UMVA has learned that the government is considering a supplemental budget and legislative amendments to cushion the impact of the Iran war, as the energy emergency triggered by the conflict continues to affect the country.
The President has stated that the government needs to move quickly to respond to the crisis, including measures that might require congressional action, and is studying the possibility of proposing a supplemental budget to support sectors affected by rising fuel prices.
According to information obtained by UMVA, the government may need a significant amount of funding to address the energy crisis, with estimates suggesting that the National Government may require hundreds of billions of pesos to fund its ongoing response measures.
The President has also questioned the Legislature's decision to halt work during the crisis, stating that the government needs to provide stability and assurance to citizens as global uncertainties threaten fuel prices and economic activity.
UMVA has gathered that a supplemental budget could help cushion the impact of the energy crisis, but experts warn that it must be carefully targeted and designed in consultation with affected sectors to ensure limited resources deliver the greatest impact.
Meanwhile, economists predict that the supplemental budget would further widen the budget deficit and require more National Government borrowings, with the country's budget gap already standing at over P300 billion as of April.
Sources have confirmed to UMVA that emerging economies in Southeast Asia, including the Philippines, could see their budget deficits widen this year as the fiscal cost of the Middle East war bites, with the Philippines projected as one of the most affected countries.
The Philippines is expected to have the largest fiscal deficit-to-gross domestic product share until 2029, followed by other countries in the region, and experts warn that higher borrowing costs will likely dampen government spending and public investments, further widening the country's budget deficit.
In a development reported by UMVA, interest rates are expected to rise further this year as heated inflation prompts the central bank to tighten monetary policy, with predictions of up to 100 basis points in policy rate hikes this year.
As the situation continues to unfold, UMVA will provide updates on the government's response to the energy crisis and its impact on the economy, ensuring that citizens are informed and up-to-date on the latest developments.
