Funding Gap Limits Aid for Pinoys Amid Mideast Crisis

The Philippines’ widening funding gap and rising debt are limiting the government’s ability to provide adequate financial assistance to millions of households hit by the Middle East oil crisis, according to a June discussion paper by the Congressional Policy and Budget Research Department (CPBRD) of the House of Representatives. The government’s strained fiscal position limits its capacity to expand subsidies even as higher fuel prices disproportionately hurt low-income households and threaten to push millions more Filipinos into poverty, the think tank said. “In a country where crises are not the exception but the norm, resilience must be built not just in recovery but in readiness,” the CPBRD said. “More importantly, resilience must be collective, or it will not endure.” Although headline inflation eased to 6.8% in May, the poorest 30% of households faced an 8.4% inflation rate, driven by higher prices of rice, transport fares, and fuel, according to the study. The June paper, authored by Elyzabeth F. Cureg-Estrada, Cynthia R. Lorenzo, Rosemarie R. Sawali, and David Joseph Emmanuel B. Yap, Jr., cited simulations by the Philippine Institute for Development Studies showing that another 1.34 million to 3.5 million Filipinos could fall into poverty if elevated global oil prices persist. The study also said the purchasing power of benefits under the Pantawid Pamilyang Pilipino Program has eroded, with the grant now worth the equivalent of only 74 centavos for every peso in 2018. Restoring its 2019 real value would require an additional P876.20 a month for each beneficiary household. The CPBRD said a proposed P1,000 monthly assistance package would cover only basic consumption, such as about a week’s rice supply for a family of five. Although several proposals seek to provide temporary assistance to vulnerable households, the paper said financing remains a major challenge. Providing a P1,000 monthly top-up to the poorest 30% of households would require about P100 billion a year, it said. “While cash aid remains an accepted and widely used form of support in the Philippines, its repeated use during crises has also brought social tensions, particularly between lower-income groups and the middle class, as limited resources are stretched across competing needs,” the think tank said. Given limited fiscal space and the government’s debt burden, the CPBRD warned that borrowing more to finance cash assistance could worsen the country’s liquidity position. Instead, it recommended stricter fiscal discipline, including cutting nonessential government spending, scaling back low-priority projects and investing in long-term programs that improve productivity and strengthen households’ resilience against future economic shocks. — Pexcel John Bacon