GOVT  TOLD  TO  REVIEW  ECONOMIC  POLICIES, PREPARE  PLAN  VS  RISING  COSTS
 
MANILA, JULY 6, 2008 (STAR) By Aurea Calica - Senators called on the government to review its economic policies and prepare a full battle plan to fight the effects of increasing oil prices and the 14-year high 11.4 percent inflation rate.

Sen. Manuel Roxas II said the government must prepare a plan to meet the relentless assault of high fuel prices on the people’s purchasing power and livelihood.

Roxas proposed adopting the four-day workweek, exempting the frontline, health and security services of the government.

“(The battle plan) should also include reallocating money from unproductive foreign trips to much-needed relief measures, such as conditional cash transfers to affected workers, food-for-work public works programs or a genuine food-for-school program,” Roxas said.

Sen. Loren Legarda, for her part, said an impending crisis should make our government more sensitive in addressing the needs of the people.

“Their interest should remain primordial. Long-term panacea of protecting them from economic shocks should be in place aside from palliatives intended to cushion the negative effects of inflation,” Legarda said.

Roxas and Legarda reiterated their call to scrap the value added tax (VAT) on oil, even temporarily.

Roxas said the government should have a concrete plan resulting from open and frank consultations with all affected sectors – the transport sector, owners of small enterprises and the average consumer.

He said the Arroyo administration should not blame external factors for the current crises.

“That is already a given. Yet throughout the world, responsible governments are taking the lead in setting good examples and helping their constituents cope with high prices,” Roxas said.

Roxas also cautioned the government against raising interest rates despite the double-digit inflation.

“To help keep the economy afloat, the government should not raise interest rates despite a high inflation rate. If we hike interest rates, then our small and medium-scale enterprises – that employ 70 percent of the workforce – would be direly affected since they rely on credit to run their businesses,” he added.

Roxas attributed the 14-year-high inflation rate the country is currently experiencing not on the “overheating” of internal economic activity but on the adverse effects of global oil and rice price shocks.

Hiking interest rates at this time, Roxas said, “means choking an already hyperventilating economy.”

And since the economy is driven largely by personal consumption, Roxas said the government should now seriously consider suspending the VAT on oil to give immediate relief to consumers.

Legarda said the skyrocketing prices of food and fuel had undoubtedly caused the inflation rate to leapfrog to double-digit levels.

She noted though this was not surprising since the Philippines “is the world’s biggest importer of rice” and highly dependent on imported oil.

Legarda said the government should increase investments in technology to help the country become less dependent on imported oil.

She said investments in agriculture should be harnessed to help increase local rice production at lower costs.

These two proposals, Legarda added, would in effect address two of the root causes of inflation.

Sen. Panfilo Lacson, on the other hand, urged Congress to focus on the looming food shortage once sessions resume on July 28.

Lacson said policymakers should immediately act on the rising inflation.

“The Senate and the whole of Congress should help. This is no longer a joke, we never imagined that the prices of oil will reach this high,” he said.

Lacson said the Arroyo administration should stop stonewalling and face the problems head-on.

Local oil companies have announced that the weekly oil price hikes will continue until August, at the least.

This weekend, the price per liter of diesel increased by P2 to P54.44, while unleaded gasoline rose by P1 to P60.46 per liter. This is the 18th increase in pump prices this year.