The Bangko Sentral ng Pilipinas (BSP) on Sunday bared a laundry list of non-monetary measures the national government (NG) may pursue to help contain the general rise in the price of goods and services.
The list reiterates BSP Governor Benjamin E. Diokno’s position that skyrocketing oil prices at the pumps and the cost of food at tables have inflated in magnitudes now seen likely exceeding targets.
The same list concretizes his position that supply-side events do not respond to monetary stimuli but rather to fiscal influence.
‘In this instance, (it is) the Executive Department that should do the heavy lifting. And it had demonstrated in recent episodes that they are able and willing to do so,” Diokno said.
He urged, for instance, that mobility restrictions should be lifted as their continued imposition has hampered economic activity.
“By relaxing restrictions and increasing mobility, economic activity could expand, thereby increasing aggregate supply, which is the best way to create jobs, increase incomes, and reduce prices,” Diokno said.
For gasoline and diesel, it (government) can increase fuel subsidy for public utility vehicles, and continue promotional discount of oil companies.
For coal, expand supply and reduce price by lowering the most favored nation (MFN) 7-percent tariff rate to zero until December 2022, and maintain buffer stock at the current 30 days minimum inventory.
For electricity, stagger the increase in generation charge, and encourage energy conservation in all government offices.
Overall support to agriculture: provide fuel vouchers to farmers and fishermen, provide targeted fertilizer vouchers to farmers, and expand supply through bilateral discussion with fertilizer producing countries.
On rice, the Department of Agriculture should monitor rice inflation, and the National Food Authority should closely monitor buffer stock; accelerate the implementation of the Rice Competitiveness Enhancement Fund and other parts of the national rice production program to increase production; facilitate the release of sanitary and phytosanitary (SPS) import clearance especially for shipment arriving for the lean season starting July; and expand supply and reduce price by extending the MFN 35 percent tariff until December 2022.
On corn, expand supply and reduce price by lowering the MFN (most favored nation) tariff to 5 percent in quota and 15 percent out quota with MAV (minimum access volume) of 4 million MT (metric ton) until December 2022; import more feed wheat and produce more cassava (as feed substitute).
On pork, expand supply and reduce price by extending the lower tariff of 15 percent in quota and 25 percent out quota with MAV of 200,000 MT until December 2022; accelerate release of imported pork from cold storage; and continued implementation of strict biosecurity measures, and partnership with private sector groups/hog breeders to speed up the repopulation program.
On fish, issue certificate of necessity to import (CNI) for small pelagic fish valid from Q2 to Q4 2022. It needs an additional 140,000 to fill up the projected supply gap of 200,000 MT.
On chicken, accelerate the release of sanitary and phytosanitary (SPS) clearances from National Meat Inspection Service (NMIS) cold storage warehouses to push up inventory to pre-pandemic level; issuance of guidelines by the Department of Agriculture on the movement of poultry products and by-products following the detection of Avian influenza in some duck and quail farms to mitigate potential spread of the disease.
On sugar, address the temporary restraining order (TRO) on sugar import; and allow direct importation by industrial users: implement to 1:1 domestic to import ratio.
On wheat, expand sources of wheat, for example, India; and promote non-wheat flour substitutes such as the Sagip-nutri flour (made from cassava, sweet potato, mongo, and others) and banana flour.
In summary, Diokno said price conditions in the Philippines are not as bad as in some of the developed economies that suffer from a tightness in labor as well as elevated commodities prices.
“Consequently, the Philippines’ response need not necessarily mimic the responses of other countries,” he said.