March 17, 2022

Targeted relief for the transport and agriculture sectors and unconditional cash transfers (UCT) for the bottom 50 percent of households will help cushion the impact of inflationary pressures arising from the Russia-Ukraine crisis, the National Economic and Development Authority (NEDA) said.

These form part of the three recommendations Socioeconomic Planning Secretary Karl Kendrick T. Chua presented to President Rodrigo R. Duterte during the Talk to the People aired yesterday.

“Una po ay tutukan po natin ‘yong relief po natin in a targeted manner to the vulnerable sectors, tulad ng pagbigay ng service contracting sa public utility vehicles at ‘yong subsidy na PHP 6,500 per month for two months, at gagamitin po natin gaya po ng sinabi ni Secretary [Carlos] Dominguez ‘yong dagdag na tax mula sa VAT,” said Chua. [First, we will focus on relief in a targeted manner to the vulnerable sectors, such as service contracting with public utility vehicles and a subsidy of PHP 6,500 per month for two months funded by the excess VAT collections, as recommended by Secretary Dominguez.]

As estimated by the Department of Finance, higher crude prices of USD 110 per barrel can provide incremental VAT revenues of PHP26 billion from March to December 2022. This increases to PHP 37.5 billion at USD 130 per barrel.

NEDA also supported the Department of Finance’s proposal to provide a UCT of PHP 2,400 for the bottom 50 percent of households, which would cost some PHP 33.1 billion for 2022.

“Pangalawa po ‘yong unconditional cash transfer na nagawa na po natin under TRAIN law. So may experience na po tayo, may listahan na po tayo. At sila ay tutulungan muli natin, para hindi po sila mahirapan,” he added. [The second recommendation is to implement the unconditional cash transfer program which we did under the TRAIN law. So, we already have the experience and the list of beneficiaries. We will help them again so they will not face hardships.]

Chua’s third recommendation is to conserve energy by reducing the workweek to four 10-hour days instead of five 8-hour days, noting that this was done in the 1990s during the Gulf War and in 2008 when oil prices also increased.

According to the NEDA chief, these three recommendations will be more effective alternatives to the increase in wages and fares, which is expected to add 1.4 percentage points to inflation and may end up affecting all Filipinos. This will allow the public to save on expenses such as fuel and transport costs.

“Mr. President, higher inflation rate is a tax on all and leads to higher interest rates. Kung mabilis po ‘yong pagtaas ng presyo, lahat po ay tinatamaan: mayaman, mahihirap, mga guro, mga nasa siyudad, mga nasa lalawigan. At kung tumataas po ‘yong presyo, ang sumusunod dito ay ‘yong pagtaas ng interest rate. At lahat po ng mga humihiram, tulad ng gobyerno, mga negosyante, ‘yong mga may mga housing loan, ‘yong mga nag-utang po sa coop, ay matatamaan,” explained Chua. [If price increase accelerates, everyone will be affected: rich, poor, teachers, those living in cities, those residing in provinces. If prices are elevated, the next to increase would be interest rates, and everyone who borrows money, such as the government, businesses, those with housing loans, those with loans from cooperatives, will be affected.]

While Chua acknowledged the good intentions from the calls to increase wages and fares to help minimum wage workers and public transport operators and drivers, he pointed out the need to be careful to avoid their spiraling effect. Chua emphasized the need to take into consideration all sectors and not just one type of worker or sector when implementing policies and interventions.

The Bangko Sentral ng Pilipinas’ latest inflation forecast for 2022 is at 3.7 percent. NEDA estimates that increasing the minimum jeepney fare by PHP 1.25 could increase inflation by 0.4 percentage point. Moreover, a 6 percent or PHP 39 per day increase to the minimum wage in the National Capital Region could add a 1.0 percentage point to the inflation. If implemented, these could bring the estimated inflation to 5.1 percent, above the 2.0 to 4.0 percent target for the year.

“Ngayon po, sa krisis na nangyayari ngayon ay tumataas po ‘yong mga presyo ng mga pangunahing bilihin at kung hindi po natin babantayan ito, pwede po siyang mag-spiral. Ibig sabihin, hindi lamang ‘yong presyo ng langis o ng gas ay tumataas, p’wede ring sumunod ang pagkain, p’wede ring sumunod ang kuryente, tubig, at iba pa,” he added. [Now, with the crisis that’s happening, the prices of basic goods are increasing and if we do not monitor closely, there will be spiral effect. This means apart from increasing fuel prices, we may also face rising food prices, along electricity, water, and others.]

Chua reiterated that NEDA will continue to monitor the situation on inflation and, as necessary, recommend policies and interventions that will benefit all Filipinos.

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