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Peso down on higher debt-to-GDP ratio, hawkish Fed

THE PESO retreated versus the greenback on Wednesday as the country’s debt ratio increased and following hawkish signals from the US Federal Reserve.

The local unit finished at P51.045 per dollar on Wednesday, depreciating by 9.5 centavos from its P50.95 close on Monday, based on data from the Bankers Association of the Philippines.

The market was closed on Tuesday due to the Lunar New Year holiday.

The peso opened Wednesday’s session weaker at P51.05 per dollar. Its worst showing was at P51.18, while its intraday best was at P50.99 against the greenback.

Dollars exchanged increased to $1.187 billion on Wednesday from $980.79 million on Monday.

The peso weakened versus the greenback due to cautious sentiment on the national government’s increasing debt, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The national government’s outstanding debt reached P11.73 trillion as of end-December, rising by nearly P2 trillion or 19.7% year on year, the Bureau of the Treasury said on Tuesday.

This brought the debt-to-gross domestic product (GDP) ratio in 2021 to 60.5%, which is the highest since the 65.7% seen in 2005. It was also slightly above the 60% threshold considered as manageable by multilateral lenders for developing economies.

Meanwhile, a trader in an email said the market also factored in hawkish signals from a Fed official.

Kansas City Fed President Esther George said the Fed can start reducing its bond holdings sooner than what it had done in the past and to shrink the Fed’s portfolio, Reuters reported.

“[I]f we took more aggressive action on lowering, pulling down that balance sheet, it might allow for fewer interest rate increases.” Ms. George said at an event on Monday.

For Thursday, Mr. Ricafort gave a forecast range of P50.90 to P51.10 per dollar, while the trader expects the local unit to move within P50.90 to P51.15. — L.W.T. Noble with Reuters

PSE index advances on positive market sentiment

STOCKS climbed on Wednesday as the easing of mobility restrictions in the capital continued to fuel investor optimism.

The bellwether Philippine Stock Exchange index (PSEi) rose 97.34 points or 1.32% to close 7,458.99, while the broader all shares index advanced 28.87 points or 0.73% to end 3,933.07 on Wednesday.

“The local market extended its rally as the easing of social restrictions in selected areas of the country including the National Capital Region (NCR), together with the country’s improving coronavirus disease 2019 (COVID-19) situation continued to fuel optimism towards the economy,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

The government last week placed the NCR under Alert Level 2, which allows for increased mobility and businesses to expand their operating capacity.

First Metro Investment Corp. Head of Research Cristina S. Ulang said optimism on the economy’s recovery boosted sentiment.

“Market [was] euphoric over confluence of positive expectations: January inflation likely falling within the BSP (Bangko Sentral ng Pilipinas) target band of 2-4%; government’s COVID-19 management shifting to endemic from an emergency situation; and accelerating corporate earnings under a likely 70% inoculation rate in early second quarter of 2022 paving the way for greater economic reopening,” Ms. Ulang said.

A BusinessWorld poll of 16 analysts held last week yielded a median estimate of 3% for January inflation, citing favorable base effects which may have offset the rise in oil prices and the impact of Typhoon Odette on food supply.

If realized, inflation will be within the 2-4% target of the BSP for the second straight month and will be easing from the 3.6% print in December.

The Philippine Statistics Authority will report the January consumer price index on Friday.

“Local shares continued their winning streak after Wall Street also stayed in the green for three consecutive days, recalibrating its attention to earnings season,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Back home, most sectoral indices ended in the green except for industrials, which dropped 18.81 points or 0.17% to 10,822.72.

On the other hand, property jumped 97.57 points or 3.02% to 3,325.16; financials climbed 42.64 points or 2.50% to 1,746.50; mining and oil rose 110.94 points or 1.07% to 10,396.06; services went up 14.49 points or 0.74% to 1,964.79; and holding firms advanced 41.78 points or 0.58% to 7,226.62.

Value turnover rose to P7.84 billion with 1.53 billion shares switching hands from the P7.42 billion with 1.28 billion issues traded on Monday. The market was closed on Tuesday in celebration of the Lunar New Year.

Advancing issues beat decliners, 123 against 81, while 47 names closed unchanged.

Net foreign buying jumped to P980.43 million from the P165.84 million seen on Monday. — M.C. Lucenio

Mapúa unveils new college with ‘digital-first’ learning models

By Bronte H. Lacsamana  

As a way to reimagine higher education in a post-pandemic, more digital-savvy context, Mapúa University launched on Feb. 2 the Mapúa Malayan Digital College (MMDC), a “digital-first” school under Malayan Colleges Laguna.

What sets this college apart are its learning models which have been structured around projects, problems, and cases (PPC) with real-world applications rather than traditional tests, according to MMDC’s chief learning officer Derrick Latreille. 

“A professor’s role is typically to explain stuff, but what we’re doing is, we’re making all that information on-demand. This frees the professor to move from providing information to facilitating experience,” he said at the virtual launch on Wednesday. 

“This allows them to upgrade what they’re doing, to change their approach with the students and really engage with them in a deeper way,” he said. 

MMDC will open this school year 2022-2023, offering courses in information technology (IT) and business administration (BA). Specializations in IT include data analytics, software development, and network and cybersecurity. Specializations in BA include marketing management, operations management, and human resource management.

Instead of costing over P100,000 a year like most private colleges, tuition at the college could cost as low as P58,000 a year, said Mr. Latreille. 

MMDC-commissioned surveys conducted by Acumen, Insight Asia, andTheNerve informed the college’s “digital-first” direction. Results showed available courses, tuition fees, school reputation, community, and opportunities for socialization ranked high.

The PPC models are anchored on a cutting-edge online learning management system (LMS), a student-centered information system, and offline experiences guided by Mapúa’s partners in the industry, said Dennis H. Tablante, executive director of MMDC. 

“We make sure our graduates are employable. We’re clear from the very beginning what set of behaviors and skills our students must have,” he explained. “Students can expect experts from the field to guide them as well.”

FLEXIBILITY, EMPLOYABILITY
Learning Hubs, which are spaces where students can meet and work on projects and organize clubs, provide the offline side of the college experience. The two hubs are in Ayala Malls’ Capitol Central in Bacolod and Ayala Malls’ Cloverleaf in Quezon City. 

Aside from this, MMDC will provide each student with a laptop and pocket wi-fi, with required class meeting times clocking in at just 7.5 hours a week of synchronous learning. This allows them to be flexible depending on their respective schedules and situations. 

“There’s actually more to the [LMS] applications because the faculty member and assistants can group students but at the same time listen in on the conversations that are happening,” said Jonathan Dayao, MMDC’s senior director of administration. 

“There are certain features where the faculty member or assistants can detect the level of engagement within groups,” he said.

As for real-world experience, the PPC model will culminate with internships and on-the-job training in the students’ final term. 

Philip A. Gioca, country manager of JobStreet Philippines, explained at the virtual launch that IT and business courses are “future-proof” because graduates from these courses tend to be the in-demand talents that companies need.

He added that there should be “a balance between core skills and practical skills like communication,” especially with the hybrid set-up being touted as the future of work. 

“It’s important to marry the digital, technical aspect, and the soft skills aspect,” he said.

MMDC is now accepting BS Information Technology and BS Business Administration freshmen for school year 2022-2023, which begins in August. 

It offers a scholarship where the first 750 enrolled students can get a discount of up to P20,000 on tuition. Slot reservation starts on March 1.

Urbanization in the Philippines provides opportunities for low-carbon technology providers 

By Patricia Mirasol 

Investments in urbanization are expected to increase by 2035, and this provides opportunities for the integration of sustainable urban technologies within these investments, according to an expert at a Jan. 25 webinar on clean technologies by JETRO and J-Bridge.

Climate change has been at the forefront of discussions in recent times: developed countries at the 26th Conference of the Parties (COP26), for instance, pledged to reach their goal of delivering $100 billion to climate finance by 2023, while $187billion is also invested annually in urban climate finance in the East Asia and Pacific regions. 

More than 70% of all carbon dioxide emissions is generated in urban environments, where over half of the world’s population (56.2%) already lives.

The overlap between urbanization and climate change needs to be as big as it gets, said Tony A. Verb, co-founder of Carbonless Asia, a decarbonization-focused innovation and investment platform. 

“Whatever investments happen in the context of urbanization will be embedded for decades,” he said. “If we have a sustainable urban technology integrated into an urban development project, we will reap the benefits of that for decades to come. If it doesn’t happen, we lose an opportunity to apply more innovative, more efficient, more inclusive solutions — also for decades to come.” 

Examples of green technologies include wastewater treatment, self-sufficient buildings, and solar energy systems.

Eighty-five percent of the technological solutions needed to hit net zero (or the balance between greenhouse gases released into the atmosphere and those that are taken out) are already in place, according to the International Energy Agency’s 2021 report.

“What is needed is to identify these technologies that can scale the fastest,” Mr. Verb told the webinar audience, noting the need to support entrepreneurs who have already been working to tackle specific challenges. “Give them the capital, give them the sales channels, and open the doors to help scale these technologies.”

In the Philippines, opportunities abound in infrastructure, such as the Metro Manila Subway Project under the administration’s Build, Build, Build program. 

The kinds of technology that is used in the construction and operation of the metro line will define efficiencies in the coming decades for the country, said Mr. Verb. 

“Propositioning this as a low-carbon technological development is our responsibility,” he said. “It’s our responsibility to work with the government to introduce and help scale these technologies.

U.S. considers authorization of first COVID vaccine for children under 5

U.S. regulators are considering the first COVID-19 vaccine for children under the age of 5, the only age group not yet eligible for the shots, after Pfizer Inc and BioNTech SE began the regulatory approval process on Tuesday.

A decision is expected as soon as this month.

The companies said they began submitting data for an emergency use authorization even though they did not meet a key target in their clinical trial of 2- to 4- year olds. They are submitting the data at the request of the U.S. Food and Drug Administration in order to address an urgent public health need in the age group, they said.

The arrival of a vaccine for younger children could help harried parents who have had to contend with quarantines and closures of pre-schools and daycare centers.

“Having a safe and effective vaccine available for children in this age group is a priority,” acting FDA Commissioner Janet Woodcock said. She said the agency asked for the application because of the recent Omicron surge.

The FDA said an outside committee of expert advisers would meet on Feb. 15 to discuss the authorization. If that goes forward, the U.S. Center for Disease Control and Prevention also needs to sign off on how the vaccinations will be implemented, following a meeting of its own advisers. Those meetings have tended to follow within a week or so of FDA decisions.

The drug companies said they are asking the FDA for authorization of the first two doses of a planned three-dose regimen.

“If two doses are authorized, parents will have the opportunity to begin a COVID-19 vaccination series for their children while awaiting potential authorization of a third dose,” Pfizer Chief Executive Albert Bourla said.

He said the company believes three doses of the vaccine will be needed “to achieve high levels of protection against current and potential future variants.”

The companies expect to complete submitting data to the FDA in the coming days, with data on the third dose to follow.

Pfizer and BioNTech are testing a 3-microgram dose of the vaccine in the age group, compared with a 10-microgram dose in 5- to 11-year-olds and 30 micrograms for people aged 12 and older.

The companies said they expect to have ample supply of the 3-microgram shots should the FDA authorize the vaccine.

 

EVIDENCE OF CLINICAL BENEFIT?

The move could speed up the inoculation timeline for this age group by months. If a third dose is eventually authorized, many children could already have begun the regimen. Pfizer is currently testing two doses three weeks apart, followed by a third dose at least eight weeks later.

In December, Pfizer said it was amending its clinical trial to test a three-dose version of the vaccine because the lower-dose generated an immune response in 2- to 4-year-olds that was inferior to the response measured in those aged 16 to 25. In 6- month- to 24-month-old children, the vaccine generated an immune response in line with 16- to 25-year-olds.

John Grabenstein, former executive director of medical affairs for vaccines at Merck, said he believes regulators should consider the vaccine as a two-dose course, rather than as the first two doses of a planned three dose regimen.

“I cannot think of any example ever where the FDA reached a regulatory decision without knowing the data from the end of the trial,” Grabenstein said. “I just can’t believe that they would authorize getting started without knowing what the third dose would do.”

But John Moore, a professor of microbiology and immunology at Weill Cornell Medical College, said the plan “sounds like a creative solution to a real problem, and there’s no safety implications, which would otherwise be a dealbreaker.”

The vaccine is already approved for emergency use in children in the United States as young as 5. It has full approval for adults.

The FDA also has authorized a third booster dose of the Pfizer/BioNTech shot for adults and children aged 12 and older. It gave the green light for a two-dose vaccine for children ages 5 to 11.

It remains unclear how many parents will choose to vaccinate their younger children.

Vaccinating children has been slow in the United States with only around 22% of 5- to 11 year-olds having received two shots since the campaign to inoculate that age group began in November. – Reuters

Former U.S. security officials urge Congress to act on China legislation

WASHINGTON – More than a dozen former senior U.S. national security officials have pressed congressional leaders to quickly pass legislation to boost technology funding, calling it “critical” to compete against China.

A letter signed by 16 officials from past Democratic and Republican administrations – including Leon Panetta, who served as defense secretary under President Barack Obama, and President George W. Bush’s national security advisor Stephen Hadley – said the legislation would “ensure the U.S. stays on the cutting-edge of microelectronics.”

The Senate passed the U.S. Innovation and Competition Act last year, including $52 billion for the semiconductor industry and authorizing $190 billion to strengthen U.S. technology and research to compete with China.

The House of Representatives began considering its “America Competes” act this week. If it passes, the two chambers will have to resolve differences with the Senate bill.

“This is the time to prioritize comprehensive, bipartisan competitiveness legislation, which will ensure that federal investment matches our national security interests and allows the United States to maintain strengths and comparative advantages against rising adversaries,” the officials wrote in the letter dated Feb.1, seen by Reuters.

The letter was addressed to Democratic House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer, as well as Republican House and Senate leaders Kevin McCarthy and Mitch McConnell.

Former CIA directors John Brennan and Michael Hayden, former Director of National Intelligence James Clapper, deputy national security advisor in the Trump administration Matthew Pottinger, and under secretary of defense for policy during the Obama administration Michele Flournoy also signed it.

Signers also included former Google chief executive Eric Schmidt, who served on a government artificial intelligence commission, and Jane Harman, a former ranking member on the House Intelligence Committee.

More than 500 amendments to the House bill have been submitted, including one that would bar semiconductor firms receiving government subsidies from paying dividends or repurchasing company stock.

The U.S. Chamber of Commerce has said it was pleased the House had begun to consider its version of the bill, and the largest U.S. labor organization said on Monday it strongly supported the House legislation. – Reuters

OPEC+ seen sticking to policy despite oil price rally -sources

LONDON – OPEC+ will likely stick to existing policies of moderate output increases on Wednesday, five sources from the producers’ group said even as it expects demand to rise to new peaks this year and as oil prices trade near their highest since 2014.

The group, which comprises of the Organization of the Petroleum Exporting Countries and allies led by Russia and produces over 40% of global supply, has faced pressure from top consumers such as the United States and India to pump more to help the economic recovery from the pandemic.

But OPEC+ has refused to adhere to speedier increases arguing that the world is facing an energy shortage due to poorly calculated energy transitions to greener fuels by consuming nations.

Several OPEC members have struggled to pump even in line with their quotas due to under-investments of the past few years.

Five OPEC+ sources told Reuters on Tuesday they expected the ministers to agree to go ahead with a planned increase of 400,000 barrels per day in March, despite high oil prices.

“The issue (of speedier increases) did not come up and I doubt it will,” an OPEC+ source said, asked if an OPEC+ expert committee meeting had discussed an increase of above 400,000 bpd when it virtually met on Tuesday.

A report prepared by the committee, known as the Joint Technical Committee (JTC), and seen by Reuters on Tuesday kept the forecast for world oil demand growth unchanged for 2022 at 4.2 million bpd.

It said it expected demand to rise to pre-pandemic levels in the second half of the year. Oil demand reached its peak of slightly above 100 million bpd in 2019.

The report still said the world would face a crude surplus in 2022 reaching 1.3 million bpd, slightly less than its previous forecast of 1.4 million bpd.

The report noted, however that a number of risks continue to linger over the oil market, including “significant uncertainties” associated with the potential impact of the Omicron coronavirus variant, ongoing supply chain bottlenecks and central bank policy to counter inflation.

The JTC also flagged other risks to the oil market recovery, citing volatility in commodity markets, restraints on oil production capacity from underinvestment, the challenge of high sovereign debt levels in many regions and geopolitical risks.

Brent crude prices were about $89 a barrel on Tuesday, not too far from the seven-year high of $91.70 reached last week, driven largely by geopolitical tensions.

Goldman Sachs said in a note there was a chance of a faster OPEC+ ramp up given the pace of the market’s recent rally. – Reuters

Putin accuses U.S. of trying to lure Russia into war

RUSSIAN President Vladimir Putin. — REUTERS

KYIV/MOSCOW – Russian President Vladimir Putin accused the West on Tuesday of deliberately creating a scenario designed to lure it into war and ignoring Russia’s security concerns over Ukraine.

In his first direct public comments on the crisis for nearly six weeks, a defiant Putin showed no sign of backing down from security demands that the West has called non-starters and a possible excuse to launch an invasion, which Moscow denies.

“It’s already clear now … that fundamental Russian concerns were ignored,” Putin said at a news conference with the visiting prime minister of Hungary, one of several NATO leaders trying to intercede with him as the crisis has intensified.

Putin described a potential future scenario in which Ukraine was admitted to NATO and then attempted to recapture the Crimea peninsula, territory Russia seized in 2014.

“Let’s imagine Ukraine is a NATO member and starts these military operations. Are we supposed to go to war with the NATO bloc? Has anyone given that any thought? Apparently not,” he said.

Russia has massed more than 100,000 troops on the Ukrainian border and Western countries say they fear Putin may be planning to invade.

Russia denies this but has said it could take unspecified military action unless its security demands are met. Western countries say any invasion would bring sanctions on Moscow.

The Kremlin wants the West to respect a 1999 agreement that no country can strengthen its own security at the expense of others, which it considers at the heart of the crisis, Foreign Minister Sergei Lavrov said.

He raised the charter signed in Istanbul by members of the Organisation for Security and Cooperation in Europe, which includes the United States and Canada, during a call with U.S. Secretary of State Antony Blinken.

Lavrov said Blinken accepted the need to discuss the matter further whilst a U.S. account of the call focused on the need for Moscow to pull back.

“If President Putin truly does not intend war or regime change, the Secretary told Foreign Minister Lavrov then this is the time to pull back troops and heavy weaponry and engage in a serious discussion,” a senior State Department official told reporters.

The U.S. is willing to discuss giving the Kremlin a way to verify the absence of Tomahawk cruise missiles at NATO bases in Romania and Poland, if Russia shares similar information about missiles on certain Russian bases, Bloomberg reported.

The White House and State Department did not immediately respond to requests for comment but a source familiar with the situation said the United States has only offered to have talks on a variety of Russia’s concerns, such as arms control issues in the appropriate forums.

 

‘INSTRUMENT’

Putin had not spoken publicly about the Ukraine crisis since Dec. 23, leaving ambiguity about his personal position while diplomats from Russia and the West have been engaged in repeated rounds of talks.

His remarks on Tuesday reflected a world view in which Russia needs to defend itself from an aggressive and hostile United States. Washington is not primarily concerned with Ukraine’s security, but with containing Russia, Putin said.

“In this sense, Ukraine itself is just an instrument to achieve this goal,” he said.

“This can be done in different ways, by drawing us into some kind of armed conflict and, with the help of their allies in Europe, forcing the introduction against us of those harsh sanctions they are talking about now in the U.S.”

Hungarian Prime Minister Viktor Orban, who has often sparred with Western European leaders over democracy in his own country, said he believed after his talks with Putin that there was room for a compromise.

“I got convinced today that the existing differences in positions can be bridged and it is possible to sign an agreement that would guarantee peace, guarantee Russia’s security and is acceptable for NATO member states as well,” Orban said.

 

GUN TO UKRAINE’S HEAD

As Western countries rush to show solidarity with Ukraine, the U.S. urged Brazilian President Jair Bolsonaro to cancel a visit with Putin in Russia, a source told Reuters.

On Tuesday, British Prime Minister Boris Johnson met President Volodymyr Zelenskiy in Kyiv and accused Putin of holding a gun to Ukraine’s head to demand changes to the security architecture in Europe.

“It is vital that Russia steps back and chooses a path of diplomacy,” Johnson said. “And I believe that is still possible. We are keen to engage in dialogue, of course we are, but we have the sanctions ready, we’re providing military support and we will also intensify our economic cooperation.”

Johnson said any Russian invasion of Ukraine would lead to a military and humanitarian disaster.

“There are 200,000 men and women under arms in Ukraine, they will put up a very, very fierce and bloody resistance,” he said. “I think that parents, mothers in Russia should reflect on that fact and I hope very much that President Putin steps back from the path of conflict and that we engage in dialogue.”

Polish Prime Minister Mateusz Morawiecki, also visiting Kyiv, said Poland would help Ukraine with gas and arms supplies, as well as humanitarian and economic aid.

“Living close to a neighbour like Russia, we have the feeling of living at the foot of a volcano,” said Morawiecki.

Zelenskiy, who has repeatedly played down the prospect of an imminent invasion, signed a decree to boost his armed forces by 100,000 troops over three years. He urged lawmakers to stay calm and avoid panic.

The troop increase was “not because we will soon have a war … but so that soon and in the future there will be peace in Ukraine,” Zelenskiy said. – Reuters

Tesla recalls nearly 54,000 vehicles that may disobey stop signs

Logo of Tesla, Inc.

WASHINGTON – Tesla Inc will recall 53,822 U.S. vehicles with the company’s Full Self-Driving (Beta) software that may allow some models to conduct “rolling stops” and not come to a complete stop at some intersections posing a safety risk.

The National Highway Traffic Safety Administration (NHTSA) said the recall covers some 2016-2022 Model S and Model X, 2017-2022 Model 3, and 2020-2022 Model Y vehicles. NHTSA said the feature also known as FSD Beta may allow vehicles to travel through an all-way stop intersection without first coming to a stop.

Tesla will perform an over-the-air software update that disables the “rolling stop” functionality, NHTSA said. The agency added it “maintains regular discussions with all manufacturers to discuss potential safety concerns of these types of systems.”

Tesla Chief Executive Officer Elon Musk said on Twitter “there were no safety issues” with the function. “The car simply slowed to ~2 mph & continued forward if clear view with no cars or pedestrians,” Musk wrote.

NHTSA noted federal law “prohibits manufacturers from selling vehicles with defects posing unreasonable risks to safety, including intentional design choices that are unsafe.”

Last week, Tesla said the number of FSD beta vehicles in the United States increased to nearly 60,000 from a few thousand at the end of September. Tesla has been testing the improved version of its automated driving software on public roads, but the carmaker and the regulator have said the features do not make the cars autonomous.

Tesla said as of Jan. 27 it was not aware of any warranty claims, crashes, injuries or fatalities related to the recall.

 

STATE LAWS

Tesla told the auto safety agency it released on Oct. 20 an updated version to introduce the “rolling stop” functionality. The automaker said to use the feature vehicles must be traveling below 5.6 miles (9 km) per hour and no relevant moving cars, pedestrians or bicyclists are detected near the intersection.

The feature, which appeared to violate state laws that require vehicles to come to a complete stop and required drivers to opt-in for what it dubbed “Assertive” mode, drew attention on social media and prompted NHTSA to raise questions with Tesla.

According to a defect report filed with the auto safety agency, Tesla said it met with NHTSA staff on Jan. 10 and Jan. 19 “to discuss the functionality, including operating parameters” and the automaker on Jan. 20 agreed to the recall.

In November, Tesla recalled nearly 12,000 U.S. vehicles sold since 2017 for another software update because a communication error could cause a false forward-collision warning or unexpected activation of the emergency brakes.

NHTSA said last week it had sought additional information from Tesla in its probe into 580,000 vehicles over the automaker’s decision to allow games to be played by passengers on the front center touchscreen.

In December, NHTSA opened a preliminary evaluation into 2017-2022 Tesla Model 3, S, X, and Y vehicles over the vehicle’s “Passenger Play” feature the agency said “may distract the driver and increase the risk of a crash.”

In August, NHTSA opened a formal safety probe into Tesla‘s Autopilot driver assistance system in 765,000 U.S. vehicles after about a dozen crashes involving Tesla models and emergency vehicles. That investigation also remains open. – Reuters

PHL ends 2021 with P11.7-trillion debt

PHILIPPINE STAR/ MICHAEL VARCAS
The government has increased its borrowings to fund its pandemic response, including the purchase of coronavirus vaccines. — PHILIPPINE STAR/ MICHAEL VARCAS

THE National Government (NG) recorded P11.73 trillion in outstanding debt as of end-December, pushing the debt-to-GDP ratio past the international threshold, preliminary data from the Bureau of the Treasury (BTr) showed.

Government debt over the course of 12 months grew by nearly P2 trillion, or by 19.7% year on year. 

The year-on-year debt growth was slower than the 26.7% expansion in 2020 due to better fiscal performance and lower financing requirements, the BTr said in a statement on Tuesday.

National government outstanding debt

Month on month, the debt stock slipped by 1.7%, mostly because of the net redemption of domestic securities, BTr added.

The end-December debt figure meets the government’s P11.73-trillion projection.

However, this meant the debt-to-GDP ratio is now at 60.5%, higher than the 54.6% a year earlier and slightly above the 60% threshold considered as manageable by multilateral lenders for developing economies. It is also the highest debt-to-GDP ratio since the 65.7% seen in 2005.

“(The ratio is) still within the accepted sustainable threshold as the economy continues to recover from the effects of the pandemic,” the Treasury said.

The Philippine government has ramped up borrowings to finance its pandemic response, which included the purchase of coronavirus vaccines.

Domestic borrowings represented 69.7% of the debt total, while the rest was sourced from foreign creditors.

As of end-December, domestic debt fell by 3.2% to P8.17 trillion from the previous month, but grew by 22% year on year.

This consisted of P8.17 trillion in government securities, which went up by 3.4% from P7.9 trillion as of end-November and increased by 22.1% from 2020.

The state’s other domestic obligations stood at P156 million, after its P540-billion loan from the central bank was repaid in December.

The growth of local debt is “in line with the domestic borrowing program which favors domestic issuance to mitigate foreign exchange risk and support local capital market development,” BTr said.

Meanwhile, foreign debt inched up by 1.9% to P3.56 trillion month on month and increased by 14.8% from full-year 2020.

“For December, the increment in external debt was attributed to the impact of Peso depreciation against the USD (US Dollar) amounting to P40.87 billion and the net availment of external obligations amounting to P33.83 billion,” the Treasury said.

Broken down, foreign debt included P1.57 trillion in loans, which rose by 1.9% since end-November.

Government securities also edged higher by 1.1% month on month to P1.98 trillion.

This included P1.56 trillion in dollar notes, P235 billion in euro bonds, P86 billion in yen securities, P19.9 billion in yuan notes and P85.6 billion in peso global bonds.

Total outstanding guaranteed debt jumped by 1.5% to P423.91 billion as of end-December from a month earlier.

However, outstanding guaranteed debt slid by 7.5% from a year earlier.

The end-2021 debt level is better than expected, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.

“This is may be due to the better-than-expected performance of the economy toward the end of 2021, with improving revenue collection performance versus 2020,” he said in a Viber message.

The economy grew by 5.6% in 2021, thanks to a 7.7% gross domestic product expansion in the fourth quarter as lockdown restrictions were loosened.

Mr. Asuncion said the debt-to-GDP ratio has improved since the 63.1% seen in September.

“This is welcome news and may bode well for markets and partially pacify uncertainties hovering over the country’s fiscal situation, especially as the national elections draw near.” — Jenina P. Ibañez

‘Hot money’ continued to exit in 2021

REUTERS

By Luz Wendy T. Noble, Reporter

MORE FOREIGN FUNDS left than entered the Philippines in 2021, marking the third straight year of net outflows, as the country gradually recovered from the pandemic.

Foreign portfolio investments (FPIs) — also called “hot money” due to the ease by which these funds enter and leave an economy — saw a net outflow of $574.46 million last year, significantly smaller than the $4.24-billion net outflow in 2020.

This was the smallest since the $195.4-million net outflow in 2017. It also missed the Bangko Sentral ng Pilipinas’ (BSP) $1.5-billion net inflow projection for the full year.

“Outflows were slimmer because 2021 was really a better year compared to 2020 with continuous vaccination and more relaxed restrictions,” Asian Institute of Management (AIM) economist John Paolo R. Rivera said in a Viber message.

The government eased lockdown restrictions during the fourth quarter, allowing more businesses to reopen. The economy expanded by 5.6% in 2021 after the record 9.6% contraction in 2020 that was caused by stringent lockdowns.

The Philippines also made progress in vaccinating its population against the coronavirus disease 2019 (COVID-19), although it remained a laggard in the region.

In December alone, hot money posted a $4.38-million net outflow, much lower than the $523.86 million outflows seen in the prior year. However, it was a reversal from the $109.56-million net inflow in November.

“Net outflow may be due to the looming threat of the Omicron in December while other countries were already ending their surge,” Mr. Rivera said.

While restrictions were loosened during the holidays, Metro Manila and other areas were once again placed under a stricter Alert Level 3 starting January due to an Omicron-driven surge in cases.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the more hawkish tone from the US Federal Reserve also prompted foreign investors to become more cautious.

In December, the Fed said it would quicken the tapering of its bond-buying program and will push for at least three interest rate increases in 2022.

Gross inflows in December reached $1.331 billion, rising by 22.8% from the $1.084 billion in the same month a year ago and up by 3.7% from November.

For the full year, gross inflows increased by 16.6% to $13.62 billion, from the $11.678 billion in 2020.

Gross outflows in December stood at $1.336 billion, down by 16.9% from the $1.607 billion last year but higher by 13.8% than the $1.174 billion in November. This brought full-year outflows to $14.194 billion, falling by 10.9% from the $15.918 billion in 2020.

Five investor countries accounted for 79.5% of short-term foreign investments in December, namely the United Kingdom, United States, Singapore, Luxembourg and Switzerland.

These bulk or 97% of these investments were mainly put into securities of utilities, food, beverage and tobacco, holding firms, property, and banks. The remaining 3% were invested in government securities.

AIM’s Mr. Rivera is hopeful that hot money will yield a net inflow this year on the back of sustained recovery and the higher-than-expected growth last year.

For RCBC’s Mr. Ricafort, there may still be lingering concerns caused by emerging COVID-19 variants. He said investors will also be factoring in the Fed’s more hawkish signals.

Last week, the Fed Chairman Jerome H. Powell said the US central bank was likely to begin hiking interest rates in March to tame runaway inflation.

The BSP expects hot money to yield a $5.7-billion net inflow in 2022.

Coronavirus alters college life as schools move online to stay afloat

College student John Sorba, 20, attends an online class in his family’s home in Tondo, Manila, Oct. 6, 2020. — REUTERS/ELOISA LOPEZ

By Jenina P. Ibañez, Senior Reporter

HANNAH ANGELA E. NERI is studying to become a nurse and wants to be on the frontlines of a future pandemic.

“The country needs more health workers and I want to help,” the freshman from the Central Philippine University in Iloilo City said in a Facebook Messenger chat.

Ms. Neri is one of many young Filipinos pursuing healthcare studies in the middle of a coronavirus pandemic, when applications for pre-medicine degrees such as Biology and Health Sciences have increased at some universities.

“Among applicants for school year 2021-2022, there was a surge in students who wanted to take pre-med courses,” Jose Maria Edito K. Tirol, director of admissions at the Ateneo de Manila University, said in an e-mail. “I suspect they’re inspired by the work of medical frontliners.”

More students applied this school year at the Ateneo, which ended the previous school year early after the Philippine capital and nearby cities were locked down in mid-March 2020 to contain the pandemic, giving most students an automatic passing mark.

Mr. Tirol declined to provide numbers.

As lockdowns were extended, schools stopped physical classes and shifted to virtual ones.

This could worsen educational quality and cost the country P11 trillion in lost wages in the next four decades, according to the National Economic and Development Authority.

When coronavirus cases declined toward the end of last year, Ateneo announced plans for a January return to campus at a limited capacity. This was postponed amid a fresh surge in infections spurred by the highly mutated Omicron variant.

The coronavirus has sickened 3.6 million and killed more than 50,000 people in the Philippines. Worldwide, more than 379 million have been infected and about 5.7 million people have died.

Jaime Noel J. Santos, president at business school Thames International in Quezon City, said they held online classes even before the pandemic, which helped boost enrollment when the global health crisis hit.

Schools that adapted more quickly took on the enrollees lost by colleges that failed to roll out online education fast enough, he said by telephone.

Across various schools, students also stopped enrolling because their parents lost their jobs during the pandemic.

“A lot of students really stopped, mainly because of financial issues,” Mr. Santos said. “But then we were bouncing back, economy-wise, before the Omicron variant spread. Parents who lost their jobs found new ones. Students started coming back.”

For some schools, the pandemic led to an initial decline in enrollment before student numbers bounced back.

Publicly listed Far Eastern University, Inc. in its financial report said it posted a 10% decline in first semester enrollment for the school year 2020-2021.

This academic year, first semester enrollment increased by 14% year on year, with the number of students just about exceeding the pre-pandemic level, it said.

At STI Education Systems Holdings, Inc., which runs STI schools and iAcademy, tertiary-level enrollment fell to 40,176 in the 2020-2021 school year from 45,902 a year earlier as the pandemic disrupted operations, according to a stock exchange filing.

“STI’s demographic remains the same at lower B to Broad C segment amidst the challenges that the pandemic has brought to the academic learning continuity of the students,” STI Vice-President for Academics Aisa Q. Hipolito said in an e-mail.

“The financial impact is seen as one of the major problems of the students and their parents when the pandemic started.”

The school rolled out financial aid and reduced school fees, she said. By the 2021-2022 school year, enrollment rebounded to 56,342.

Ms. Hipolito said enrollment recovered after STI started aggressive recruitment campaigns and delivered classes online.

STI schools still expect strong demand for its information technology curricula.

“We are closely monitoring the potential impact of COVID-19 on our hospitality and tourism-related courses due to the threat of the pandemic, but we haven’t really seen a downward trend for these programs over the past year,” Ms. Hipolito said.

“We think that students who want to pursue careers in the fields of hospitality and tourism understand that the present situation is temporary.”

At De La Salle University in Manila, applications before and after the pandemic have remained more or less the same, Office for Strategic Communications Executive Director Johannes Leo D. Badillo said.

Biology, accountancy, computer science, business management, engineering, psychology and information technology are posting top numbers.

Meanwhile, the shift to online learning has helped the schools reach a larger demographic of students that otherwise would not have applied due to distance or heavy traffic.

“Students from the provinces who tend to shy away from Manila schools before the pandemic are now open to apply in National Capital Region universities with the online learning setup,” Mr. Badillo said in an e-mail.

Mr. Santos said a third of Thames students are outside Metro Manila. “People who were not able to enroll with us because they were far away are able to enroll now.”

Mr. Santos noted that in the future, his school plans to offer both online and in-person education.

“The perfect way of delivery for college-level is that there is a face-to-face component because you still need socialization,” he said. “The ideal situation is that there is partial face-to-face teaching. It cannot be 100% online.”

The online setup can be difficult for students, including those trying to study healthcare.

“We haven’t been able to experience actual laboratory activities that could really help us,” said Ms. Neri, the nursing student.

The lack of social activities at the end of long days of heavy school work has led to burnout, she said.

“A world where medical students are expected to excel all the time and not fail takes its toll on their mental health,” she said. “But we are human too.”