The economic team of President Ferdinand Marcos Jr. sees the ongoing Middle East conflict having minimal impact on the Philippine economy, following a US-initiated truce between Iran and Israel.
However, this assumes the situation does not take a turn for the worse, Department of Energy officer-in-charge Sharon Garin said on Tuesday.
In a briefing at Malacañang, Garin said the president met with the economic team to discuss the effects of the Middle East conflict, including the price and supply of oil, the cost of basic commodities, inflation and remittances, as well as the welfare of Filipinos working and living in Israel and Iran.
She said the meeting also explored different scenarios and possible solutions to potential problems, including the possible suspension of Value Added Tax (VAT) and excise tax on oil.
Garin said the Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan also presented current trends that show the world market price of oil already on a decline and tensions are easing.
She said fuel prices are now at $69 per barrel, which is hoped to continue dropping, especially with the reported ceasefire that the two countries, Israel and Iran, have reached.
DEPDev made an assessment on the impact on inflation as well as on the growth of gross domestic product (GDP).
“So, with all those considerations — I don’t have the numbers here — but the impact is so minimal to our economy that it doesn’t seem alarming as of now, as long as the situation does not worsen,” Garin said in mixed English and Filipino.
Garin said despite the positive developments, the government continues to monitor the situation closely.
“I think that was the feeling, eventually, that the impact won’t be as alarming as it is today. We’ll see tomorrow if there are changes to the situation in the Middle East. But, everybody’s closely monitoring what’s happening there,” she added.
Among those present in the meeting with the president, apart from Balisacan and Garin, were Finance Secretary Ralph Recto, Special Assistant to the President for Investment and Economic Affairs, and officials of the Department of Foreign Affairs (DFA) and the Department of Labor and Employment (DOLE).
Garin said the concerned agencies also discussed and finalized various contingencies that would be activated in the event the situation worsens.
P3.1B fuel subsidy
Among the measures to be put in place is the provision of fuel subsidies to members of the transport sector, particularly the drivers, farmers and fisherfolk, Garin said.
The Department of Transportation (DOTr), Department of Agriculture (DA), and Land Transportation and Franchising Regulatory Board (LTFRB) are finalizing the guidelines for the subsidies, including the amount to be given, the beneficiaries, and the banks that would release the financial aid.
Garin said P2.5 billion had been set aside as the fuel subsidy for the public utility vehicle (PUV) sector, while P600 million had been earmarked for farmers and fisherfolk.
She said the DOTr is still trying to determine the balance of the P2.5 billion budget after the fuel subsidy was provided to the transport sector from January to February, when world oil prices reached $80 per barrel.
The government automatically grants fuel subsidies to the transport sector once world market prices exceed $80 per barrel.
“Mind you, because of the lowering of the price internationally, it might go lower also. Then we might not need the subsidy. But we will still continue (with the plan). We want to be prepared,” Garin said.
“DOTr is ready to distribute anytime the situation escalates. So, that’s good. And what’s happened now, all agencies are bracing for impact, even if there seems to be no impact, we’re still preparing for it,” she added.
Staggered price hike
Garin said the oil firms had also committed to supporting measures to ease the impact of rising prices by implementing price hikes on a staggered basis, thereby mitigating the impact on consumers.
Proof of this is the “calibrated” implementation of a P2.60 per liter price increase that was implemented yesterday and another P2.60 hike on Thursday instead of a one-time P5 spike.
Garin said Clean Fuel had also vowed to implement a P1 discount per liter for PUVs.
She said the government would ask the oil firms anew to implement a staggered price hike should the prices in the global market rise.
Up to Congress
Asked about the possible suspension of excise and VAT on fuel, Garin said the DOE cannot make such a decision, as only an act of Congress or an amendment to the law could allow the suspension.
She added, however, that suspending the 12 percent VAT and 10 percent excise tax could deprive the government of around P300 billion in funds, which could be used for the construction and repairs of many roads and many school buildings, or provide funds for health services, among others.
“So, it’s a balance that the administration is trying to find to protect the riders of public transport and the basic service that should also go on,” she said.
Garin, meanwhile, assured the public of the country’s oil supply, as oil firms currently have an average oil stock sufficient for 28 days.
