Business Bayani PH

The Philippines’ top economic planner, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan, said on Monday that he is not in favor of widespread subsidies for oil and electricity. 

Balisacan argues that such subsidies would mostly benefit wealthy Filipinos, who are typically the biggest consumers of these utilities.

“I think we should avoid subsidizing power, electricity, fuels generally, because the biggest consumers of fuels, for example, are the rich. The biggest consumers of electricity are the rich, so if you subsidize those, who benefits?” Balisacan said, according to a GMA News Online report.

Balisacan’s statement comes amid calls from some industry leaders for the government to provide wider subsidies to ease the burden of rising energy prices. 

San Miguel Corp. (SMC) President and CEO Ramon Ang said in a recent panel discussion that fuel and power costs in the Philippines are high compared to neighboring countries that offer subsidies.

“Our prices, without the subsidy and without taxes, are even lower than Malaysia, Indonesia, and Thailand. It’s also the same as power. Our power generation compared to our neighboring countries is lower but we impose taxes on the power sector and fuel and we also don’t give subsidies on power that’s why our power prices are higher,” Ang said.

However, Balisacan believes the government should focus instead on providing targeted subsidies to the most vulnerable sectors, like low-income earners. 

He argued that broad subsidies can strain government finances, potentially leading to fiscal problems like those experienced in the past with the Oil Price Stabilization Fund (OPSF).

“We have been there before,” Balisacan said. “I think our approach is not to subsidize oil generally but what we can subsidize (is the) vulnerable sector.”

The NEDA chief expressed confidence that the government’s ongoing digitalization program, which aims to provide a national identification system for Filipinos, will improve the targeting of subsidies. This will ensure that aid goes directly to those who need it most, Balisacan said.

“We should be able to perfect targeting. ‘Yung tina-target natin na matulungan, ‘yan talaga ang matutulungan [we will be able to help those that we are really targeting],” he said. 

“We can save a lot of fiscal resources and avoid potentially serious problems like fiscal crises as what happened in the past when you have oil price stabilization fund.”Ⓒ