New subsidy program eyed as inflation sizzles to 8.7%

MANILA, Philippines — The government economic team is looking at a subsidy program that will be targeted for the most vulnerable sectors after inflation exceeded expectations and hit 8.7 percent in January, according to Finance Secretary Benjamin Diokno.

On the sidelines of the National Tax Campaign kickoff yesterday, Diokno said the government would continue to provide targeted subsidies to affected sectors to cushion the impact of elevated inflationary pressures.

“We will work for targeted subsidies for the affected parties,” Diokno told reporters.

Asked whether the targeted cash transfer program implemented by the Department of Social Welfare and Development (DSWD) would be continued, Diokno said it “depends.”

“We will look into it (the contributors). It’s no more on the fuel prices anymore, now it’s on the food,” Diokno said, adding that “we will design a program that will address that. It’s in the budget anyway.”

The government last month concluded its P500 subsidy program or ayuda for low-income households impacted by the continued increase in commodity prices, with a total of P18.3 billion in subsidies released.

Initiated by the Duterte administration, the program granted cash aid amounting to P500 per month for six months to poor households, as identified by the DSWD.

It was meant to mitigate the effects of the increase in the prices of fuel and other non-fuel commodities on vulnerable groups.

The program expired on Dec. 31, 2022, with the last payout of obligated subsidies distributed from Jan. 4 to 14.

During the same event, Finance Undersecretary and chief economist Zeno Ronald Abenoja said the subsidy depends on the situation, especially as the government is now prioritizing infrastructure, health and education.

“If possible, it should be targeted and not just one bulk,” Abenoja said. “Inflation has different sources, but the vulnerable sectors are just almost the same so we will see.”

Abenoja said the Department of Finance is working with other concerned agencies to look at the sources of inflation pressures and then initiate targeted measures toward such sources.

Further, Diokno said the government is intensifying measures to increase local production and agricultural productivity to address inflation.

“The government ensures that its fiscal policy avoids adding up to aggregate demand that risks further inflation by maintaining fiscal responsibility,” Diokno said.

The finance chief maintained the government would ramp up measures to bring inflation within target at 2.5 to 4.5 percent this year.

“We expect inflation to decelerate in the latter part of 2023. Modernizing and improving agriculture and securing ample and lower energy supply could help stabilize inflation moving forward,” he said.

Research and advocacy group IBON Foundation argued that the government should provide meaningful cash assistance and wage hikes as well as support for rural producers and small businesses.

“The government should be taken to task for giving mere lip service to dealing with inflation since taking office. Inflation has been accelerating for the last seven months apart from a momentary and only incremental dip in August 2022,” IBON said.

“Cash assistance can help millions of Filipino families that can hardly make ends meet. Expanding social protection for the poorest families, a wage hike, and support to rural producers and small businesses is possible. They should not be made to bear the burden of austerity measures justified as fiscal consolidation,” it said.