The country’s economic managers — meeting last February 24 in the inter-agency Development Budget Coordination Committee (DBCC) after Russia’s invasion of Ukraine — announced the government’s readiness to provide “targeted assistance” and relief to sectors directly affected by the spike in oil prices, especially public utility vehicle (PUV) drivers, farmers and fisherfolk.
Russia’s invasion of Ukraine pushed global crude oil prices to seven-year high, breaching the $100 per barrel mark and sending shock waves across financial and capital markets. Russia is the second largest exporter of crude oil and the world’s number one producer of natural gas.
Some 377,000 qualified PUV drivers shall receive a total of P2.5 billion to cushion the impact of high oil prices that have increased since January 1, 2022 as follows: P8.75 per liter for gasoline, P10.85 per liter for diesel, and P9.55 per liter for kerosene. PUV drivers are those operating jeepneys, UV express, taxis, tricycles, and other full-time ride-hailing and delivery services nationwide.
Also to be assisted are farmers and fisherfolk who are likely to absorb the impact of elevated fuel prices in terms of higher transport and production costs. The Department of Agriculture has announced the availability of P500 million to alleviate their plight.
As the possible further escalation of the Russia-Ukraine conflict would also likely disrupt global supply chains, the DBCC said the government is pursuing a holistic value chain approach to ensure adequate and affordable food supply amid the rising oil prices.
The provision of targeted assistance to hard-hit sectors is deemed more prudent than the call made by some legislators who are pitching for the reenactment of Section 43 of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which provided for the automatic suspension of excise taxes when the price of crude in the world market breaches $80 per barrel.
The Department of Finance has cautioned against this option, as this would bring about substantial revenue losses for the government that could affect the budget for coronavirus recovery measures. The proposed suspension of fuel taxes is expected to result in foregone revenues of P10.95 billion monthly.
Beyond cushioning the impact of rising oil prices, the government must consider, too, that the public transport, agriculture and fishery sectors had also borne the brunt of the national health emergency and economic recession triggered by the coronavirus pandemic. The imposition of alternating quarantine regimes have severely limited mobility and deprived hundreds of PUV drivers of the means to provide for their families’ basic needs. The agriculture and fisheries sectors have also struggled with the effects of low productivity and reduced income during the past two years.
Clearly, social safety nets need to be provided to enable these hard-hit sectors to join the rest of the citizenry in rebuilding what had been decimated by the pandemic. As the country prepares to go into the new normal mode made possible by the decline in COVID-19 infections, all sectors of society must be given the capacity to participate in economic recovery efforts.