By Chloe Mari A. Hufana again Kenneth Christiane L. Basilio, Journalists
THE PRESIDENT’S PALACE on Tuesday indicated that it is ready to introduce other measures to cushion the economic impact of the weakening peso, as the escalating war in the Middle East continues to threaten currency risks and fuel inflation.
Palace Press chief Clarissa A. Castro said the peso’s historic plunge reflects external pressures linked to the conflict and warned that instability could continue if the war continues, although she stressed that the administration is working to stem the fall.
“We know what the President and the administration are doing to reduce the impact of the conflicts in the Middle East and to do everything possible to deal with the situation, including helping other Filipinos,” he told reporters in the Philippines, without giving details.
He said the peso’s slide to consecutive record lows could continue as long as the war continues. “This is a possible outcome when conflict is not contained.”
The peso has posted several sharp declines this month as the conflict roils energy markets around the world, sparking fears of inflation in other countries and renewed pressure on financial stability in an economy heavily dependent on foreign fuel supplies.
In a separate video message, President Ferdinand R. Marcos, Jr. he said his administration will continue to provide intervention and assistance to the people of the Philippines as the economic effects of the war are heavy at home, citing government aid measures aimed at reducing consumers.
He said an interagency committee is coordinating efforts to stabilize prices and speed up the delivery of aid. These include a fixed price of P50 per kilo on imported rice and the expansion of subsidized P20 rice stores nationwide.
The committee met on Monday to discuss alternatives to the war. The Development Budget Coordinating Committee is scheduled to meet later this week to submit its assessment on the possible suspension or reduction of excise duty on fuel products.
“If there is even one Filipino who needs help, we will continue to work to reach them,” said Mr. Marcos in Filipino. “We will not stop taking measures until it is heard in every household.”
Mr. Marcos said the government will not use the country’s foreign currency to protect the peso only, noting that there is a limit to government intervention against market forces that propel the dollar.
He said a certain level of weakness in the peso would be tolerated, indicating a policy stance focused on preventing excessive volatility rather than targeting a certain exchange rate.
The peso closed at a record low of P60.748 to the dollar on Tuesday, breaking its previous record of P60.69 set the previous day, according to Bankers Association of the Philippines data posted on its website.
Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. he said the central bank does not see the need for aggressive market intervention, reiterating that it only intervenes in times of great volatility rather than protecting the fixed exchange rate.
The devaluation raises the cost of imports, particularly petroleum products, increasing the risk of inflation at a time when global oil prices remain high due to supply concerns related to the Middle East war.
The administration has rolled out subsidies and transport discounts as part of efforts to protect families and workers from higher fuel and transport costs.
The Philippines is under a one-year national emergency, the first such declaration worldwide, as the war threatens fuel supply chains and poses risks to the country’s energy system.
‘UNITED RESPONSE’
In the House of Representatives, lawmakers are trying to draft a package of measures aimed at protecting the economy from oil spills that could deepen inflation and slow growth.
The chamber will form a joint congressional task force made up of 13 committees to make proposals to address the rise in oil prices, including improving the identification of subsidies and increasing aid through budget restructuring, Marikina Rep. Romero “Miro” S. Quimbo told a news conference.
“We want something comprehensive that will make the economy stronger, so that we don’t stumble suddenly if oil prices rise too much,” he said in mixed English and Filipino.
The urgency has grown as the month-long conflict between the US, Israel and Iran has highlighted how the country’s foreign-dependent economy is exposed to global disruption.
Now in its fifth week, the conflict has already prompted President Marcos to re-open talks with China on joint military exercises in the South China Sea.
“One objective is to have a systematic and unified response to address and assess the urgent measures we can take to address this oil price crisis,” said Mr. Quimbo.
The Philippines, a major exporter to the Middle East, is facing record pump costs, with gasoline in Metro Manila approaching P115 a liter and diesel rising to P156 a liter.
Mr. Quimbo said the 13 House committees, including budget, taxation, economic affairs, transportation and agriculture, will meet on April 8 to receive a report on the economic administration before establishing sub-committees to develop proposals.
The main objective is to see which sectors and industries are most immediately affected, he said. “We want to know which industries will have the most profound and devastating effects on the entire economy.”
He recommended tax incentives and subsidies for electric vehicle manufacturers to encourage adoption and reduce dependence on oil, and called for rapid investment in renewable energy by reducing bureaucratic constraints.
“The government’s role is to create an environment where investment is easily attracted and protected,” said Mr. Quimbo.
The joint task force will also review the 1998 Oil Debt Relief Act and examine proposals to establish a national oil reserve, while researching ways to reallocate funds for aid programs without disrupting existing spending commitments.
“The first step is to have an aid plan – to identify available funds and look for new sources,” he added.
