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By Chino S. Leyco, Reporter
THE fiscal health of governments
may suffer amid skyrocketing commodity prices, as more money is
allocated for food subsidies this year, the International Monetary
Fund (IMF) warned Wednesday.
In a report titled Commodity
Price Surge Boosting Inflation, Hitting Budgets, the world’s
lender-of-last-resort said fiscal consolidation of some economies
will be in danger this year. These include the Philippines, which
already conceded that balancing its budget would be very difficult
to attain this year.
“If oil and food prices
continue to spiral, it could lead to unsustainable fiscal positions
and undermine the health of government finances in some
countries,” the IMF said.
It also said net importers of oil
and food are being hit very hard by the commodity price shocks, with
negative impact on their budgets.
“The impact of surging oil and
food prices is being felt globally but is most acute for
import-dependent poor and middle-income countries confronted by
balance of payments problems, higher inflation, and worsening
poverty,” the IMF said.
Analyzing the macroeconomic
policy challenges arising from the price surges, it argued that many
governments will have to adjust policies in response to the price
shock even as the international community does its share to address
this global problem.
In emerging economies, and
especially in some low-income countries, the IMF said the stakes are
even higher. For the very poor, high food prices can mean deep
poverty, hunger, and malnutrition.
“Some countries really are at a
tipping point,” Dominique Strauss-Kahn, IMF managing director,
said.
The Washington-based lender said
it is ready to help with balance-of-payments support, and has
already provided additional financial assistance.
The Department of Finance earlier
postponed to 2010 its original plan of balancing the budget after
the government acknowledged that it needs to spend more to cushion
the adverse effects of the high cost of fuel and rice.
The Finance department said the
government may end the year with a budget deficit of P40 billion to
P75 billion.
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