Gov’t moves to shield OFW money

By Erika Mae P. Sinaking, Reporter and Justine Irish D. Tabile, Senior Reporter

THE GOVERNMENT is preparing measures to protect remittance flows and cushion the domestic impact of escalating tensions between Israel and Iran, the presidential palace said on Wednesday, as President Ferdinand R. Marcos, Jr. ordered agencies to safeguard overseas Filipinos and monitor risks to fuel prices and financial markets.

The President is closely tracking developments in the Middle East, particularly their potential effect on overseas Filipino workers (OFW) and remittances, a critical source of foreign exchange for the Philippines, it added.

“President Marcos wants to ensure that Filipinos, both here and abroad, are protected while we brace for market movements caused by the conflict,” Palace Press Officer Clarissa A. Castro told a news briefing.

The heightened alert follows a series of emergency high-level meetings at the palace, including a special Cabinet session convened to address the geopolitical instability.

Central to the administration’s strategy is mitigating inflationary pressures triggered by volatile global crude prices, which threaten the purchasing power of Filipino families dependent on remittances.

Economic managers are weighing interventions to shield the domestic economy from “energy shocks.” Among the most significant is a proposal for the President to seek emergency powers from Congress to reduce or suspend excise taxes on petroleum products.

“One of the options for President Marcos is to talk to the Senate and House leadership to be granted the power to reduce the excise tax on petroleum products as an emergency measure only,” Ms. Castro said.

Under the proposal, this authority would be temporary and triggered by specific price thresholds. While the Tax Reform for Acceleration and Inclusion  law includes certain suspension mechanisms, the palace said these are insufficient for the crisis, prompting the need for an urgent measure.

The Department of Budget and Management said there are undisbursed appropriations and contingent funds worth over P15 billion that could be tapped for fuel subsidies.

“Continuing appropriations from 2025 can still be used until the end of 2026,” Budget Undersecretary Goddes Hope O. Libiran told BusinessWorld via Viber.

She said the Department of Transportation has P2.5 billion in unspent funds from last year. The Department of Agriculture – Office of the Secretary has P25 million remaining for farmers, while the Bureau of Fisheries and Aquatic Resources also has P25 million for fisherfolk.

SIXTH-MOST VULNERABLE
“If additional support is needed, there’s also the P13-billion contingent fund under the 2026 General Appropriations Act,” she added.

The Philippines ranks as the sixth-most vulnerable country globally to rising oil shocks amid Middle East tensions, according to Fitch Solutions unit BMI.

As a net oil importer with a sizable current account deficit, the country faces heightened economic risks from fluctuating energy prices. Only Egypt, Poland, Turkiye, India and China are more exposed.

Rickinder Chima, BMI director and global economist, noted during a webinar that economies heavily reliant on energy imports like the Philippines could experience domestic energy shortages if the Strait of Hormuz were to be closed.

The findings highlight the urgent need for energy and fiscal measures.

The palace assured the public that the country’s oil supply is sufficient to last 50 to 60 days. Should global crude prices hit $80 per barrel, authorities are prepared to release fuel subsidies specifically targeting transport, agriculture and fisheries.

Beyond fiscal measures, the government is exploring structural changes to the workweek to conserve energy. Proposals include a four-day workweek and expanded work-from-home (WFH) arrangements.

“The President may study that suggestion, especially if the ongoing Israel-Iran issue becomes more severe,” Ms. Castro said.

‘NO WAGE CUTS’
Labor groups expressed conditional support for these plans, emphasizing that any transition must safeguard workers’ rights.

“This must be worker-centered — no wage cuts, no unpaid overtime, no compulsion, with clear occupational safety and health standards, especially for WFH,” Federation of Free Workers (FFW) President Jose Sonny G. Matula told BusinessWorld via Viber.

The FFW is ready to support the government’s energy-conservation push if flexible work arrangements are implemented through dialogue and protect labor standards.

The group called for a tripartite meeting with the government, employers and labor representatives to design safeguards, including wage protection, limits on working hours, voluntary participation, data privacy, occupational safety, the right to disconnect and support for workers unable to work from home.

Analysts said the conflict poses direct risks to the safety and livelihoods of 1 million to 2.5 million OFWs in the Middle East, potentially disrupting workplaces, delaying salaries or prompting repatriation that could dent remittance flows.

“Some OFWs may repatriate voluntarily, and those who remain may face income insecurities,” Benjamin B. Velasco, an assistant professor at the University of the Philippines Diliman School of Labor and Industrial Relations, told BusinessWorld in a Facebook Messenger chat.

“Even if remittances hold, higher global oil prices will reduce the purchasing power of OFW families here,” he added.

Reducing excise taxes could help temper oil prices and curb inflation but may lower government revenues. Mr. Velasco said the government could consider borrowing to fund short-term welfare support for low-income households.

Labor proposals such as a four-day workweek with one work-from-home day are acceptable if they respect worker rights. “These policy proposals are welcome as adaptations to the escalating war,” he said.

Mr. Matula cited the risks from employment disruptions overseas, remittance instability and oil price shocks.

Remittances fund food, transport, tuition, rent and healthcare for millions. If the conflict persists, he said, remittance growth could slow, while higher global oil prices would drive up transport, electricity and food costs.

With 64% of domestic transport reliant on imported fuel, purchasing power would erode further.

Economists said targeted subsidies would be more manageable than universal programs. John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said limited support for transport and agriculture would reduce strain on the budget, unlike broad subsidies that could widen the deficit.

Asian Development Bank economist James P. Villafuerte recommended cash or income support for vulnerable households, saying blanket fuel subsidies often benefit wealthier families and do not encourage energy conservation.

He added that the government could also reprioritize projects, improve budget efficiency or borrow for short-term relief if needed.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the government’s emerging response mirrors measures during prior flare-ups, including the June 2025 Iran-Israel retaliatory attacks and the October 2023 Israel-Hamas conflict.

Authorities are expected to roll out subsidies, targeted assistance and legally mandated mechanisms to cushion vulnerable sectors such as transport operators, fisherfolk, farmers and low-income households.

Beyond short-term relief, he stressed conservation and structural reforms. “Conservation measures for oil and energy, alongside a shift to renewable sources — solar, wind, geothermal, hydroelectric — and more electric and hybrid vehicles, will reduce dependence on imported energy,” he said, noting that sustained investment in energy diversification will strengthen resilience against recurring geopolitical shocks. — with Katherine K. Chan