NEDA rejects hike in unconditional cash transfer

MANILA, Philippines — The National Economic and Development Authority (NEDA) is not keen on the proposal of party-list Rep. Michael Romero to increase the monthly unconditional cash transfer (UCT) to poor families. 

Romero of 1-PACMAN party-list said he would file a bill seeking to increase to P500 the monthly UCT for the first three years of the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) to help poor families cope with rising inflation. 

Romero argued that a UCT of P500 would be enough to blunt the effects of a four to five percent growth in inflation, a 10 percent depreciation of the peso against the US dollar and increases in oil prices. 

Currently the UCT is placed at P200 only for the first year of implementation of the TRAIN law and P300 for the second and third years of enforcement. 

NEDA officials said this could not be considered as a robust solution to easing price pressures that come with the implementation of the TRAIN law. 

“It’s kind of a quantum leap, it would be difficult,” said Socio-economic Planning Secretary Ernesto Pernia. 

NEDA Undersecretary for planning and policy Rosemarie Edillon said the more lasting solution would be to enable firms to increase production capacity to address soaring demand that comes with having more money in the economy via higher take home pay that fuels inflation. 

“The more robust solution is to increase production, increase capacity, production capacity. So if you intervene on the side of the transfers, then we miss out on initiating what is supposed to be the robust medium- and long-term solutions. And that is what we want to happen,” she said. 

“We have an immediate stopgap, but at the same time, we’ll put in the measures that are necessary for the more robust expansion of capacity and expansion of production. And that is why we are using the additional revenues from TRAIN for the “Build, Build, Build” (and) for human capital investments,” she said. 

Prices of goods and services spiked to 5.2 percent in June, the highest in more than five years and significantly higher than market expectations. Economic managers attributed this to a confluence of factors such as high global oil prices, peso depreciation, high price of rice as well as strong domestic demand that come with income tax cuts. 

Romero said the increase in the TRAIN subsidy would allow poor families to “absorb the effects of four to five percent inflation (or increase in consumer prices), depreciation of 10 percent in the value of the peso against the US dollar and higher fuel prices.”

He said the President, upon unanimous recommendation of the secretaries of finance, budget and social welfare and development, should be authorized to increase the subsidy. 

Bohol Rep. Arthur Yap, who chairs the House of Representatives committee on economic affairs, also said the increased subsidy would help people cope with rising prices of goods and services.  

“The government cannot allow people to suffer these price hikes on basic food commodities, goods and transport fares. All their gains are being eroded by high prices. We need to augment peoples’ sources of income,” he said. – With Jess Diaz