Targeted aid works

The rice price shock called for the return of importation to government control and, later, the reduction of tariffs.

Professionally, President Ferdinand “Bongbong” Marcos Jr. and his economic team have shown that they can roll up their sleeves and untangle the country’s heavy problems.

Solutions are skillfully applied to prevent problems from getting out of hand, and they do this mainly through targeted subsidies and by allowing the full play of the free market.

It started with the 4Ps, or the Pantawid Pamilyang Pilipino Program, and the concept is now being applied beyond interventions to level up poor families.

The rice price shock called for the return of importation to government control and, later, the reduction of tariffs.

The Rice Tariffication Law was passed during the previous administration, but strong interest groups that dominated the industry resisted it, particularly the grains importation monopoly of the National Food Authority, or NFA.

The NFA was relegated to buying palay from local rice farmers, which was its original mandate.

The government imposed a temporary price cap to address the surge in rice prices, which some industry experts believed was prodded by those against the tariffication law.

Calls were made to scrap the law and later to lower the tariff, both of which PBBM resisted.

Instead, subsidies to retailers were farmed out while the NFA raised the buying price for palay, which thus hit the middlemen and, some said, the cartel that manipulates prices.

The law provides for the Rice Competitiveness Enhancement Fund that the administration employs to help farmers.

Since its implementation, government figures showed that P12.7 billion has been raised from tariff proceeds.

This is being used for programs to mechanize farms and purchase equipment to improve the harvest and sales of the staple grain.

The attempt to influence the market and pressure the removal of the law was thwarted. The price cap, which was a temporary market distortion, was lifted, and prices retreated to normal.

Pivotal to the swift resolution of the problem was PBBM’s decision to hold on to his post as Agriculture secretary, which allowed him to cut through the bureaucracy that usually impedes government projects.

A bigger challenge facing PBBM’s team is the fuel price crunch which is expected to worsen as the conflict in Israel draws out and sucks in more protagonists.

The effects of the Russian invasion of Ukraine on fuel prices had lingered, but when trouble hits the Middle East, the magnitude of the problem on the global oil industry multiplies.

Prices are thus predicted to soon shoot past the $100 per barrel mark, which would mean the frightening prospect of gasoline and other oil products hitting record-high levels per liter.

This is where political will again will apply as the knee-jerk reaction would be to call for a reduction in the excise tax on fuel.

Higher fuel prices have the collateral result of raising revenues from taxes, which means the government can deploy an increase in funds to mitigate the problem.

Economic managers said the more populist solution of cutting the fuel tax will have little effect on improving the lot of those who suffer the most from the surge in global oil prices.

Fiscal experts in the Cabinet said a reduction in the excise tax benefits those well off and can afford multiple vehicles more than the jeepney and taxicab drivers.

A more practical solution is through the fuel cards that should, however, be efficiently distributed to public transport drivers. Their income has been cut by half since gasoline and diesel prices exceeded P60 per liter.

The subsidies may not even bring their financial state back to when fuel prices were around P40 per liter, but government aid makes the difference for them to keep going and prevent their families from going hungry.

The challenging situations, all external, require actions that would balance diverse interests, particularly those needing assistance the most.

It’s a hard road to traverse that PBBM’s team, thus far, has safely led the nation through.

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Credit belongs to: tribune.net.ph