious.”
He concluded his comments during the webinar as he said, “It is not enough that the funds and the process is there for LGUs to use; what is critical is that the process is short and efficient, and will capacitate LGUs to invest and spend quickly in their local economies.”