Ukraine war fallout: P2.5B in fuel subsidy out soon, Cabinet body says | Inquirer Business
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Ukraine war fallout: P2.5B in fuel subsidy out soon, Cabinet body says

By: - Reporter / @bendeveraINQ
/ 06:04 PM February 24, 2022
Business groups’ plea: Targeted measures, not oil, power tax suspension

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MANILA, Philippines—President Rodrigo Duterte’s economic team on Thursday (Feb. 24) said the government will release P2.5 billion in fuel subsidies to public utility vehicle (PUV) drivers to ease the pain inflicted by high oil prices further aggravated by the ongoing war in Ukraine.

The Inquirer asked the Department of Budget and Management (DBM) when it will release the fuel subsidy to the Land Transportation Franchising and Regulatory Board (LTFRB), but there was no reply as of Thursday afternoon.

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In a statement, the Cabinet-level Development Budget Coordination Committee (DBCC) said it was “closely monitoring the factors affecting oil prices in the country.” The Philippines is a net oil importer.

“Given recent developments, the government remains ready to provide targeted relief assistance and support to address the impact of the oil price hike for affected sectors, especially PUV drivers, farmers, and fisherfolk,” said the DBCC, which groups the DBM, the Department of Finance (DOF), the National Economic and Development Authority (Neda) and the Office of the President (OP).

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“To assist the transport sector, the government is preparing to release P2.5 billion for the fuel subsidy program of the Department of Transportation (DOTr),” the DBCC said.

It said the subsidy would distribute fuel vouchers to more than 377,000 “qualified PUV drivers” who operate jeepneys, UV Express vans, taxis, tricycles and “other full-time ride-hailing and delivery services nationwide.”

Also, the DBCC said P500 million from the Department of Agriculture’s (DA) 2022 budget will be used for “fuel discounts to farmers and fisherfolk who either individually own and operate agricultural and fishery machinery or operate through a farmers organization or cooperative.”

The DBCC said the DA’s assistance “will help mitigate the impact of elevated fuel prices on production and transport costs of farm and fishery products.”

To ease the impact of expensive oil on consumer prices, especially of food items, the DBCC said the government will pursue a “holistic value-chain approach to ensure an adequate and affordable food supply.”

For one, the DBCC noted that the DA was pushing for Senate Bill (SB) No. 139 or the proposed Philippine Livestock Development Industry Act as well as SB 2176 or the proposed Affordable Pork Act “to help ease possible domestic supply constraints and prevent second-round effects on prices.” The domestic supply shortage caused by the African swine fever (ASF) outbreak kept pork prices elevated for over a year now.

“The DBCC remains committed to taking decisive action to ensure unhampered supply of goods and services despite rising oil prices amid the pandemic. These will support our full recovery and sustained growth in 2022 and beyond,” it said. The government targets an ambitious 7 to 9 percent gross domestic product (GDP) growth this year as the economy further reopens while COVID-19 infections fall.

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Citing estimates of the Bangko Sentral ng Pilipinas (BSP) as of last week, the DBCC said benchmark Dubai crude oil prices would likely average $83.3 per barrel in 2022. “This is expected to decelerate to $79 [a barrel] by the end of this year based on the latest oil futures,” the DBCC said.

Last week, Finance Secretary Carlos Dominguez III, Duterte’s chief economic manager, told a TV interview that if global oil costs hit $100 per barrel, the Philippines will be “concerned, but we are ready.”

“At $95 for a barrel of oil, we will still remain very confident of meeting our inflation targets,” Dominguez said, referring to the 2 to 4 percent band of year-on-year price hikes deemed manageable and conducive to economic growth.

The BSP last week jacked up its inflation forecast for 2022 to 3.7 percent from 3.4 percent previously, anticipating expensive oil plus possibly higher local food prices as upside headline inflation risks.

Debt watcher Moody’s Investors Service last Wednesday (Feb. 23) said the Asia-Pacific region, including the Philippines, will likely feel the impact of the war in Ukraine by way of second round effects like global price shocks and trade disruptions.

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TAGS: Business, economy, fuel, oil prices, PUV subsidy, Russian invasion, Ukraine war
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