MANILA, Philippines – AS tensions between Israel and Iran heighten following direct military confrontations in April 2025, House Committee on Ways and Means Chair Rep. Joey Sarte Salceda is calling for urgent economic preparedness from the Philippine government.
In a policy statement issued over the weekend, Salceda emphasized that while the Philippines is not directly involved in the geopolitical dispute, the potential economic consequences could be significant, particularly through spikes in oil prices, currency fluctuations, labor market instability, and rising import costs.
“The issue is not about foreign alignment—it’s about economic resilience,” Salceda said, urging all government agencies to factor global risks into their Tier 1 and Tier 2 proposals for the 2026 national budget.
Oil Supply at Risk
Salceda pointed to the Strait of Hormuz—through which over 20% of the world’s oil supply passes—as a critical global chokepoint. The Philippines, which consumes around 471,400 barrels of oil per day, would face an estimated additional import cost of PHP 258.5 million per day (or PHP 94.9 billion annually) for every USD 10 increase in Brent crude oil prices.
“These figures must be part of the baseline assumptions for fuel subsidies, energy planning, and agricultural support in the 2026 budget,” Salceda stressed.
Peso, Reserves, and Volatility
Salceda acknowledged that the peso slightly appreciated from PHP 56.60 to PHP 56.28 against the US dollar between April 16 and April 25, 2025. He also cited the country’s gross international reserves, which stood at USD 105.5 billion as of May 31—equivalent to 7.3 months of import cover.
“This is a strong position, but conditions can change quickly. Volatility remains a risk, and the budget must be designed to absorb those shocks,” he added.
Risks to Overseas Filipino Workers
With over 2.16 million Filipinos working overseas—more than a third of them in the Middle East—Salceda highlighted the vulnerability of the overseas labor market to regional conflict. He noted that in 2020, the Department of Labor and Employment mobilized PHP 600 million in emergency funds amid similar tensions.
“That amount should be the benchmark for contingency funding in 2026 by the Department of Migrant Workers and the Department of Foreign Affairs,” he recommended.
Threats to Agriculture and Shipping
Around 66% of fertilizer imports into the Philippines are nitrogen-based, primarily from Qatar. Salceda warned that any disruption in Gulf shipping would drive up domestic fertilizer prices and affect food security.
He also cautioned about possible increases in freight and marine insurance costs if Gulf routes are designated as war risk zones. These would raise the prices of vital imports even if Philippine shipments avoid the region directly.
Inflation Pressures
Citing data from the Bangko Sentral ng Pilipinas, Salceda noted that oil price hikes can contribute between 0.5 to 1.5 percentage points to headline inflation. He urged the Development Budget Coordination Committee (DBCC) to reflect this in its 2026 projections and social program allocations.
Budget Recommendations
Salceda outlined specific policy recommendations for the 2026 General Appropriations Act, including:
Fuel Subsidies: Allocate at least PHP 5 billion for Pantawid Pasada and other targeted support programs.
Oil Import Stability: Empower the Department
About the Author
