Press Release
October 22, 2010

"Cash to casualties of typhoon" (CTCT) plan to help victims - Recto

The government will have to dig deeper into its budgetary pockets to bankroll an immediate cash assistance plan to victims of supertyphoon 'Juan' and also restore damaged infrastructures in affected provinces of Northern Luzon.

Sen. Ralph G. Recto today said the government could draw 'emergency' funding to extend financial assistance to typhoon victims from the following: tap remaining funds from this year's conditional cash transfer (CCT) program and use savings from interest debt payments.

"From conditional cash transfers or CCT, the government may have to launch a dole-out variant that could be called as the 'cash to casualties of typhoon or CTCT program'," Recto said.

The senator said typhoon victims and even local government units (LGUs) will have to be cared for immediately with financial support to rebuild their lives, farms and infrastructures.

About P12 billion was earmarked this year for the CCT program, which would double to P21.9 billion next year.

Recto said the variant "CTCT" program should prioritize typhoon-hit households with senior citizens and young children.

He said to complement whatever is left of this year's CCT budget, the government may have to draw its 'savings' derived from debt interest payments triggered by the peso's continuous appreciation.

Recto said easily the government stands to save P13 billion this year due to a strengthening peso, ending the year with interest payments of P314 billion from the programmed P327 billion.

He noted that debt interest payments were pegged on a higher exchange rate or as high as P47 to the dollar. But the dollar has been trading within the P43 level, closing at P43.375 against the greenback last Wednesday.

Foreign and local banks have predicted the peso further appreciating to P41 to the dollar by year-end. A stronger peso means cheaper dollars to pay-off the interest of the total debt load.

Recto said under a P41 to the dollar exchange rate scenario, more billions would be added to the P13 billion projected savings from lower interest payments.

It was estimated that for every one peso appreciation of the local currency, about P2.5 billion is generated as savings from debt interest payments. With the peso treading the P43 level now against the dollar, the government stands to gain P10.2 billion in savings.

"Savings from interest payment could be used to supplement the relief-assistance plan for typhoon Juan victims," Recto said.

As to sourcing the funds for rehabilitation of destroyed or damaged infrastructures, Recto said the government could "free" up to P20 billion from the unprogrammed accounts in the budget next year by actually funding it.

Recto estimates that the complete rehabilitation work from the ravages of Juan, which could run to billions, could only be in full swing during the first half of 2011.

He said the P20 billion from the unprogrammed accounts must be only released in the presence of new loan proceeds and good revenue performance in the first half of 2011.

"The major rehab work may take place, at the most, in January next year and tapping P20 billion from the unprogrammed funds would ensure funding for the typhoon rebuilding effort," he said.

Recto nevertheless said only 50 percent of the P20 billion "funded" unprogrammed outlay should be used for continuous typhoon rehabilitation while the other half would be used to prop up the government's revenue targets.

He said before Congress ratifies the P1.645 trillion budget, it will have to amend the spending plan by inserting a special provision earmarking P20 billion from the P67 billion unprogrammed accounts for typhoon rehabilitation effort.

About P5 billion in damages to agriculture in typhoon-devastated provinces involving 200,000 tons of rice crop, livestock, poultry and fisheries was estimated by the Department of Agriculture.

The government has yet to release its assessment on the devastation wrought to infrastructures such as roads, bridges, and power and telecommunications facilities.

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