Archives: Business World Article

The Department of Budget and Management (DBM) said that it is looking at cost-cutting measures should the revenue losses from the proposed suspension of excise tax on fuel are not fully offset.

“At this stage, there is no automatic or immediate shift in expenditure priorities,” Budget Undersecretary Goddes Hope O. Libiran told BusinessWorld via Viber.

“Should the projected revenue losses from the proposed excise tax suspension not be offset by compensatory revenue measures, the government will need to adopt targeted efficiency-enhancing interventions to remain consistent with its fiscal deficit objectives,” she added.

In particular, Ms. Libiran said that the department is looking at the rationalization of nonessential operational expenditures to safeguard priority and high-impact programs. Nonessential spending includes travel, training, consultancy services, and discretionary spending on materials and supplies.

“The ongoing implementation of a uniform four-day workweek is likewise being assessed as part of a broader expenditure optimization strategy,” she said.

However, the DBM official said that the full fiscal implications of the potential fuel excise tax suspension and corresponding policy responses are likely to be addressed at the next Development Budget Coordination Committee meeting in April.

“The DBM remains committed to ensuring that any course of action achieves a prudent balance between delivering immediate economic relief and maintaining medium-term fiscal sustainability and macroeconomic stability,” Ms. Libiran said.

Last week, Finance Secretary Frederick D. Go said that the government is looking at how to delay non-urgent programs and capital outlays that the government does not need at this point.

In particular, he said that these non-urgent capital outlays include those with an economic rate of return of only slightly above 10%.

“So, if the economic rate of return is, say, 19% or 20%, I think we should just pursue it because it is a great return for the investment the country puts in,” he told reporters.

The suspension of the excise tax on fuel products is among the interventions being looked at by the Philippine government amid oil price shocks and supply chain disruptions due to the war in the Middle East.

The House of Representatives and the Senate last week approved a bill that authorizes the President to suspend or reduce excise taxes on petroleum products during national or global economic emergencies as urgent.

The bill is now awaiting President Ferdinand R. Marcos, Jr.’s signature.

Band-aid solution?

However, some economists see the measure as a band-aid solution, citing the fuel tax suspension’s potential impact on the country’s already tight fiscal space.

“The suspension of excise fuel taxes while providing short-term relief will also impact the country’s fiscal space,” Philip Arnold “Randy” P. Tuaño, president of the Philippine Institute for Development Studies, told BusinessWorld via e-mail.

Citing data from the Department of Finance, he said that the suspension of fuel excise tax will result in revenue losses of around PHP 136 billion if implemented from May to December 2026.

This excludes the additional PHP 10 billion in value-added tax  revenues, he said.

“The total amount is around 8-9% of our projected deficit for the year. Thus, while lower fuel taxes will support household consumption and will provide some slight relief on transportation and logistics costs, this may be offset by lower government spending or even delays in disbursements following lower revenues,” he added.

Peter Lee U, associate professor and dean of the University of Asia and the Pacific School of Economics, said that the lower tax collections will push the government to borrow more to finance projects that were originally planned.

“This will lessen fiscal space in the future as the national debt as a percentage of gross domestic product (GDP) will grow. If GDP will grow more slowly (a possible, at least, if not likely scenario), then the ratio will grow even faster,” he said.

Nevertheless, he said that the measure will help slow down the increase in pump prices.

Economic managers are targeting 5-6% GDP growth this year.

However, Jose Enrique “Sonny” A. Africa, executive director of the think tank IBON Foundation, said that he disagrees with the argument that the excise tax on fuel should not be suspended, as it disproportionately benefits richer households.

“This is blind to how oil excise taxes eat up a larger share of the income of poorer households and also fails to understand that poorer households are more exposed to second-round inflation effects on food, transport fares, and basic goods and services,” he said in a Viber message.

Mr. Africa said that suspending fuel excise taxes even for a full year will not dramatically affect GDP growth.

“Oil excise tax collections are less than PHP 15 billion monthly on average and don’t even reach two-thirds of a percentage point of annual GDP,” he said.

Mr. Africa said that the main benefit of the measure is to provide relief for poor and middle-class Filipinos who are reeling from spiraling costs.

“The real issue is not the revenue loss, but why the government chooses to rely on regressive taxes instead of taxing extreme wealth and windfall profits to finance critical relief,” he said.

Mr. Africa said that the Marcos administration can choose to expand the fiscal space by taxing billionaires’ wealth, restoring previous income tax rates on large corporations and the richest families, and windfall taxes on energy and real estate.

He said that the rational response is for the government to absorb the cost-push, supply-side oil price shock by implementing measures such as cutting taxes to help protect the purchasing power of poor and middle-class households.

Budget releasees

Meanwhile, the DBM said 63.5% of the 2026 national budget has been released as of the end of February, reflecting a slower disbursement rate compared to the previous year.

In its Status of Allotment release report, the DBM said that PHP 4.31 trillion of the budget had been released to national agencies and local government units as of Feb. 28.

This leaves PHP 2.48 trillion remaining undistributed from the PHP 6.793-trillion budget for the year.

The pace of releases was slower than the 67% rate posted a year earlier.

Releases to government agencies and departments amounted to PHP 2.77 trillion, equivalent to 75.2% of their allocations.

Special purpose funds released by the end of the month stood at PHP 141.9 billion, representing 19.7% of the funds allocated.

Meanwhile, automatic appropriation releases were at 58% or PHP 1.387 trillion.

These include PHP 1.19 trillion for National Tax Allotment, PHP 93.98 billion for block grant, and PHP 82.21 billion for the retirement and life insurance premiums.

Excluding the other releases worth PHP 14.417 billion, the budget release rate is 63.3%, as the released funds reached PHP 4.297 trillion out of the PHP 6.793-trillion original program.

The other releases include unprogrammed appropriations worth PHP 9.55 billion, 2025 continuing appropriations of PHP 4.816 billion, and special purpose funds worth PHP 4.58 billion.

“The slower February allotment release looks more like timing and prudence than a policy change,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

He said that agencies are still aligning cash plans, procurement, and safeguards by February, which is why the DBM releases carefully while watching out for revenues and global risks. 

“For March, I expect releases to stay measured, not frozen, with a pickup once clearances are completed, particularly for infrastructure and priority programs,” he added.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said that the slower disbursement rate still reflects some government underspending in view of the anomalous flood control projects.

“Anti-corruption measures and other reforms to further level up governance standards may have caused greater caution on some government spending, especially on infrastructure, to prevent the risk of corruption,” he said in a Viber message.

For the coming months, he said that the government’s catch-up spending could lead to a higher disbursement rate.

“But (this) could still be offset by more cautious government spending to prevent risk of corruption and leakages,” he added. — Justine Irish D. Tabile, Senior Reporter

The National Government’s (NG) budget surplus more than doubled in January to PHP 165.4 billion amid a double-digit decline in spending, the Bureau of the Treasury (BTr) said.

In a statement, the Treasury said the NG posted a PHP 165.4-billion budget surplus in January, 141.91% higher than the PHP 68.4-billion surplus a year ago due to “sustained revenue growth.”

Month on month, the budget balance swung to a surplus from the PHP 313.17-billion deficit in December last year.

This was the first budget surplus posted since the PHP 11.15-billion surplus in October 2025.

In January, revenues inched up by 0.36% to PHP 468.9 billion from PHP 467.1 billion in the same month in 2025.

Tax collections, which make up 94.45% of total revenues, rose by 1.21% to PHP 442.8 billion in January from PHP 437.5 billion in January 2025.

The bulk of tax revenues came from the Bureau of Internal Revenue (BIR), whose collections went up by 1% to PHP 358.7 billion in January from PHP 355.1 billion in the same month in 2025.

“The agency’s continued growth was supported by its digitalization initiatives and intensified tax administration efforts,” the Treasury said.

Meanwhile, the Bureau of Customs saw a 2.13% increase in collections to PHP 80.9 billion in January, from PHP 79.3 billion in the same month a year ago.

“The agency’s positive outturn was buoyed by its sustained enforcement operations, including the seizure of smuggled goods, the confiscation of illegally imported vehicles, and strengthened compliance and tax administration measures,” it added.

Collections by other offices were flat at PHP 3.2 billion in January.

On the other hand, nontax revenues plunged by 12.08% to PHP 26 billion, from PHP 29.6 billion in the same month last year due to a “moderation in BTr income and NG share from Malampaya proceeds.”

The BTr saw a 13.17% decline in its revenues to PHP 13.7 billion last year, while collections by other offices also dropped by 10.85% to PHP 12.4 billion.

Meanwhile, state spending dropped by 23.9% to PHP 303.5 billion in January from PHP 398.8 billion in the same month last year.

The BTr attributed the decline to the “rescheduling of the transfers to local government units, as well as the base effect of large capital disbursements in January last year.”

It said that the large disbursements last year were “due to the settlement of accounts payables and frontloading of some expenditure ahead of the election ban.”

Primary spending—which refers to total expenditures minus interest payments—dropped by 40.32% to PHP 175.5 billion in January from PHP 294.4 billion a year ago. It accounted for 57.88% of disbursements during the month.

Meanwhile, interest payments surged by 22.39% to PHP 127.8 billion in January from PHP 104.4 billion last year, due to the “additional debt incurred to finance the previous year’s deficit and changes in coupon payment timing following refinancing.” — Justine Irish D. Tabile

The Philippines’ balance of payments (BoP) position swung to an over USD 2-billion deficit in the second month of the year, the Bangko Sentral ng Pilipinas (BSP) said late on Thursday.

Based on central bank data, the BoP position stood at a USD 2.277-billion deficit in February, a reversal from the USD 3.086-billion surplus recorded in the same month in 2025.

Month on month, the BoP position ballooned from the USD 373-million gap recorded in January.

February’s tally brought the country’s two-month BoP deficit to USD 2.651 billion, wider than the USD 992-million gap seen in the comparable year-ago period.

BoP refers to the country’s economic transactions with other nations. A deficit shows that the country spent more than it received, while a surplus indicates more funds entered into the country.

The central bank sees the Philippines’ BoP deficit widening to USD 5.9 billion or -1.2% of its gross domestic product this year.

Meanwhile, revised BSP data showed that the country’s dollar reserves hit a fresh high of USD 113.3 billion at end-February, exceeding the previous record of USD 112.707 billion at end-September 2024.

Month on month, the gross international reserves (GIR) edged up by about 0.6% from USD 112.615 billion in January.

As of February, the country’s GIR level translated to 7.5 months’ worth of imports of goods and payments of services and primary income, higher than the three-month standard.

“Specifically, the latest GIR level ensures the availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme cases when there are no export earnings or foreign loans,” the BSP said in a statement.

It is also enough to cover about 4.3 times the country’s short-term external debt based on residual maturity.

GIR comprises foreign-denominated securities, foreign exchange, and other assets such as gold. It enables a country to finance imports and foreign debts, maintain the stability of its currency, and safeguard itself against global economic disruptions.

The BSP expects the end-2026 GIR level to reach USD 110 billion. — Katherine K. Chan, Reporter

 

Philippine President Ferdinand R. Marcos, Jr. on Wednesday suspended the fare increase for public utility vehicles (PUVs), a day before its implementation.

In a video message, Mr. Marcos said he directed the Department of Transportation (DoTr) to defer the hike scheduled for Thursday, adding that now is not the right time to raise fares despite soaring pump prices.

“This may not be the right time to increase fares for our fellow citizens,” he said in Filipino.

The Department of Transportation (DoTr) said it has deferred the implementation of PUV fare adjustments to help ease the burden on commuters.

Transportation Acting Secretary Giovanni Z. Lopez said the agency is exploring other programs and initiatives to support drivers and commuters, such as free rides and the expansion of fuel voucher distribution.

The Land Transportation Franchising and Regulatory Board on Tuesday approved fare increases for PUVs, reflecting the spike in fuel, maintenance and operating expenses since the Iran war began.  It covered jeepneys, provincial and city buses, airport taxis, and transportation network vehicle services.

Mr. Marcos assured transport workers that the government will ramp up support as it began its cash relief distribution for tricycle drivers in the capital region on March 17.

Other PUV workers are scheduled to receive aid in the coming weeks.

“Transport workers should not worry; we will expedite and increase support for you so that you won’t be burdened too much,” Mr. Marcos added.

The DoTr said it is expediting the release of fuel subsidies for qualified PUV drivers and operators as additional assistance.

Mr. Lopez said the DoTr is also coordinating with toll operators for the possibility of offering discounts to motorists.

BusinessWorld sought comments from toll operators Metro Pacific Tollways Corp. and San Miguel Corp. but had not received a response as of deadline.

Meanwhile, transport group Manibela is set to stage a transport strike to protest the government’s suspension of fare adjustments, stressing that this move further burdens drivers already reeling from high pump prices.

“The government should have thought things through before suspending the increase, this would add another burden to our drivers and operators,”  Manibela Chairman Mar S. Valbuena told BusinessWorld on Wednesday.

Mr. Valbuena also noted the approved fare increase was not enough to compensate drivers as fuel expenditure accounts for the majority of drivers’ daily earnings.

The DoTr also clarified that the suspension order applies only to fare adjustments for land transport. The higher fuel surcharge for airlines from April 1-15 remains in effect, along with Maritime Industry Authority’s  authorization for ship operators to collect up to 20% of base fares as a fuel surcharge.

MRT, LRT fare discounts

The President said the operators of the Metro Rail Transit (MRT) and Light Rail Transit (LRT) will also give fare discounts.

“Even if there is a major disruption happening, it will only be felt a little, or we can do it, hopefully, our people will feel nothing in their daily work, among our students who come to school every day,” he added.

Benjamin B. Velasco, an assistant professor at the University of the Philippines School of Labor and Industrial Relations, said the government’s reversal on the fare hike highlights a lack of clear policy coordination, sending mixed signals amid a fuel and cost-of-living crisis.

“Even if the fare hike was suspended, the demand for a wage hike will not be muted since prices of other basic necessities — like food and electricity — are rising still,” he said via Facebook Messenger.

“If the costs of living are increasing, then why are wages not being adjusted too? It behooves the government to also call for a tripartite industrial summit to tackle this concern,” he added.

Mr. Velasco recommended a transport summit to discuss measures such as service contracting and “libreng sakay,” ensuring no operator or worker is unfairly disadvantaged.

No emergency powers for now

Also on Wednesday, Mr. Marcos said he is uncertain when or whether he will use the proposed emergency powers to cut fuel excise taxes despite certifying the measure as urgent.

The possible move on fuel excise taxes is contingent on global price movements amid uncertainties from the escalating conflict, he said, noting there are many things to consider.

Both chambers of Congress have already passed separate measures allowing the President to cut or halt the excise tax on fuel under certain conditions.

“That depends. That’s a very complicated calculation,” he told reporters during a market visit in San Juan City. “When the situation calls for it, then we will see when to exercise that power and by how much.”

According to Mr. Marcos, the country has enough supply of oil and food, urging Filipinos not to hoard as “everything is normal.”

Fuel prices spiked on Tuesday, March 17, with gasoline rising by PHP 12.90 to PHP 16.60 per liter, diesel by PHP 20.40 to PHP 23.90 and kerosene by PHP 6.90 to PHP 8.90.

Monitoring by the Department of Energy showed pump prices could climb as high as PHP 91.60 per liter for gasoline, PHP 114.90 for diesel and PHP 143.79 for kerosene.

“Right now, we don’t have a problem with the supply of food, and we don’t have a problem with the supply of petroleum products, including fertilizer for farmers,” Mr. Marcos said in mixed English and Filipino.

Analysts said suspending fuel excise taxes offers limited relief amid global oil volatility, with domestic prices still driven by import costs and Middle East supply disruptions. 

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., noted that while excise tax cuts provide immediate relief, they are a blunt tool.

“A better approach is targeted support for transport, agriculture, and power, while accelerating fuel diversification,” he said via Viber.

Foundation for Economic Freedom President Calixto V. Chikiamco said that the impact of the suspension would be modest — roughly PHP 10 per liter for gasoline and PHP 6 for diesel.

“It would also reduce much-needed government revenue, which could have funded additional schools or infrastructure,” he said via Viber.

Both analysts cautioned that tax relief alone will not stabilize oil prices or shield consumers from broader cost-of-living pressures.

On March 17, Finance Secretary Frederick D. Go said it is premature to push for a fuel excise tax cut, as the government is still assessing the impact of the ongoing conflict and oil price movements.

Instead of an immediate tax cut, economic managers are prioritizing alternative relief measures, including boosting fuel buffer stocks, rolling out targeted subsidies for transport and vulnerable sectors and coordinating with oil firms to manage price increases.

The Senate approved on third and final reading a bill granting Mr. Marcos the authority to suspend or reduce fuel excise taxes to cushion the impact of rising oil prices.

The measure allows the President to act when the Mean of Platts Singapore crude benchmark averages at least USD 80 per barrel for a month prior to the order.

The proposal differs from the version passed by the House of Representatives, which requires the declaration of a national emergency or calamity before tax relief can be implemented.

Lawmakers in the House also included additional conditions for the automatic suspension or reduction of excise taxes. — Chloe Mari A. Hufana, Reporter with Ashley Erika O. Jose

The Philippine government and oil companies are already building up fuel inventories for May as early as now, the Department of Energy (DoE) chief said, as the Iran war enters its third week and continues to threaten global oil supply.

Energy Secretary Sharon S. Garin said that the country’s fuel supply is enough to cover demand until end of April but oil companies are now trying to secure stocks for May.

“It’s a liberalized industry. So, oil companies are supposed to make sure that we have stocks, a minimum of 15 days. But actually, they surpassed that. So, they’re ordering now for their May stocks,” Ms. Garin told ANC’s Headstart on Wednesday.

Currently, oil companies are required to maintain at least a 30-day inventory of crude oil and a 15-day inventory of finished petroleum products.

Since the Philippines has very limited domestic oil production to cover demand, local fuel retailers mostly import their supply from the Middle East, the world’s top oil-producing region that is currently being disrupted by the Iran war.

The majority of the finished petroleum products come from Asian countries such as Japan, South Korea, and China, but crude oil is also sourced from the Middle East.

“The stocks for May are supposed to be delivered in April and they’re (oil companies) trying to lock that in. It’s early but we have to do it early in these times. So, oil firms, including the government, are working on the supply for May,” Ms. Garin said.

As a precautionary measure, the government has also moved to assist fuel companies by directing the oil and gas exploration arm of state-run Philippine National Oil Co. to procure at least two million barrels of oil from global markets.

“Because there might be risks that their source might not deliver, so the government is also procuring. So, one million or two million stocks, so we have a buffer,” Ms. Garin said.

“Just in case any of our oil companies fail to procure, we have a reserve for May. So that’s what we’re doing now. We’re slowly locking in some offers. Little by little, we’re trying to make sure that May is covered,” she added.

Aside from existing suppliers, the Energy chief said the Philippines is also tapping other countries in Asia like Malaysia, Brunei, and India. It is also considering sourcing from other markets such as the US, Canada, Russia, or South American countries.

While fuel prices might be cheaper in the latter countries, Ms. Garin said that the end cost of transportation will be “longer and a little more expensive” as deliveries could take up to a month.

Tight supply

Leo P. Bellas, president of Jetti Petroleum, Inc., told BusinessWorld that “almost all oil companies are doing their best to secure cargoes for May.”

“Volume being secured is, at the minimum, based on each oil company’s monthly sales,” he said.

However, increasing the stockpiles remains challenging, as it is constrained by the availability of products in the market.

“Supply is becoming very tight because of run cuts imposed by refineries due to lack of feedstock, and export ban,” Mr. Bellas said.

“Assuming there is no supply problem, the concern will be the capital requirement due to higher cost of importation. The price of diesel has more than doubled already versus prior to the Middle East crisis, and gasoline is now higher by more than 70%,” he added.

Robert Dan J. Roces, an economist at SM Investments Corp., said building up inventories is “a prudent and proactive step” to cushion the country from potential supply disruptions amid the ongoing geopolitical conflict.

“By increasing buffers and exploring alternative suppliers, oil companies can better ensure continuity of supply and reduce the risk of sudden shortages,” he told BusinessWorld in a Viber message.

In the short term, fuel inventory buildup should help mitigate global shocks and prevent abrupt spikes in local pump prices.

“Over the longer term, the focus should shift toward strengthening energy security — such as diversifying import sources, expanding strategic petroleum reserves, and accelerating investments in domestic and renewable energy — to reduce the economy’s vulnerability to external oil shocks,” Mr. Roces said.

Several oil companies are hiking pump prices this week, pushing diesel costs beyond PHP 100 per liter. To alleviate pressure on consumers, some oil companies staggered the implementation of the increases in two to three tranches.

Asked how long the Philippines may experience elevated fuel prices, Ms. Garin said: “It all depends on the war.”

“The worst part is that the effects will be longer. The prices will take longer to go down. The logistics — all the oil fields that they bombed — it will take time to prepare those,” Ms. Garin said. “Maybe another six months after the war, slowly, it will go back to normal — the prices and logistics.” — Sheldeen Joy Talavera, Reporter