By Katherine K. Chan, Reporter
WASHINGTON, D.C. — The Philippines’ response to the Middle East war-driven energy crisis should remain time-bound and targeted to assist preserve its limited fiscal buffers as price shocks may persist, the International Monetary Fund (IMF) said.
Krishna Srinivasan, director for the Asia and Pacific Department on the IMF, said it will be important for cash-strapped economies within the region to only implement focused support to avoid further straining their fiscal positions.
“Why do we are saying that? Because buffers have come down, and we don’t understand how long this shock will last,” Mr. Srinivasan told a press briefing here on Thursday.
“So, providing targeted support could be very vital, and that applies within the case of (the) Philippines. Debt levels aren’t very low; it’s still at about 60%. So, there’s not much by the use of fiscal buffers.”
Because the war within the Middle East erupted in late February, the federal government has implemented several support measures mainly to ease the financial burden for the general public transport sector and consumers.
These include money aid and a P10-per-liter fuel subsidy for public transport drivers, a 20% fare discount for commuters, in addition to the suspension of the excise tax on kerosene and liquefied petroleum gas.
The Department of Finance said the excise tax halt may lead to revenue losses of around P4.1 billion over the following three months.
The crisis poses a fresh challenge to the National Government’s (NG) medium-term fiscal consolidation program, under which it desires to regularly reduce its budget deficit and convey down its outstanding debt, which ballooned throughout the coronavirus pandemic.
Outstanding NG debt amounted to P17.71 trillion at end-2025, bringing its share within the gross domestic product (GDP) to 63.2%, the best because the 65.7% posted in 2005. That is above the 60% debt-to-GDP threshold considered by multilateral lenders to be manageable for developing economies.
Keeping support focused on essentially the most vulnerable would prevent the Philippines from further narrowing its fiscal space, which was also affected by a graft scandal related to flood control and infrastructure projects that got here to light last 12 months, Mr. Srinivasan said.
“The momentum coming into 2026 was weaker. And this reflects the incontrovertible fact that… sentiment remains to be weak given the governance issues with these flood control projects, the general public flood control projects. So, that was already weighing on sentiment across investors,” he said. “After which comes the shock.”
The IMF now sees Philippine GDP expanding by 4.1% this 12 months, much slower than the 5.6% it earlier projected and the post-pandemic low growth of 4.4% in 2025.
“(The) Philippines is a really energy-intensive economy,” Mr. Srinivasan said. “It relies lots on imports. So, the shock has a major bearing on prospects in (the) Philippines.”
Over 90% of the Philippines’ oil supply is sourced from the Middle East, making it vulnerable to shocks emerging from trade disruptions and attacks on energy infrastructure within the region.
The worldwide energy price shock caused double-digit increases in local pump prices within the weeks following the beginning of the war. In consequence, Philippine headline inflation already breached the central bank’s 2%-4% annual goal in March, coming in at 4.1%, which was the fastest pace in nearly two years.
After declaring a year-long energy emergency amid fears of a supply shortage, the federal government has moved to secure fuel from Japan, Malaysia, India and Oman, amongst others.
As of April 10, the country’s average fuel stock is estimated to sustain demand for about 50.31 days or 75.55 million liters of consumption.
“So, use your buffers in a really efficient way. And that’s what is essential for the Philippines and for other countries within the region, especially those which rely lots on imports [and] don’t have much by the use of physical buffers of oil and gas,” Mr. Srinivasan said.