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PLDT signs talent engagement, retention partnership with LinkedIn

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PLDT, Inc. said it has entered into a partnership with professional network LinkedIn to help engage and retain premium talent.

According to the partnership agreement, PLDT will be tapping LinkedIn solutions that give its employees access to over 20,000 courses on the professional network’s platform.

“LinkedIn will be in step with us on market intelligence, talent engagement and learning, to help achieve our aspiration of becoming the best workplace,” said Gina P. Ordoñez, PLDT’s chief people officer.

Aside from the online courses, the partnership will also allow employees of PLDT and wireless unit Smart Communications, Inc. to access LinkedIn’s Glint platform and LinkedIn Talent Insight system.

Glint is LinkedIn’s people success platform that leverages real-time data to help organizations increase employee engagement, while its Talent Insight system allows organizations to recruit and manage talent more strategically.

Atul Harkisanka, head of emerging markets for the Philippines at LinkedIn, said the company’s research shows that one of the top priorities for professionals when choosing or staying at a job is having adequate learning and development opportunities.

“By investing in all aspects of managing the employee experience, the PLDT Group shows that they are serious about building a people-centric culture, as well as an agile and resilient workforce,” he said.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Justine Irish D. Tabile

Evaluating the effectiveness of corporate strategies

In the dynamic and competitive landscape of the business world, corporate strategies play a pivotal role in determining an organization’s success. Developing and implementing effective strategies is essential for achieving long-term growth, sustainability, and competitive advantage.

However, the mere formulation of strategies is not enough; evaluating their effectiveness is crucial to ensure that they align with organizational goals and drive positive outcomes. There are several key considerations and methodologies for evaluating the effectiveness of corporate strategies.

Corporate strategy effectiveness refers to the extent to which a company’s strategies achieve their intended objectives and deliver value to stakeholders. This evaluation process involves assessing whether the strategies have led to improved financial performance, market share growth, increased customer satisfaction, enhanced operational efficiency, and other desired outcomes. Effective strategies should align with the organization’s mission, vision, and values while adapting to changes in the external environment.

To evaluate the effectiveness of corporate strategies, one key consideration is that organizations must establish clear and measurable objectives. These objectives should be translated into key performance indicators (KPIs) that can be tracked and monitored over time. KPIs provide a quantifiable way to assess progress and success.

Effective strategies should also meet the expectations of various stakeholders, including shareholders, customers, employees, and regulators. Regular feedback from stakeholders can provide insights into whether the strategies are meeting their needs and creating value.

Moreover, corporate strategies should be consistent with environmental changes. Since the business environment is constantly evolving, strategies that were effective in the past may become obsolete due to technological advancements, regulatory changes, shifts in consumer preferences, or competitive pressures. Evaluating strategy effectiveness involves assessing whether the strategies remain relevant and adaptable in the face of these changes.

Successful strategy implementation also requires allocating the necessary resources, both financial and human, and executing plans effectively. Evaluation should consider whether resources were allocated optimally and if the execution followed the intended timeline and processes.

There are several methodologies for evaluating strategy effectiveness. One is measuring and comparing financial metrics. Financial performance metrics, such as revenue growth, profitability, return on investment (ROI), and shareholder value, are common indicators of strategy effectiveness. Comparing these metrics before and after strategy implementation can provide insights into its impact.

Changes in market share and the organization’s position within the industry can also indicate the success of competitive strategies. Gaining market share or moving up in industry rankings suggests that the strategy is effective in capturing customer attention and trust.

Measuring customer satisfaction and loyalty is another method. Strategies that focus on improving customer experience and satisfaction can be evaluated through customer feedback, surveys, and Net Promoter Score (NPS). Increased customer loyalty and positive sentiments suggest the strategy is resonating with the target audience.

Operational efficiency metrics can also be monitored and measured. Since streamlining operations and optimizing processes are often key components of corporate strategies, metrics like operational costs, production efficiency, and supply chain performance can indicate the success of such strategies.

For strategies centered around innovation and research and development, metrics might include the number of new products or services launched, patents filed, and the speed of bringing innovations to market.

In sum, evaluating the effectiveness of corporate strategies is a multidimensional endeavor that requires a holistic approach. By considering clear objectives, stakeholder alignment, adaptability, and resource utilization, organizations can assess the impact of their strategies on overall performance. Utilizing a combination of financial metrics, market indicators, customer satisfaction data, and operational efficiency measures provides a comprehensive picture of strategy effectiveness. Regular assessment and adjustment of strategies based on evaluation results are essential for maintaining competitiveness and achieving sustainable growth in today’s ever-changing business landscape.

 

Reynaldo C. Lugtu, Jr.  is the founder and CEO of Hungry Workhorse, a digital, culture, and customer experience transformation consulting firm. He is a fellow at the US-based Institute for Digital Transformation. He is the chairman of the Digital Transformation IT Governance Committee of FINEX Academy. He teaches strategic management and digital transformation in the MBA Program of De La Salle University. The author may be e-mailed at rey.lugtu@hungryworkhorse.com

Barbie is dull, dumb, and lifeless. Just a life in plastic

The biggest problem with the Barbie movie is that it’s built on a lie, illustrated by the fact (as reported by Variety) that its marketing budget ($150 million) was bigger than its production cost ($145 million). It was marketed as a cheery, family friendly, and — most importantly — child appropriate movie when in truth it is far from it.

Instead, Barbie is a vacuous, man-hating, anti-family, anti-marriage movie that presents an utterly confused view of femininity — vacillating between seeing it as an essence of womanhood and (quite ironically) a weakness.

“From the opening scenes of little girls bashing their baby dolls on rocks in a symbolic rejection of motherhood to the final scene where Barbie is so empowered and self-actualized that she visits a gynecologist for the first time, the film criticizes women’s impulses toward motherhood, love, and femininity and leaves the lead character standing alone in the real world with no friends, no husband, no children and only the medical industrial complex by her side,” writes Libby Emmons in the website Human Events (“The new Barbie movie is an anti-motherhood, man-hating tangle of daddy issues posing as a tale of female empowerment,” Human Events, July 2023).

“While the film has been touted as a feminist triumph, it could be more accurately described as a tale of Barbie’s downfall. She goes from a woman who knows what she wants to a woman without a home, without friends, without family, searching for meaning, desperate to ‘be part of the people who make meaning,’ and trying to find herself in the barren depths of her own, neutered reproductive system,” she writes.

The movie essentially hinges on creating a strawman against masculinity (aka “the patriarchy”): Ken is a weak and effeminate moron, an underdeveloped boy, the kind that grew up without a strong father figure — emotional, vain, always demanding to be the center of attention, manipulative, controlling everyone. That is not manhood — that is just a scorned bitter woman’s self-delusion about the ex that left them for a more beautiful woman.

The alleged moral plea of the movie, the one supposedly justifying the vapidness of the entire exercise, was America Ferrera’s monologue. But even that falls flat as a misguided, completely self-centered, and unaware bit of whining:

“It is literally impossible to be a woman. You are so beautiful, and so smart, and it kills me that you don’t think you’re good enough. Like, we have to always be extraordinary, but somehow we’re always doing it wrong.

“You have to be thin, but not too thin. And you can never say you want to be thin. You have to say you want to be healthy, but also you have to be thin. You have to have money, but you can’t ask for money because that’s crass. You have to be a boss, but you can’t be mean. You have to lead, but you can’t squash other people’s ideas. You’re supposed to love being a mother, but don’t talk about your kids all the damn time. You have to be a career woman but also always be looking out for other people.

“You have to answer for men’s bad behavior, which is insane, but if you point that out, you’re accused of complaining. You’re supposed to stay pretty for men, but not so pretty that you tempt them too much or that you threaten other women because you’re supposed to be a part of the sisterhood.

“But always stand out and always be grateful. But never forget that the system is rigged. So, find a way to acknowledge that but also always be grateful.

“You have to never get old, never be rude, never show off, never be selfish, never fall down, never fail, never show fear, never get out of line. It’s too hard! It’s too contradictory and nobody gives you a medal or says thank you! And it turns out in fact that not only are you doing everything wrong, but also everything is your fault.”

What’s so annoying about this spiel is how disconnected it is from reality, how utterly jejune, how passé. Male discrimination? In 2023, really?

The Philippines itself ranks among the world’s best places for a woman to live in, ranked fourth in the world in 2022 with the most women managers (including in media), had two women presidents, a former Chief Justice (and associate justices), and numerous members of Congress. The 2023 World, Business, and the Law report saw the Philippines having perfect scores for women in relation to “workplace,” “pay,” and “entrepreneurship.”

And yet the banal inanity of this entire speech could be simply exposed by exchanging “woman” with “man” and vice-versa — it is just a vain, self-pitying, infantile complaint not on the travails of being a woman but on adulthood. Each and every word describes a burden carried by any responsible grownup, woman or man. Get over it.

However, it is in this self-pitying, victimhood schtick that Barbie’s attraction precisely lies. So much so that “some women are even vowing to ditch their boyfriends if they don’t agree with the movie’s feminist message” (“Women are deciding to break up with their boyfriends after watching Barbie,” Unilad, August 2023). Aside from gratifyingly admitting that Barbie is indeed a feminist hit piece, it’s comforting to note that the movie does provide a public service: it at least makes woke women advertise their red flags and helpfully allow young men to escape the nut cases.

Which leads then to the truly damaging thing about Barbie and that is its feminist anti-marriage stance: glamorizing and idealizing the Eat Pray Love fantasy, of a woman’s life without husband and children, which reality exposes as a complete deception.

A new study (Peltzman, Sam, The Socio Political Demography of Happiness (July 12, 2023). Available at SSRN: https://ssrn.com/abstract=4508123 or http://dx.doi.org/10.2139/ssrn.4508123) found, accounting for “differences along standard socio demographic dimensions: age, race, gender, education, marital status income and geography,” including “political and social differences,” found that “being married is the most important differentiator with a 30-percentage point happy-unhappy gap over the unmarried” (emphasis supplied).

Barbie is just an overwrought self-absorbed solipsistic woke lecture that could ultimately harm the very women it supposedly sought to inspire.

 

Jemy Gatdula is a senior fellow of the Philippine Council for Foreign Relations and a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence

https://www.facebook.com/jigatdula/

Twitter  @jemygatdula

Cebu Landmasters records P1.68-B income for first half

LISTED Visayas-Mindanao developer Cebu Landmasters, Inc. saw a 9% rise in attributable net income to P1.68 billion for the first half from P1.55 billion a year prior amid a rise in revenues, an official said.

“CLI [took] opportunities of the advantages we have [as] we continued to grow at a strong pace…this is driven by a strong growth in revenue across all our segments; from premium, middle market, and affordable segments,” CLI Chief Operating Officer Jose Franco B. Soberano said in a media briefing on Thursday.

The company reported that consolidated revenues for the six-month period went up by 23% to P9.15 billion from P7.36 billion on the back of higher progress for construction and take-up of new launches.

CLI’s rental revenues went up by 41% to P50 million for the first semester, on the back of rental increases and higher occupancy rate.

Its hotel operation was further propelled by an increase in bookings and higher room rates at its Citadines Cebu City property, achieving 74% growth.

“[The] company is expected to grow its recurring income with three more hotels opening within the year, with the openings of lyf Cebu City, Citadines Bacolod City and CLI’s first co-living brand The Pad Co-Living in Banilad Cebu City,” it said in a disclosure.

CLI Property Management, Inc., its property management arm, reported a 26% increase in management revenues to P31 million after the completion of 28 projects during the period.

The majority of the company’s reservation sales, accounting for 35% of the period’s total, originated from Davao. CLI achieved substantial sales in the region by opening its inaugural house and lot project, achieving 80% sales within three days.

Furthermore, 31% of the sales were attributed to CLI’s Cebu operation, 15% from Bohol, 8% from Bacolod and Palawan combined, and the remainder from its properties in Dumaguete.

During the first half, the company launched six new projects worth a total of P13.5 billion. Its properties are no in 16 key cities throughout the country.

“CLI remains to be at the forefront of the action, while maintaining a strong financial and operational discipline in order to healthily sustain the company’s growth,” CLI Chairman, President and Chief Executive Officer Jose R. Soberano III said.

On Thursday, shares for CLI went up by 0.75% to P2.67 apiece. — Adrian H. Halili

How PSEi member stocks performed — August 10, 2023

Here’s a quick glance at how PSEi stocks fared on Thursday, August 10, 2023.


Selecting internal talent for promotion

Headhunters are having difficulty finding candidates to fill a management post after a long-time employee retired this year. Aside from headhunting, what’s the best way to find a suitable replacement? — Blind Mice.

I’m using the name “Blind Mice” (jokingly) to highlight what you’re missing in the process of succession planning to ensure business continuity. Talking to executive headhunters suggests that they don’t have a program designed to discover and nurture internal candidates.

Even without a formal succession plan, you should have known a long time ago that someone is retiring. That means you should have actively prepared some people as a possible replacement, assuming that your management decides to distribute the tasks to those who can perform them, which you need to explore as an option.

You can’t hide behind the excuse that the organization lacks internal talent. There’s no such thing if you know how to discover and nurture people so they can fit into management roles later on. Even if there are many internal candidates, the best approach is to send them to an external service provider who can assess their readiness for the job.

SIX STEPS
Forget the headhunters for a while. Instead, let’s focus on the many options that you can pursue under the circumstances. First and foremost, you must promote someone from within the organization. There’s no better choice but to look for talent inside the organization, even if the soon-to-retire executive believes no one can replace him yet.

Ignore him. After all, he shares the blame for the lack of talent and the unpreparedness of potential successor to assume the job. Now, do the following:

One, formalize the internal job vacancy announcement. Give applicants a reasonable timeline — not more than three weeks — to apply so potential candidates do not drag their feet. This allows candidates from other departments to come forward and bid for the position.

Outline the application process so internal candidates will know how to proceed, including the need for all applicants to undergo external assessments and the relevance of their performance over the last five years.

Two, require applicants to undergo a competency test. This is the best way to ensure objectivity in the process. Even if there’s only one candidate, it’s best for him to undergo such evaluations so that your organization will know if they’re fit for the job. If there appear to be many potential candidates, a service provider can recommend their number one choice for the job.

Three, ensure the completeness of the provider’s system. Central to this is the assessment center approach that includes the in-basket experience, case study and analysis, group discussions and role-playing, among others. All this must include the most common situations that are often experienced by the incumbent.

The more difficult the simulated situations are, the better that all candidates be put through them.

Four, decide on the result of the competency test. Even if all candidates fail the test, choose the candidate with the highest rating. Don’t stop there. Validate your decision by reviewing the performance of that candidate over the last five years. You may also include other job requirements but ensure they’re all objective and are included in the job vacancy announcement.

Five, consider other relevant leadership factors. This includes the candidate’s critical thinking skills, amiability, ability to work in teams, attitude, willingness to volunteer time and many more. Again, these requirements may be included in the job vacancy announcements so that candidates know where they stand at the outset.

Six, use seniority as a tie-breaker. Candidates with the most years of service must not be considered automatic shoo-ins for any promotion, especially if they show an average performance rating or poor attendance.

Last, create an ad hoc management committee to decide. You may include the incumbent executive in the committee. But be cautious about how the incumbent could derail the process or delay the proceedings. Remember that he was part of the problem for not ensuring that a successor is ready to come onboard anytime.

If you suspect as much, prepare for any eventuality. At any rate, I’m sure the department heads have a better sense of what to do, especially if they know that the outcome of the process will greatly benefit the organization’s future.

 

Bring Rey Elbo’s leadership program called “Superior Subordinate Supervision” to your line leaders. Chat with him on Facebook, LinkedIn, X (Twitter) or e-mail elbonomics@gmail.com or via https://reyelbo.com

Shares drop on slower-than-expected GDP growth

PHILIPPINE STAR/KRIZ JOHN ROSALES

PHILIPPINE STOCKS dropped anew on Thursday as slower-than-expected economic growth in the second quarter soured investor sentiment.

The Philippine Stock Exchange index (PSEi) fell by 80.79 points or 1.23% to close at 6,449.66 on Thursday, while the broader all shares index went down by 34.78 points or 0.99% to end at 3,445.38.

“The market fell after a surprisingly disappointing Philippine second quarter GDP (gross domestic product) print of 4.3%, which was far below consensus forecast of 6%. This raised investor concerns that full-year growth will fall below the government’s target of 6-7% and drag the performance of listed companies,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“The local equities market tumbled after the Philippine statistics office reported second quarter GDP results, which was much lower than consensus estimates. This is relevant considering that the Philippines has been highly regarded to deliver one of the highest growth for this year and 2024. The latest report can lead to adjustments in growth projections,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan likewise said in a Viber message.

The Philippine economy grew by 4.3% in the second quarter, slower than the 6.4% expansion seen in the first quarter and the 7.5% in the same period a year ago, the Philippine Statistics Authority reported on Thursday.

The second quarter print fell below the 6% median estimate of 21 economists in a BusinessWorld poll conducted last week.

For the first half of the year, GDP growth averaged 5.3%, still below the government’s 6-7% goal for the year.

“That, coupled with the market bracing for an anticipated higher US CPI (consumer price index) data later today, spooked investors. Inflation concerns have resurfaced and can put pressure on CPI in the coming month,” Mr. Vistan added.

All sectoral indices declined on Thursday. Mining and oil plummeted by 315.71 points or 3.12% to 9,790.58; property dropped by 42.81 points or 1.56% to 2,699.68; services fell by 22.75 points or 1.43% to 1,567.95; industrials declined by 125.86 points or 1.37% to 9,010.62; holding firms went down by 78.25 points or 1.26% to 6,117.84; and financials lost 2.73 points or 0.14% to end at 1,912.91.

Value turnover went up to P3.64 billion on Thursday with 513.68 million shares changing hands from the P3.39 billion with 428.38 million issues seen on Wednesday.

Decliners outnumbered advancers, 107 versus 57, while 51 names closed unchanged.

Net foreign selling stood at P268.5 million on Thursday versus the P214.67 million in net buying recorded on Wednesday.

For Friday, Mr. Vistan placed the PSEi’s support at 6,400. — A.H. Halili

Peso slips on weaker Q2 economic growth

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THE PESO slipped against the dollar on Thursday following the release of data showing that the Philippine economy grew slower than expected in the second quarter.

The local currency closed at P56.22 versus the dollar on Thursday, weakening by two centavos from Wednesday’s P56.20 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Thursday’s session weaker at P56.25 per dollar. Its intraday best was at P56.13, while its worst showing was at P56.45 against the greenback.

Dollars traded rose to $1.24 billion on Thursday from $996.2 million on Wednesday.

The peso was dragged down by data showing slower gross domestic product (GDP) growth last quarter, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The peso depreciated following the weaker-than-expected Philippine GDP report for the second quarter,” a trader likewise said in an e-mail.

The Philippine economy expanded by 4.3% in the second quarter, the slowest in two years, Philippine Statistics Authority data released on Thursday showed.

The second-quarter print was slower than the revised 6.4% growth in the first quarter and 7.5% in the same period a year earlier. It was also well below the 6% median forecast in a BusinessWorld poll of 21 economists conducted last week.

For the first half, GDP growth averaged 5.3%, lower than the government’s 6-7% target.

Mr. Ricafort added that global crude oil prices hitting new highs recently also contributed to the weaker peso.

On Thursday, Brent crude edged up by 14 cents to $87.69 a barrel by 0757 GMT while West Texas Intermediate crude (WTI) crept up by 1 cent to $84.5, Reuters reported.

Oil prices hit new peaks on Wednesday with the global Brent benchmark touching its highest since January after a steep drawdown in US fuel stockpiles and Saudi and Russian output cuts offset concerns about slow demand from China.

Brent crude settled $1.38 or 1.6% higher at $87.55 a barrel, its highest since Jan. 27.

WTI closed $1.48 or 1.8% higher at $84.40, its highest since November 2022

For Friday, the trader said the market could react to the US consumer price inflation report set to be released overnight.

The trader expects the peso to move between P56.15 and P56.35 per dollar on Friday, while Mr. Ricafort sees it ranging from P56.10 to P56.30. — A.M.C. Sy with Reuters

Agencies ordered to draft catch-up spending plans

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THE Department of Budget and Management (DBM) said it issued a circular directing government agencies to submit their spending catch-up plans next month.

“There is a need to ascertain the underlying causes or reasons for the underperformance (in spending) and undertake measures to address them,” according to the circular, which was released to reporters.

The DBM acknowledged, though, that preliminary data indicated that the implementation of programs was ongoing or were encountering billing or payment concerns or other issues.

Nevertheless, the department “will be requiring all agencies to periodically undertake a data analysis which will cover programs and projects with historical trends of low disbursement and those with anticipated delays.”

The analysis needs to include a comparison of project performance against targets, and a delivery and execution strategy to address delays.

Agencies must also submit to the DBM a list of their latest available financial and physical accomplishments, updates on the status of flagship programs, and catch-up plans to meet their spending targets for the year. The deadline for these reports is Sept. 15.

The DBM said it will “closely monitor the status of program and project implementation to ensure that the government achieves disbursement targets.”

The economic managers in a joint statement on Thursday said that they will work on accelerating budget execution for the remainder of the year.

“While government expenditure contracted by 7.1% in the absence of election-related spending in the first half of the year, government spending will accelerate in the coming quarters to allow us to recover our growth momentum,” according to the joint statement.

“Government agencies, including local and regional government entities, are encouraged, if not instructed, to formulate catch-up plans, accelerate, and even frontload the implementation of said programs and projects. Line agencies already have their catch-up plans and are enjoined to implement these urgently,” it added.

Government spending rose 0.42% to P2.41 trillion in the first six months. However, this was 6.6% lower than the P2.58 trillion targeted for the first half.

The DBM reported a cash utilization rate by government agencies of 98% at the end of June, behind the year-earlier pace of 99%.

The National Government, local governments and state-owned companies used P2.01 trillion out of the P2.06 trillion worth of Notices for Cash Allocation issued as of the end of June. — Luisa Maria Jacinta C. Jocson

AboitizPower in talks with US nuclear supplier

ABOITIZ POWER Corp. (AboitizPower) said it is in initial discussions with a US company that makes micro modular reactors to advance its plans to pursue nuclear power.

“Early discussions. Nuclear should always be an option for the country, I think when it becomes available, it’s going to be economically feasible solution that’s not emitting carbon dioxide but there has to be a number of items that need to be in place,” Emmanuel V. Rubio, president and chief executive officer of AboitizPower, told reporters on Thursday.

Mr. Rubio said safety standards are in place but need to be updated if the Philippines is to pursue nuclear power projects.

“In one of the talks I participated in, (it was noted) that laws are already in place. We just have to revisit whether those safety standards are updated. Government has to have a role in encouraging nuclear power as an option,” Mr. Rubio said. 

He said the potential supplier is Ultra Safe Nuclear Corp. with which the group is engaged in exploratory talks.

“Exploratory talks. We’re going to do a signing of an NDA (non-disclosure agreement) with Ultra Safe just to continue the discussion. But Ultra Safe makes micro modular reactors of around 5-7 MW (megawatts)… probably perfect for micro grids,” he said.

The Philippines needs to comply with 19 requirements set by the International Atomic Energy Agency. So far, the government has accomplished one of the 19 milestones, which is the development of a national position on nuclear power.

“I think the licensing will be 2027, 2028. So, it’s going to be beyond that. Maybe around 2030 we can seriously consider that option,” he said.

Last year, AboitizPower said it is exploring investing in a nuclear project.

The Department of Energy has said that it is considering a target of about 2,400 MW in nuclear power capacity by 2035, a goal which it plans to incorporate in the Philippine Energy Plan. — Ashley Erika O. Jose

Q2 debt-to-GDP ratio flat at 61%

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THE National Government’s (NG) debt as a share of gross domestic product (GDP) stood at 61% at the end of the second quarter, unchanged from a quarter earlier, the Bureau of the Treasury reported.

The ratio remains above the 60% threshold considered by multilateral lenders to be manageable for developing economies. It also rose from the 60.9% posted at the end of 2022 and 60.4% at the end of 2021.

The Department of Finance expects the debt-to-GDP ratio to end the year at 61.4%.

The government aims to bring the debt-to-GDP ratio below 60% by 2025.

The NG’s outstanding debt was P14.15 trillion at the end of June. Year on year, the debt stock has risen 10.6%.

The debt stock at the end of June was also equivalent to 56.6% of gross national income, lower than the 57.2% posted at the end of March.

The NG’s total debt service bill was equivalent to 5.8% of GDP in the second quarter, falling from 10.1% in the first quarter.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that high interest rates and a weakening peso could lead to increased debt, making it difficult to cut the debt-to-GDP ratio.

The Monetary Board in June extended its pause for a second straight meeting, keeping the key rate at a near 16-year high of 6.25%.

Between May 2022 and March 2023, the central bank raised borrowing costs by a total of 425 basis points.

“Mostly medium- to long-term borrowing will also help keep outstanding debt levels relatively elevated (in record territory) for now. Debt payments will eventually ease the outstanding debt level and correspondingly help ease the debt-to-GDP ratio,” he said in a Viber message.

China Banking Corp. Chief Economist Domini S. Velasquez said that the debt-to-GDP ratio was below program due to the smaller budget deficit incurred in the past months.

“This, however, does not bode well for growth as seen in the lower-than-expected GDP in the second quarter,” she said in a Viber message.

The NG’s budget deficit narrowed 18.17% to P551.7 billion in the first six months of the year.

Mr. Ricafort said that robust growth will also help trim the debt-to-GDP ratio.

“Expanding the GDP denominator would largely keep the debt-to-GDP ratio steady, at the very least, or further bring down gradually the ratio for the coming months, despite the slower GDP growth recently due to higher base effects amid the one-time election-related spending a year ago,” he added.

The economy grew 4.3% in the second quarter, much slower than the 6.4% growth posted in the first quarter and the year-earlier 7.5%.

It is also well below the government’s 6-7% target for the year.

“We think that sticking to the programmed spending, with a realistic and credible fiscal program, should be more beneficial to the economy. For debt to remain sustainable, the economy needs to grow similar to its pre-pandemic growth rates of 6.0-6.5%,” Ms. Velasquez added. — Luisa Maria Jacinta C. Jocson

ERC suspends order allowing NGCP to pass on franchise tax

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THE Energy Regulatory Commission (ERC) said it suspended an order that had allowed the National Grid Corp. of the Philippines (NGCP) to pass on its franchise tax to consumers.

The ERC said once the suspension is formalized, the NGCP franchise tax can no longer be passed on to consumers in the next billing month, the ERC said in a statement on Thursday.

ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta said the decision will result in a reduction of about one centavo per kilowatt-hour.

In July, the ERC said that it will review a 2011 order that had allowed the NGCP to pass on to consumers its 3% franchise tax.

“Based on the review of our Legal Services (office), the franchise tax is in the nature of a direct tax that, as early as 2002, the Supreme Court has ruled is the sole responsibility of the franchise-holder and cannot be passed on to consumers,” Ms. Dimalanta said in a Viber message. 

In 2011, the ERC issued an order approving the inclusion of 3% national franchise tax billed by NGCP as part of the monthly transmission cost.

The ERC said it will continue to review the rules and regulations to ensure that the mandate of the Electric Power Industry Reform Act of 2001 is “faithfully fulfilled.”

“With the consumers’ interests in mind, as well as upholding the rule of law, the Commission (voted unanimously) to suspend ERC Resolution No. 07, Series of 2011,” the ERC said in the statement.

Cynthia P. Alabanza, spokesperson for NGCP, said the company has yet to receive a copy of the resolution.

“We will address the matter once we receive the resolution in full,” Ms. Alabanza said in a Viber message. — Ashley Erika O. Jose

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