THE government should focus on long-term solutions such as diversifying energy sources and attracting more money from abroad, as the peso’s recent slide drives up fuel and food costs for consumers, an economist said Saturday.
Union Bank of the Philippines Chief Economist Ruben Carlo Asuncion told The Manila Times that the peso’s recent depreciation was largely driven by “external shocks,” particularly higher oil prices and a stronger US dollar amid the war in the Middle East, rather than domestic weakness.
The economist said that a weaker peso “makes it more costly for the government to cushion fuel and food prices, as it amplifies imported inflation, even as remittances and exports provide some offset.”
“Policy should remain calibrated — allowing the exchange rate to act as a shock absorber while the BSP (Banko Sentral ng Pilipinas) smooths excessive volatility and fiscal support is kept targeted and temporary,” Asuncion told The Times.
“Over the medium term, energy diversification and stronger external inflows matter more than defending any specific peso level,” he added.
Robert Dan Roces, former chief economist of SM Investments Corp., agreed that the peso was weakening mainly on global forces — strong dollar, higher oil, and risk aversion — “not a breakdown in local fundamentals.”
But he said that “it does make cushioning more costly: fuel imports, subsidies, and debt servicing all rise in peso terms.”
“The goal now is to smooth volatility, not defend a level — measured FX intervention, clear signaling, and tight policy coordination,” Roces told The Times.
“Ultimately, stability comes from fundamentals: keeping inflation anchored, fiscal discipline intact, and investor confidence steady,” he added.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael Ricafort told The Times that the central bank’s main focus remained on price stability, saying that smoothening exchange rate volatility was key to maintaining stable inflation.
Since the Philippines is a net importer, he said, the government has also relied on non-monetary measures to cushion the impact of higher prices.
Ricafort said that previous administrations used targeted subsidies as a way to reduce pass-through of higher prices and mitigate the inflationary effects while managing limited financial resources to prevent wider budget deficits and prevent incurring additional debt.
“Consistency on stance on fuel taxes across different administrations and economic teams reflects fiscal discipline and prudence, based on calculated cost-benefit analysis. Larger foregone government revenues amid limited financial resources and budget deficit would also benefit more the higher income brackets than the poor,” Ricafort said.
“That is why targeted subsidies have been given to the hard-hit and most vulnerable sectors, such as the poorest of the poor, such as for the transport sector/PUV drivers, fisherfolk, and agricultural sectors, to also reduce or temper the need to pass higher prices of fuel to the general public,” he added.
Economist Victor Andres Manhit, founder and chief executive officer of Stratbase, said consumers should take priority over farmers as the government responds to inflation worsened by global conflict, rising fuel costs, and higher food prices.
“Are we here to protect the farmers? (Or) Are we here to protect the Filipino consumers?” Manhit said.
He argued that farmers would still have buyers for their produce, while the more immediate problem facing the broader public is the high cost of living.
Manhit said the inflation outlook for the rest of the year remains uncertain, with global tensions continuing to strain economies and drive up the cost of fuel, power and basic goods.
He said the Philippines, unlike some countries, does not subsidize power or gasoline, leaving consumers more exposed to price shocks during crises.
Manhit said inflation for Filipinos is largely driven by food, particularly rice and chicken, and argued that the government should revisit the value-added tax (VAT) and review tariffs on imported rice and corn to help ease the cost of living.
He said lower tariffs on rice and corn could also help bring down the prices of poultry and meat, as corn is a key input in food production.
Fuel prices in the country have surged past P100 per liter as the Philippines scrambles to look for alternative sources of oil and gas.
Despite the spike in fuel costs, President Ferdinand Marcos Jr. maintained that the overall situation remained under control and urged the public to refrain from panic buying or hoarding.
On Friday, the president said the country has enough crude oil to last until June 30.
This came after Malacañang confirmed that a shipment of more than 700,000 barrels of crude oil from Russia arrived recently.
The shipment was reportedly bound for the refinery of Petron Corp. in Bataan, where it will be processed into petroleum products such as diesel and gasoline.
The latest delivery signals renewed efforts by the government to import oil from Russia after a pause that began in 2022, following global market disruptions due to the Russia-Ukraine conflict.
Speaking at the sidelines of the opening of the Ninoy Aquino International Airport Expressway Phase II, Marcos said the Philippines has secured sufficient crude oil imports for the coming months to support domestic supply.
“Because of that, we now have a supply of crude oil that is sufficient until June 30,” the president said.
Marcos said the government would continue to look for additional suppliers to ensure long-term energy security.
The president earlier said the country was looking to countries like Russia, Japan, China and South Korea.
Marcos also recently issued Executive Order 110, declaring a state of national emergency, which will be in effect for one year unless sooner lifted or extended, the president said.
He also signed a measure allowing the suspension of excise taxes on fuel, although its implementation will depend on global oil price trends and recommendations from the economic cluster.
Excise taxes may be suspended if global crude oil prices exceed $80 per barrel for at least one month. CATHERINE VALENTE, JAMES DANIEL DANIO
