Manila: Senator Sherwin Gatchalian has filed a resolution to determine the alignment of current economic conditions with the projections used in Republic Act No. 12314 or the 2026 General Appropriations Act (GAA), amidst increasing geopolitical tensions in the Middle East.
According to Philippines News Agency, Gatchalian has introduced Senate Resolution No. 348, which directs the relevant Senate committee to conduct an inquiry, aiding legislative measures. This action is in response to the potential risks posed by escalating tensions between the United States and Israel, and Iran, which could impact key economic indicators.
Gatchalian emphasized the need to assess the alignment of market conditions with the national budget and to ascertain whether fiscal policy adjustments are necessary to ensure responsiveness to the needs of the Filipino people. The resolution highlights the increased vulnerability of the Philippines to external shocks and volatile energy prices due to the rising tensions in the Middle East, which could influence inflation, economic growth, and fiscal stability.
The resolution references estimates from the Department of Economy, Planning, and Development (DepDev), suggesting that inflation could rise to between 4.0 percent and 4.2 percent, up from the pre-conflict forecast of 3.6 percent, if oil prices reach USD100 per barrel and remain high. A further increase in inflation to between 4.5 percent and 4.8 percent could occur if oil prices escalate to USD140 per barrel and stay above USD80 until September.
Additionally, the resolution indicates potential declines in overseas Filipino worker (OFW) remittances by up to 65.3 percent from 2025 levels, amounting to PHP226.58 billion, due to a possible deployment ban and partial repatriation of workers in conflict-prone areas. DepDev also warned of a potential reduction in the country's gross domestic product (GDP) by 0.20 percent to 0.30 percent if the oil price shock continues.
Gatchalian pointed out that deviations in key assumptions, particularly inflation, GDP growth, and global oil prices, could influence fiscal targets and the implementation of government programs under the 2026 budget. The resolution aims to provide guidance for possible policy adjustments to ensure the national budget's responsiveness while upholding fiscal discipline amid evolving global risks.
