DBM orders agencies to report savings made amid oil crisis
The Department of Budget and Management (DBM) has directed all government agencies to identify their savings, which can be pooled to fund relief measures in response to the Iran war and its ensuing oil crisis.
National Budget Circular (NBC) No. 602, issued by the DBM on April 23, said all agencies must submit their identified savings from at least 20 percent of their reduced costs in maintenance and other operating expenses (MOOEs)—including travel and representation expenses, trainings and scholarships, and utilities, supplies and materials.
These and other “funding sources [will] augment the … programs, activities and projects [of each agency which are] intended to mitigate the economic and social impacts of the Middle East conflict,” stated the circular.
The DBM said if some of those items are essential to the agency concerned, the 20-percent cost reduction can be applied to “other non-essential or non-priority MOOE items.,”
The department also said an agency’s identified savings should be based on its Financial Accountability Report as of March 31 this year.
The DBM also recommended the deferral of the purchase of motor vehicles not critical to health services, uniformed personnel and disaster response, and of the construction of new government buildings and other facilities.
The department noted, however, that these cost reductions should not “adversely affect agency performance or result in service disruptions.”
All agencies are required to submit their identified savings by May 15, after which the DBM will report these submissions to President Marcos.
Budget Secretary Rolando Toledo had earlier estimated that up to P25.6 billion could be tapped from savings following the issuance of NBC No. 602.
Fiscal response
The directive is in line with the President’s declaration of a state of national energy emergency on March 24 through Executive Order No. 110, as also cited in the circular.
The DBM has so far set aside some P230 billion to cushion the economy from the energy shock.
The amount consists of P200 billion from the 2026 budget; P20 billion from the emergency fund of the Department of Energy; and P10 billion from continuing appropriations under the 2025 national budget.
The government’s fiscal response to the impact of the conflict has raised last month’s budget deficit by 1.96 percent to P349.7 billion, according to the Bureau of the Treasury.
Analysts have warned the deficit could widen further if fuel price pressures persist.
The country’s efforts toward fiscal consolidation also face more risks after two of the three major credit rating agencies had revised their sovereign outlooks.
Fitch Ratings revised its outlook on the Philippines last week from “stable” to “negative,” signaling a potential downgrade risk to the country’s “BBB” investment-grade rating over the next one to two years.
Earlier this month, S&P Global Ratings—from which the Marcos administration had sought to secure its first-ever “A” rating—cut its outlook on the country from “positive” to “stable.”
