DEPDev wary of deficit impact if supplemental budget passes

By Kaela Patricia B. Gabriel

THE Department of Economy, Planning, and Development  (DEPDev) said it is weighing a possible request to Congress for a supplemental budget to support the programs addressing the oil crisis, though it cautioned about the possible impact of such a budget on the deficit.

At a Senate hearing on Monday, Economy Secretary Arsenio M. Balisacan said the government has sufficient funds to support oil-crisis measures until June, but added that a crisis that runs for six months could require budget realignment.

“The disadvantage is the deficit will surely increase. I am emphasizing that because unfortunately unlike when COVID hit us, we had a very good fiscal picture. Deficit was low, debt was low, but this time we don’t have that luxury,” Mr. Balisacan said.

Mr. Balisacan noted that the continued rise of fuel prices would cause inflation to exceed the 2%-4% target band for 2026.

He added that credit agencies have been watching how the Philippines handles the crisis, noting that one of the agencies has downgraded the Philippines due to elevated fiscal risks brought about by the Persian Gulf war.

According to Mr. Balisacan, P238 billion in funds to support emergency measures have been identified by the Department of Budget and Management, with P125.2 billion already released as of April 1.

Out of the released funds, P20 billion supported the Department of Energy’s (DoE) emergency oil purchase.

“My preference is that we work around the 2026 GAA (General Appropriations Act). We need to cut back on capital outlays if necessary just to fund what’s most needed for the crisis,” Mr. Balisacan said.

Aside from the supplemental budget, Mr. Balisacan also recommended revisiting the oil deregulation law, easing the biofuels import ban, building strategic fuel reserves, using lower-grade fuel, diversifying energy resources by tapping nuclear energy, and lifting the coal moratorium.

In 2020, the Philippines imposed a moratorium which restricted the processing of applications for coal-fired power plants to promote the transition towards renewable energy.

“We are in a transition but I think that even Japan, Germany, and Italy (are) revisiting their renewable energy transition, delaying it a bit, so that they can respond to the challenges of the global situation” Mr. Balisacan said.

In the same hearing, Energy Secretary Sharon S. Garin reported the gasoline reserve as equivalent to 54.38 days of consumption. The diesel reserve is projected to last 48.90 days, kerosene 104.73 days, jet fuel 67.65 days, fuel oil 45.96 days, and liquefied petroleum gas 36.27 days.