THE government’s latest cash assistance program may provide immediate relief to vulnerable households reeling from rising prices, but economists said that sustaining similar support could prove challenging should elevated oil prices extend into next year.
President Ferdinand Marcos Jr. last week announced another round of ‘ayuda’ that will run from July to December to help Filipinos cope with the expected impact of renewed conflict in the Middle East on domestic fuel prices and the cost of basic goods.
Under the expanded United Package for Livelihoods, Industry, Food, and Transport (UPLIFT) program, more than 7.5 million households will receive one-time and monthly cash assistance.
While this may indeed help cushion households from rising prices, De La Salle University (DLSU) economist Marites M. Tiongco warned that if the conflict persists and warrants another round of assistance next year, the program could become increasingly difficult to sustain.
Malacañang said eligible beneficiaries under the Department of Social Welfare and Development (DSWD) will receive a one-time P2,000 grant, while qualified Social Security System (SSS) members and poor and near-poor households identified under the 2024 Community-Based Monitoring System will receive P2,000 a month until December.
The DSWD said it had earmarked P55 billion for the expanded UPLIFT program in the second half of the year.
Tiongco estimated that extending similar monthly transfers throughout 2027 could cost nearly P100 billion, excluding administrative expenses and other energy-related support programs.
‘For the remainder of 2026, the program appears fiscally manageable as an emergency intervention, but it should not be viewed as indefinitely sustainable,’ Tiongco told the BusinessMirror.
She said prolonged assistance could also squeeze the government’s fiscal space as it would have to contend with higher subsidy requirements, slower revenue growth, rising debt servicing costs, and competing spending needs for health, education, infrastructure, and disaster response.
University of Asia and the Pacific (UAandP) economist Marco Antonio C. Agonia also said the government may eventually have to choose between expanding subsidies and accelerating infrastructure spending.
‘The [National Government] will likely have to compromise on the scale of subsidies and the pace of [infrastructure] rollouts to keep its fiscal sustainability picture intact, especially with downward revised growth targets in the latest [Development Budget Coordination Committee] assumptions review,’ Agonia told the BusinessMirror.
Foundation for Economic Freedom (FEF) President Calixto V. Chikiamco, meanwhile, said a growing share of the national budget could eventually be devoted to social assistance at the expense of investments that support long-term economic growth.
‘This will crowd out government programs that will raise the productivity of the economy, such as investments in education and infrastructure,’ he told this newspaper.
Temporary relief
Despite concerns over fiscal sustainability, both Tiongco and Agonia said the latest round of cash assistance is justified as a temporary response to rising prices.
Tiongco said the program is warranted because inflation disproportionately hurts lower-income households, but stressed that its credibility will depend on transparent implementation, objective targeting, and whether it remains a temporary measure.
Agonia likewise said the subsidy rollout may be warranted to protect the country’s most vulnerable households and sectors, although he noted it could be politically unpopular among tax-paying middle-income families who ultimately shoulder the cost of funding social protection programs.
Official data showed headline inflation eased to 6.4 percent in June, while inflation for the bottom 30 percent of households remained higher at 8.4 percent. Both figures remain above the Bangko Sentral ng Pilipinas’s 2 to 4 percent target range.
Meanwhile, the purchasing power of the peso stood at P0.74 in June, meaning every peso in 2018 was worth only 74 centavos last month.
Tiongco, however, said it is still too early to determine whether previous rounds of cash assistance have effectively protected households because no public impact evaluation has yet been released beyond data on beneficiaries and funds disbursed.
Chikiamco also argued that cash assistance alone cannot restore the purchasing power lost to inflation.
‘No amount of social protection measures will help households recover the lost purchasing power due to inflation,’ Chikiamco said.
He added that the government’s cash assistance could be undermined by inflationary pressures, noting that the historic P85 minimum wage increase in Metro Manila may fuel further price increases and ultimately erode the purchasing power of the very households the program seeks to protect.
Structural reforms
Tiongco also emphasized that cash assistance should not be viewed as the government’s primary response to inflation because ‘it does not reduce the underlying causes of inflation.’
She said temporary cash aid should be accompanied by reforms that tackle supply-side pressures. These include boosting support for key sectors, improving food production and distribution, strengthening fuel and food security, and accelerating investments in energy diversification to reduce reliance on imported oil.
‘In other words, cash assistance should serve as a bridge-not the entire strategy,’ Tiongco added.
Agonia shared a similar view, saying previous rounds of targeted subsidies provided some relief to transport workers but were not enough to offset persistent inflation and weak economic activity, which continue to weigh on vulnerable households.
‘Subsidies should be emergency measures to alleviate short-term hardship, until structural solutions can be worked out in the form of energy and food security, economic confidence, and growth driver diversification,’ he also said.
Earlier this year, the Department of Economy, Planning, and Development (DepDev) already warned that the government may need as much as P429 billion to finance support and relief measures should the conflict in the Middle East persist through the end of the year.