High oil prices peril poverty reduction program

from the Inquirer

By Michelle Remo
Philippine Daily Inquirer

MANILA, Philippines—The government’s agenda to reduce poverty incidence to as low as 17 percent of Filipino families by 2010 may likely be derailed by the adverse effects of rising oil and food prices on households.

The National Economic and Development Authority (NEDA) said the unabated rise in oil prices, which pushes the cost of other commodities, might make it difficult for some poor families to get out of poverty.

The latest report on poverty incidence said 26.9 percent of Filipino families in 2006 fell below the poverty line, as they failed to meet the minimum income required to meet their basic daily needs. The poverty level in 2006 was worse than in 2003, when the government documented 24.4 percent of Filipino families as being poor.

Poverty-reduction target

The Arroyo administration was hoping to trim the figure to a range of 17 to 20 percent by 2010 as part of its commitment to the Millennium Development Goals set by the United Nations. UN member-countries have committed to eradicate extreme poverty by 2015.

But the NEDA said the soaring price of oil in the world market posed a tough challenge to the domestic economy to meet the government’s poverty-reduction target.

Increases in oil and commodity prices raise the minimum amount of income required to meet a family’s basic needs. An increase in poverty incidence ensues when families are not able to increase their income commensurate with the rising cost of living.

“We might have to revise the target on poverty reduction to take into account changes in macroeconomic assumptions,” NEDA Director General Augusto Santos said Thursday.

The government’s economic team on Wednesday revised its growth projection for the economy this year from between 6.3 percent and 7 percent, to between 5.7 percent and 6.5 percent.