Postpone Village Polls And Then Blame High Prices Of Crude Oil

September 18, 2007 at 3:45 pm | Posted in Uncategorized | Leave a comment

MANILA, Philippines (Mindanao Examiner / 18 Sept) – With prices of crude oil soaring, Filipino lawmakers now have reasons to postpone next month’s village polls in what they say would be a big savings for the government.

Cebu Rep. Eduardo Gullas said the fresh surge in crude oil prices to new highs above $80 per barrel drove the House of Representatives to finally pass a bill seeking to reset the Oct. 29 Barangay and Sangguniang Kabataan elections to May 2009.

“This is not just about the modest government savings. This is about stopping some P8 billion in election-related spending by candidates from being needlessly pumped into the system at a time when oil prices are hovering at or near record highs,” Gullas said in a statement sent to the Mindanao Examiner.

Gullas is the author of the bill that seeks to postpone the polls despite a strong protest from many groups to cancel the elections.

He insisted that the P8-billion spending would come barely six months after bets in the May 14 mid-term elections swamped the system with tens of billions of pesos.

The Bangko Sentral ng Pilipinas (BSP) said there is a potential new inflationary pressure on consumer prices that may be brought about the recent surge in oil prices.

“High oil prices are becoming a concern. Definitely, it will have an impact on inflation, not immediately this September because the oil companies here still have inventory,” BSP Deputy Governor Diwa Guinigundo said.

Guinigundo said the adverse impact of the recent surge in oil prices would likely be felt starting October, right around the time election-related spending in connection with the Barangay and SK polls is expected to heighten.

Crude oil futures touched record highs above $80 per barrel last week.

“If we unnecessarily stir inflation in a big way, we’re afraid this might force the BSP to eventually raise interest rates, or keep them at current levels, at a time when other countries are already lowering rates,” Gullas said.

The high lending rates in turn could dampen the country’s strong economic expansion, and set back the debt-laden government’s financial recovery, Gullas warned.

“We know how indebted the National Treasury is, despite the favorably strong peso that has allowed the government to lessen its dollar-denominated liabilities. The government is thus extremely vulnerable to rising interest rates, just like the private sector,” Gullas said.

Excessive money supply tends to put upward pressure on consumer prices as people are induced to spend more when they have more cash in their pockets.

Raising interest rates is one of the options available to the BSP to curb excessive money supply and fight any added inflationary risks.

The polls have been previously reset many times and maybe postponed in 2009 because of the Presidential and national polls in 2010. (Mindanao Examiner)

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