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The Philippine government has allocated around PHP 20 billion to purchase two million barrels of diesel to boost the country’s stockpile, which is currently equivalent to 45 days of supply.

“We are reserving about PHP 20 billion. It’s very expensive. But what eventually will happen is we sell also the buffer (to fuel retailers) so we can use the money to buy more,” Energy Secretary Sharon S. Garin said in a virtual press briefing on Tuesday.

The planned buffer stock is enough to cover 10 days’ worth of consumption.

Earlier, the Department of Energy (DoE) has tasked the oil and gas exploration arm of state-run Philippine National Oil Co. to procure around two million barrels of fuel to boost the country’s inventory.

So far, the government already secured about 400,000 barrels of oil from Southeast Asian countries and is now negotiating for additional 600,000 barrels outside to ensure arrival this week.

“It’s not that big, but we need to build it up just in case so that we have reserves. It’s better to have little than nothing at all,” Ms. Garin said in a mix of Filipino and English.

The Energy chief said that the country’s existing suppliers of imported supply have assured it will deliver orders even as the Middle East conflict has also affected them.

Currently, the Philippines has 45 days’ worth of fuel supply, Ms. Garin said.

“So far, our supply is still manageable,” she said.

As of March 20, the country’s inventory of gasoline could last  53.14 days, diesel for 45.82 days, and kerosene for 97.93 days.

However, the country’s jet fuel inventory is only 38.62 days, while liquefied petroleum gas or LPG is 23.51 days.

Since the Philippines has very limited domestic oil production to cover its demand, local oil firms mostly rely from imports coming from the Middle East, the world’s biggest oil-producing region that is currently disrupted by the Iran war.

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

Pump prices surge

Meanwhile, pump prices continue to soar this week as the Iran war is about to enter its fourth week.

Starting Tuesday, gasoline prices in Metro Manila rose by PHP 8 to PHP 12 per liter, diesel by PHP 15 to PHP 18 per liter, and kerosene by PHP 12 to PHP 22 per liter.

The latest price adjustments have pushed diesel and gasoline prices to as high as PHP 144.20 and PHP 102.50 per liter, respectively. Kerosene prices could have reached as much as PHP 165.79 per liter.

“Even though it is smaller than last week, this is still a significant jump considering that it will still affect our transportation industry, as well as all industries, as well as the buying power of our households,” Ms. Garin said.

So far, Chevron Philippines, Inc. (Caltex) and TOTAL Philippines Corp. have informed the DoE that they are set to stagger the implementation of their respective price adjustments in two to five tranches.

Ms. Garin said fewer companies are staggering price hikes because of the increasing financial burden.

Aside from local pump prices, the ongoing volatility in the global market is also threatening to push electricity rates upward by 16%, according to the simulation conducted by the DoE.

To temper the expected increase in power rates, the government is looking to increase the use of coal in power generation and calling for advanced completion of renewable energy projects.

Ms. Garin said this move could help reduce the expected spike in power rates by PHP 2.

The Philippines is also a major importer of coal, which is mostly used for power generation. The country relies heavily on Indonesia for its coal supply, sourcing approximately 98% of imported coal.

Ms. Garin said the Indonesian government assured the Philippines of “steady supply of coal.”

“We have assurance from them and we’re good partners with Indonesia. We have a long-standing trade relationship with Indonesia,” she said.

Ms. Garin said the government is also in talks with power generators to assess how much domestic coal they can maximize in their operations. — Sheldeen Joy Talavera, Reporter

Philippine President Ferdinand R. Marcos, Jr. declared a national state of energy emergency on Tuesday, which gives the government expanded powers to secure fuel supplies and shield the economy from surging oil prices triggered by the war involving Iran, Israel and the US. 

In Executive Order No. 110, Mr. Marcos said escalating hostilities in the Middle East and disruptions in critical shipping routes such as the Strait of Hormuz pose an “imminent danger” to the country’s energy security, underscoring the Philippines’ vulnerability as a major importer of petroleum products. 

The order activates a coordinated response framework known as UPLIFT or Unified Package for Livelihoods, Industry, Food and Transport, aimed at stabilizing fuel supply, sustaining economic activity and protecting sectors most exposed to rising energy costs. 

Global oil prices have surged since the conflict erupted late February, raising inflation risks for the Philippines, where fuel costs directly affect transportation fares, food prices and electricity rates. 

The move comes even as Malacaсang has maintained that the country is not facing an immediate fuel shortage, citing stable inventories and diversification of supply sources. 

The Palace said the government is negotiating with alternative suppliers including China, Russia, Japan, South Korea, Brunei and India to reduce reliance on Middle Eastern oil. Mr. Mr. Marcos earlier said talks with these countries had been “positive,” though no supply agreements have been announced. 

Under the executive order, the Department of Energy (DoE) may take emergency actions such as direct procurement of petroleum products and closer coordination with state‑owned companies, including the Philippine National Oil Co. Authorities are also empowered to tighten oversight of fuel pricing and crack down on hoarding, profiteering and market manipulation. 

The government will prioritize fuel allocation for critical sectors including public transport, healthcare, power generation and utilities. 

Approvals for energy projects will be fast‑tracked to boost domestic generation capacity, while government offices will implement stricter conservation measures, including a four‑day workweek to curb energy use. 

Short‑term relief measures include fuel subsidies for transport operators and drivers, fare support for commuters, expanded public transport services and targeted assistance for households and industries most exposed to higher fuel costs. 

The order also outlines longer‑term steps to reduce dependence on imported oil, including accelerating renewable energy development, expanding electric vehicle adoption in mass transport and promoting energy‑efficiency measures across sectors. 

A Cabinet‑level committee headed by Mr. Marcos will oversee implementation, bringing together officials from economic, transport, agriculture and social welfare agencies to coordinate supply‑side interventions and targeted relief. 

As the Iran war nears its one‑month mark, the Philippines has relied heavily on fuel and cash subsidies to cushion the impact on consumers. 

The President has asked Congress to grant him emergency powers to suspend or reduce excise taxes on petroleum products, though he has yet to sign the proposed measure and has cited complex fiscal calculations. 

Fuel prices rose again this week, extending one of the longest streaks of increases in recent years. Some oil companies raised diesel prices by as much as PHP 18 per liter and gasoline by about PHP 8, while government estimates pointed to increases of up to PHP 11.88 for diesel, PHP 6.47 for gasoline and PHP 13.66 for kerosene. 

In Metro Manila, pump prices could climb to PHP 126.78 per liter for diesel, PHP 98.07 for gasoline and PHP 157.45 for kerosene, marking the 13th straight weekly increase for diesel and kerosene and the 11th for gasoline. — Chloe Mari A. Hufana, Reporter

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