Act before crisis bites
Economic managers must not delay the measures to provide aid to Filipino households and public transport drivers and operators who will be reeling from the backlash of rising prices.
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Daily TribuneEconomic managers must not delay the measures to provide aid to Filipino households and public transport drivers and operators who will be reeling from the backlash of rising prices.
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While the Philippines is practically on the other side of the globe from the worsening Middle East conflict, its economic effects are rippling through with rising oil prices.
Current estimates based on Mean of Platts Singapore (MOPS) data suggest gasoline prices will rise by up to P7 per liter, pushing the average to P70 per liter. Diesel will surge by P15 per liter, while kerosene, which is the fuel used by industries, will rise by P10 per liter.
With the resolution of the war nowhere on the horizon, the effects are considered just the beginning.
Economic managers, thus, must not delay aid measures to Filipino households and public transport drivers and operators who will be reeling from the backlash of rising prices.
The households that rely on remittances from family members working in the areas of tension will doubly suffer because remittance flows will be affected.
US and Israeli strikes on Iran and its retaliatory attacks continue, sending shockwaves through energy markets, pushing Brent crude above $80 per barrel and Dubai crude toward $80 to $90 per barrel.
The Marcos administration is holding off on aid measures until policies are in place, even as Filipinos are reeling.
Taxi and jeepney drivers are considering getting off the streets when gas and diesel hit P70 per liter, since they will be fighting a futile battle. They will spend the day working and not earn anything; worse, they will owe money to their operators.
The country, a net oil importer reliant on the Middle East for nearly 90 percent of its petroleum needs, faces immediate economic peril due to skyrocketing fuel costs and inflationary pressures.
A day of delay in assistance and policy interventions risks amplifying the suffering, exacerbating poverty, and stifling economic growth.
The suspension of the excise tax would result in an automatic reduction of P10 per liter.
Gross domestic product (GDP) growth is projected to slow by 0.07 percentage points for every 10-percent increase in oil prices.
This is the time for earnest cash subsidies and livelihood assistance, not the patronage-laced aid that has become a main feature of this year’s budget.
In past fuel crises, such as the 2018 oil spike under TRAIN, delayed subsidies contributed to a 0.26-percentage-point increase in poverty.
In the 2022 crisis triggered by the Ukraine war, hesitation in expanding fuel aid programs allowed diesel prices to surge unchecked, resulting in a drop in agricultural output and food inflation that pushed over a million more Filipinos into poverty.
Farmers reported up to 20-percent higher production costs without immediate discounts, leading to supply shortages and price volatility that lingered for months.
Existing tools, such as the P2.5-billion Pantawid Pasada fuel vouchers for over 377,000 PUV drivers, P500 million in agricultural discounts, and potential excise tax suspensions under TRAIN, should be activated.
President Marcos sought emergency powers for tax cuts that could yield up to P300 billion in relief, along with energy-saving mandates and free bus rides, but the proposals must pass Congress.
With inflation risks mounting, poor households are being pushed closer to the brink. Policymakers must act with urgency to shield the nation from a crisis that could prove even more damaging than the Covid pandemic.
Addressing the situation requires decisive and compassionate leadership, qualities that appear to be in short supply today.
