Inflation control to hinge on agri competitiveness, crop insurance, other bills — Diokno
By Beatriz Marie D. Cruz
BILLS on agrarian reform, land use, livestock industry competitiveness, and crop insurance will help the central bank rein in inflation, according to the Secretary of Finance.
“Congress’ main role is to pass new laws or amend existing ones,” Sec. Benjamin E. Diokno told BusinessWorld via Viber Thursday.
Headline inflation may have exceeded 9% in February, the central bank said Tuesday. Inflation was 8.7% in January, the highest level since November 2008.
Mr. Diokno called on Congress to pass the New Agrarian Emancipation Act, which will condone a total P58 billion in unpaid debt of farmer-beneficiaries stemming from agricultural land awarded under the Comprehensive Agrarian Reform Program.
“This will allow farmers to focus their efforts on increasing the productivity of agrarian reform land,” Mr. Diokno said.
The bill hurdled the House of Representatives in December, while a counterpart measure in the Senate has been consolidated into a committee report. In his State of the Nation Address, President Ferdinand R. Marcos Jr. called for the need to pass the measure.
Mr. Diokno also saw the need to amend the Philippine Crop Insurance Corp. (PCIC) Charter by including “suitable disaster risk transfer programs to farmers and fisherfolk for their crop, livestock, and fishery products,” to ensure stable supply of agricultural commodities.
The chambers must also approve the National Land Use Act to allow which lands will be used for agricultural purposes and ensure that these lands are not converted, Mr. Diokno said.
Signing it into law will help “classify land according to use: protection (for conservation), production (for agriculture and fisheries), settlements development (for residential purposes), and infrastructure development (for transportation, communication, water resources, social infrastructure),” Mr. Diokno added.
The bill is one of the House’s priority measures for 2023. A similar measure in the Senate is pending at the committee level.
He added that the Livestock Development and Competitiveness Bill will reduce inflation arising from high meat prices.
The proposed measure “aims to replace the minimum access volume system on corn with a uniform 5% tariff rate to ensure a stable supply of cheap corn for inputs, and earmark corn tariff revenues for corn productivity improvement,” according to Mr. Diokno.
Both livestock bills are pending in the two chambers’ respective committee levels.
“We do not see the need to raise the growth or inflation targets specified in the medium-term expenditure framework,” Mr. Diokno said. Any proposed changes to growth and inflation targets will be discussed in the economic managers’ next briefing at the House of Representatives in April.
Asked about the prospects for further rate hikes, Mr. Diokno noted that the Monetary Board (MB) considers the potential benefits and costs of hiking policy rates.
“The BSP’s future policy actions will be influenced by several factors, including more recent data and prospects for inflation, economic growth, and financial stability,” he said.
The MB raised its overnight borrowing rate by 50 basis points on Feb. 16, bringing the policy rate to 6%, the highest in nearly 16 years or since May 2007, when the rate was 7.5%.
The MB will meet on March 23 for its next policy setting.
At a House briefing Tuesday, Mr. Diokno said that food supply constraints and higher utility rates are the main drivers of inflation.
In a statement on the economic managers’ meeting with lawmakers, the National Economic and Development Authority noted that short-term measures to improve agricultural productivity are addressing supply chain issues (production and post-harvest facilities, logistics, imports, and anti-smuggling efforts); frequent monitoring and updating of farmgate and retail prices; and using surveys and satellite data to enable timely import decisions.
The government must also create a centralized database for quick sharing of information; and support vulnerable sectors through subsidies and the Agriculture department’s Kadiwa program, Mr. Diokno said.