MALACAÑANG on Thursday said the government is relying on fiscal discipline and targeted public spending to help cushion the economy from inflation risks arising from the peso’s weakness and the war in the Middle East.
“The recent weakening of the peso was brought about by brewed US dollar strength and rising global prices of oil,” Palace Press Officer Clarissa A. Castro told a news briefing, reading a statement from the Office of the Executive Secretary.
“On the part of the BSP (Bangko Sentral ng Pilipinas), while the rate hike last week was done to anchor inflation expectations, it also helps support our currency,” she added.
The peso closed at P62.565 against the dollar on Wednesday, marking its fourth straight record-low finish. It touched an intraday low of P62.69 and has weakened by 6.03% from its end-2025 close of P58.79, based on Bankers Association of the Philippines data.
The currency slide has added pressure on the prices of imported fuel, food and other goods.
“Moving forward, we expect the BSP to act decisively based on available data and intervene when necessary, to reduce exchange rate volatility,” Ms. Castro said.
The central bank last week raised the benchmark rate by 25 basis points to 5%, its fourth straight rate increase, citing risks to inflation from higher energy prices and supply disruptions.
Inflation slowed to 6.2% in July from 6.4% in June but accelerated from 0.9% a year earlier, based on Philippine Statistics Authority data.
Ms. Castro said the administration would closely review spending proposals and prioritize projects that generate economic and social benefits.
“The administration’s approach is focused on fiscal discipline and more efficient use of public funds,” she said.
“One of the solutions seen by the administration is that the government needs to spend on the right projects,” she said in Filipino. “Public funds should not be wasted on whatever expenditures.”
The Palace also cited the government’s Unified Package for Livelihoods, Industry, Food and Transport program as part of its response to the economic effects of the Middle East war.
President Ferdinand R. Marcos, Jr. activated the program after declaring a state of national energy emergency in March.
Under the program, government agencies have reprioritized spending and tapped available savings to fund assistance for sectors affected by rising prices.
Malacañang earlier said the Department of Budget and Management had identified P22.79 billion in savings for assistance programs, while nearly P58 billion had been released to local government units.
Ms. Castro said measures being implemented include the P20-per-kilo rice program, zero-balance billing in Department of Health hospitals and selected local government hospitals, and toll-free passage for buses and vehicles carrying agricultural products.
“These are just some of the measures being focused on by the government to reduce, even if only to some extent, the effects of the crisis in the Middle East,” she said. She added that the economic team remains focused on sustaining growth despite external shocks.
“The main thrust of the economic team is to support economic growth, and one way we are doing this is by increasing productive public spending,” Ms. Castro said. — Erika Mae P. Sinaking