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ECONOMIC MANAGERS now expect gross domestic product (GDP) to expand by 7-8% this year, as the outlook may be clouded by the prolonged Russia-Ukraine war, economic slowdown in China and monetary policy tightening in the United States.
After a meeting on Tuesday, the Development Budget Coordination Committee (DBCC) said in a statement that it adjusted macroeconomic assumptions, fiscal program and growth targets for 2022 to 2025 “to take into account recent domestic trends and external developments.”
The DBCC sets the official macroeconomic assumptions and fiscal program.
“The Philippine economy’s strong recovery in the first quarter of 2022 has moved us closer to our goal of achieving at least 7% growth this year,” the Cabinet-level committee said, referring to the 8.3% GDP in the January to March period.
“However, in light of heightened external risks such as the Russia-Ukraine conflict, China’s slowdown, and monetary normalization in the United States, the full-year growth target was slightly revised from 7-9% to 7-8% for 2022.”
Socioeconomic Planning Secretary Karl Kendrick T. Chua said the DBCC kept the lower bound of the original target since the domestic economy showed significant improvement in the first quarter, despite the external risks.
“Nonetheless, we will grow by 7 to 8% this year, supported by our very strong domestic economy. The more we shift to Alert Level 1, begin face-to-face schooling, accelerate vaccination, especially of children and seniors, we can fully reopen the economy,” he said during a briefing after the DBCC meeting.
“We will continuously monitor and improve our economic domestic base to counter these external shocks.”
The DBCC said it kept the GDP growth target at 6-7% for 2023 to 2025.
The average inflation rate assumption was raised to 3.7-4.7% for 2022, from 2-4% previously, reflecting the impact of soaring oil and food prices caused by the ongoing Russia-Ukraine war and supply chain disruptions.
However, the DBCC is expecting inflation to return to the 2-4% target range for 2023 to 2025.
The assumption for the price of Dubai crude oil per barrel is now projected at $90-$110 this year, significantly higher than the previous projection of $68-70 per barrel. This is expected to drop to $80-$100 per barrel in 2023, and $70-$90 per barrel in 2024 and 2025.
Global oil prices spiked after Russia’s invasion of Ukraine in late February, bringing pain at the pump for consumers around the world.
For this year, the DBCC raised the export growth target to 7% from 6% previously, and import growth goal to 15% from 10% previously.
The export growth target was kept at 6% for 2023 to 2025. However, imports are expected to expand by 6% in 2023 and by 8% in 2024 to 2025.
FISCAL PROGRAM
The DBCC revised its revenue projections upward as it expects economic activity to continue improving over the medium term.
It now targets to generate P3.633 trillion in revenues (15.3% of GDP) for 2023, up from P3.624 trillion previously. The government expects to collect P4.063 trillion (15.6% of GDP) in 2024, and P4.549 trillion (16.1% of GDP) in 2025.
The expenditure program was also increased to P5.086 trillion (21.3% of GDP) and P5.392 trillion (20.8% of GDP) for 2023 and 2024, respectively. Disbursements are seen to hit P5.723 trillion (20.2% of GDP) in 2025.
“Given the revised revenue and disbursement program, the DBCC maintained its target deficit at 6.1% of GDP for 2023, 5.1% of GDP for 2024, and projected the figure of 4.1% of GDP for 2025 as the government continues to adopt a fiscal consolidation strategy to lower the deficit back to pre-COVID-19 levels,” it said.
The DBCC said next year’s proposed national budget is now at P5.268 trillion, representing 22.1% of GDP.
“The DBCC remains strongly committed to exercise prudent macroeconomic and fiscal management in prioritizing expenditures that translate to the betterment of micro communities in the country,” it said.
Meanwhile, the Department of Finance (DoF) said it is in the process of creating a fiscal consolidation program for the incoming Marcos administration.
“The DoF is working double time on hammering out the details of a fiscal consolidation and resource mobilization program,” Finance Assistant Secretary Valery A. Brion said. “We will publicly announce the components of this package in the coming days.” — Tobias Jared Tomas
By Tobias Jared Tomas
THE PHILIPPINES is unlikely to face an economic crisis such as the one being experienced by Sri Lanka right now, economists said, citing the country’s relatively strong fiscal position and economic reforms.
Socioeconomic Planning Secretary Karl Kendrick T. Chua said in a Viber message that the Philippines and Sri Lanka are in “two very different situations.”
“Our country is on the way to further growth and development,” he said.
The Philippine economy grew by 8.3% in the first quarter, on track to meet the government’s revised 7-8% target this year.
Department of Finance (DoF) Chief Economist Gil S. Beltran called the prospect of a Sri Lanka-like crisis in the Philippines “outlandish,” noting the country has far healthier gross international reserves (GIR) than Sri Lanka.
“If you look at Philippine data, the Philippines has outstanding external debt of $106.4 billion and its GIR as of end-March is $107.3 billion,” Mr. Beltran said in an e-mail. “We have more GIR than debt. We can pay off all of it immediately.”
In comparison, Sri Lanka had a GIR of $1.6 billion, while its debts totaled $7 billion, or nearly 5 times their reserves.
Sri Lanka is currently experiencing the worst economic crisis in its history. It defaulted on its sovereign debt earlier this month and is facing a shortage of foreign exchange, fuel and medicine.
“At this point, I do not think that the Philippines will end up in the same economic position as Sri Lanka,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mailed message. “Pre-pandemic, the Philippines and Sri Lanka were far from being the same as well.”
Mr. Asuncion said that the country’s GIR was sufficient to cover import costs for an extended period.
“Debt stock is predominantly in local currency, mitigating currency risk to some extent,” he added.
As of end-March, the National Government’s outstanding debt stood at a record P12.68 trillion. Of this, P8.8 trillion is owed to domestic lenders, while the remaining P3.8 trillion is owed to foreign lenders.
“I think the Philippines enjoys a relatively robust external position, in particular in terms of our current account dynamics. Although now in deficit territory due to surging imports related to the economic reopening, the country still enjoys structural flows in the form of remittances, which have proved to be robust even in the face of a global crisis,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.
However, Mr. Mapa warned that since the Philippines depends on imported food and fuel, it is more vulnerable to import inflation.
“The Philippines must remain vigilant as the economy attempts to navigate a very challenging global landscape,” he said.
‘STILL MANAGEABLE’
The Philippines’ external debt stock stood at $106.4 billion at the end of 2021, up by 8.2% from the $98.5 billion as of end-2020.
In a Department of Finance (DoF) economic bulletin on Tuesday, Mr. Beltran said the external debt-to-gross domestic product (GDP) ratio stood at 27.4% as of end-2021, slightly lower than the 27.59% in the year prior.
“At 27.4% of GDP, the country’s external debt is at a manageable level. This ratio is less than half of the level in 2005, at 57.3%,” he said.
Mr. Beltran pointed out the Philippines’ external debt-to-GDP ratio was the lowest among five Association of Southeast Asian Nations (ASEAN) members.
“The Philippines is in the middle of 5 ASEAN countries in the ranking of percentage point change in external debt-to-GDP ratio during the pandemic. At 5.2 percentage points, the Philippines is higher than Indonesia and Vietnam but lower than Thailand and Malaysia,” he said.
The external debt-to-GDP ratio of Indonesia and Vietnam stood at 36.2% and 38.6%, respectively. Thailand and Malaysia recorded ratios of 44.3% and 69.6%, respectively.
“This implies continued prudence in debt management,” Mr. Beltran said.
The Philippines’ total debt-to-GDP ratio was 63.5% as of end-March, above the 60% considered manageable by multilateral lenders.
Last week, the Philippine Institute for Development Studies forecasted that the debt-to-GDP ratio could peak at 66.8% in 2024, before easing to 65.7% by 2026.
However, the institute said that this debt surge was less severe than previous instances, as the debt shock was largely due to outside factors, particularly the pandemic.
The country borrowed extensively both from foreign and domestic lenders in order to finance its coronavirus disease 2019 pandemic response.
A BUREAU of Internal Revenue (BIR) regional office’s plan to issue a closure order against listed developer Megaworld Corp. had no basis, Finance Secretary Carlos G. Dominguez III said.
“There was a threat to close down a publicly listed company without any basis. There is no finding that they (Megaworld) did not pay the tax, there is none,” Mr. Dominguez said to reporters on the sidelines of a Department of Finance (DoF) event in Manila on Monday.
Shares of Megaworld plunged on May 17 after the BIR Revenue Region 8B – South NCR sent a media advisory regarding its plan to issue a closure order against the company the next day.
The order was withdrawn later that day, after Megaworld said it would comply with the audit.
“I’m just saying I haven’t seen an assessment and charge sheet. I haven’t seen it. By announcing it publicly like that on a publicly listed company, you are not affecting only the company, you are affecting the shareholders. It is not correct,” the Finance chief said, noting the Social Security Service (SSS) and the Government Service Insurance System (GSIS) are shareholders of Megaworld.
In a separate Viber message to reporters, Mr. Dominguez said shareholders of Megaworld collectively lost about P111 million in value between May 17 to 23. Of this total, the paper losses of SSS and GSIS are around P37 million.
The BIR Revenue Region No. 8B – South NCR had claimed the closure order stemmed from Megaworld’s refusal to comply with an audit to check if the company paid taxes on one-time transactions on the sale of properties in Taguig City.
However, Mr. Dominguez said Megaworld did not deny the BIR access to its books, but was only questioning the regional office’s jurisdiction.
“Settle the jurisdictional issue first before you go out. Don’t be stupid. It was the left hand not knowing what the right hand is doing. Come on, that’s not professional thought,” he said, adding that the BIR closure order never reached his desk.
Mr. Dominguez said the audit on Megaworld would now be conducted by the Large Taxpayers Service of the BIR National Office, not the regional office.
On Saturday, the DoF ordered the suspension of orders creating special audit tax forces on real estate developers and multilevel marketing firms, as well as task forces for Philippine Offshore Gaming Operators and electronic sabong firms. It also ordered a halt on all field audit and other operations under these task forces.
“I stopped these investigations because I don’t want something like that, a legitimate thing to do to be used to harass people for false pretense, for nothing,” Mr. Dominguez said. — Tobias Jared Tomas
DAVOS, Switzerland — While the world economy faces headwinds, current growth forecasts offer a buffer against a potential global recession, the International Monetary Fund’s (IMF) No. 2 official said on Monday.
Among the major threats to economic growth, IMF First Deputy Managing Director Gita Gopinath told Reuters that the conflict in Ukraine could escalate, adding: “You could have sanctions and counter sanctions.”
Ms. Gopinath said in an interview on the sidelines of the World Economic Forum in the Swiss resort of Davos that the other challenges included inflation, a tightening of interest rates by central banks and a slowdown in Chinese growth.
“So, all of these provide downside risks to our forecast,” Ms. Gopinath said, with reference to the IMF’s 2022 growth forecast issued last month of 3.6%, a downgrade from a 4.4% estimate in January.
“I would say at 3.6% there is a buffer,” she said, conceding, however, that risks are uneven around the world.
“There are countries that are getting hit hard… countries in Europe that are getting hit hard by the war, where we could see technical recessions,” Ms. Gopinath added.
Ms. Gopinath said inflation “will remain significantly above central bank targets for a while,” adding: “It is very important for central bankers around the world to deal with inflation as a clear and present danger, that is something they need to deal with in a very forceful manner.”
“Financial conditions could tighten much more rapidly than we’ve already seen. And growth in China is slowing,” she added.
The US Federal Reserve is leading the charge among the largest central banks, with two rate hikes so far this year.
Its second, at half a percentage point, was the largest in 22 years. At least two more of that size are expected at the coming meetings.
“What is very important is for the Fed to watch the data carefully and respond at a scale that’s needed to deal with the incoming data,” Ms. Gopinath said.
“So, if it turns out that inflation is especially broad… is going up even more, they may need to react more strongly.” — Reuters
GLOBE Telecom, Inc. is working to typhoon-proof its fiber network by shifting to an underground cabling system, a company official said on Tuesday.
“One of the interesting things we’re doing now is seeing how we can typhoon-proof our network, moving our cables underground,” said Don Rae, senior advisor for Globe’s enterprise group, during a briefing.
Services of telecommunications companies are constantly disrupted whenever a strong typhoon hits the country. In December last year, several areas in Mindanao and the Visayas lost telecommunication lines due to Typhoon Odette.
Various groups have urged the government to consider underground cables as part of its disaster resiliency strategy to prevent massive blackouts during calamities like Typhoon Odette.
Utility service providers have said they are willing to shift to an underground cable system, but this would require government subsidies and proper planning on the part of public officials.
Department of Public Works and Highways-National Capital Region (DPWH-NCR) Regional Director Nomer Abel P. Canlas told BusinessWorld in February that there was a proposal to bury overhead utility lines in Metro Manila.
In March, Mr. Canlas said his office requested some P200 million for the project in the 2023 National Expenditure Program.
The funding will support both the feasibility study and infrastructure that will house the buried cables.
The DPWH is also hoping to “subsidize the transfer costs” for distribution companies that use overhead cable like Manila Electric Co. (Meralco) and telecommunications companies. Water utilities may also be supported in moving their above-ground transmission assets.
Mr. Canlas noted that the project could be revenue-positive for the government by making utility companies pay to use the infrastructure that will house the buried lines.
The feasibility studies were planned to be conducted along the Epifanio de los Santos Avenue (EDSA) and the Katipunan Avenue Extension. Mr. Canlas said the DPWH also wants to include the Radial Road 10 or R10.
Among the benefits to utility companies is that they get to skip the step of acquiring road right-of-way for their posts, Mr. Canlas said.
Mr. Rae likewise said that Globe group is building “extensive facilities” for cybersecurity, which is becoming increasingly important as more people work from home. — Arjay L. Balinbin
THE group behind Maxicare announced on Tuesday that it agreed to have the private investment company of the Gokongwei clan as a co-equal shareholder of the health insurer.
In a media release on Tuesday, the Equicom group said the “partnership agreement” signed with the Gokongweis’ JE Holdings, Inc. will allow Maxicare to revolutionize its mission of helping Filipinos.
“Maxicare is already the top health maintenance organization (HMO) provider in the Philippines; this partnership will only strengthen our lead in the healthcare sector and will help us deliver industry-defining services that will benefit Filipino consumers,” said Antonio L. Go, chairman of the Equicom group.
The partnership agreement was approved by the Insurance Commission on May 5.
JE Holdings Chairman Lance Y. Gokongwei said the partnership will further “democratize the delivery of essential healthcare services to our countrymen.”
“We share Maxicare’s vision for the future of healthcare in the Philippines. As their partner, we commit our support as they continue to innovate to help bring a better and comprehensive healthcare system in our country. We have high hopes that the synergy from this partnership will provide unparalleled customer experience,” Mr. Gokongwei said.
Maxicare Healthcare Corp. is among the pioneers in the HMO industry in the Philippines. It was established in 1987 by a group of doctors and businessmen to improve the local healthcare system.
“We imagine a future where healthcare services in the country will be further enhanced through a new industry-leading healthcare ecosystem that will benefit Maxicare’s medical provider partners and provide Maxicare members better customer experience, affordability, and availability,” Maxicare Chief Executive Christian S. Argos said.
Maxicare is planning to expand into new products and services in order to reach and serve more customers.
“By leveraging the combined Equicom and Gokongwei ecosystem, Maxicare will now have access to more than 36 million customers,” Mr. Argos said.
The Equicom group is a diversified conglomerate engaged in the areas of healthcare, information technology, banking, and financial and leasing services.
The group includes Equitable Computer Services, Inc., a computer solutions provider. Its financial services business is composed of Equicom Savings Bank, Inc., a medium-sized savings bank.
Maxicare provides comprehensive healthcare programs and currently services the largest number of HMO customers across the country. — Luisa Maria Jacinta C. Jocson
By Bronte H. Lacsamana, Reporter
A PLATFORM that uses artificial intelligence (AI) can analyze X-ray and CT (computerized tomography) scans within minutes, allowing patients to consult a doctor immediately.
Unveiled on Monday by technology solutions provider Advanced Abilities and healthcare maintenance organization Maxicare, AI SmartScan taps a database of around six million images to detect up to 25 chest pathologies, including tuberculosis, pneumonia, COVID-19 (coronavirus disease 2019), smoker’s disease, enlarged heart, and lung cancer.
“We are able to eliminate so many factors that can add to a patient’s distress. In that sense, we are able to democratize patient care through an innovative solution that will invariably reduce hospitalization and rescue the already overburdened healthcare infrastructure in the country,” said Christer P. Cruz, chief technology officer of Advanced Abilities, at the launch.
The system, which allows healthcare professionals to give faster medical advice backed up by data, is the first of its kind in the Philippines, the startup said.
“We figured that one of the keys in limiting the contagion is rapid diagnosis. Through the quick end-to-end health screening solution provided by the AI SmartScan, we are able to complete the process even before health risks become aggravated,” said Christian S. Argos, chief executive officer of HMO Maxicare.
AI SmartScan is available to Maxicare members at clinics in Eton Centris in Quezon City, Ayala North Exchange in Makati City, and in Cebu.
“Through our partnership, we aim to boost healthcare infrastructure in the country for the benefit of the people. Technological advances, after all, particularly artificial intelligence, hold an enormous position in saving the lives of millions of people around the world,” said Advanced Abilities chief executive officer Angelo Antonio Buendia in a statement.
A LOCAL court in Marinduque ruled in favor of at least 30 plaintiffs against Marcopper Mining Corp. for a mine spill incident in 1993.
In December 1993, parts of the structure of Marcopper’s Maguila-guila tailings dam broke, flooding the Mogpog River with toxic waste.
In a decision dated May 16, the regional trial court granted P200,000 in temperate damages and P100,000 in moral damages to each of at least 30 plaintiffs. An additional P1 million as exemplary damages was awarded to all the plaintiffs.
Marcopper is also known for the 1996 Mt. Taipan pit mining incident, where the drainage tunnels of the company’s open-pit mines broke and caused toxic mine tailings to spill into Boac River.
The Chamber of Mines of the Philippines said that it welcomed the ruling on the Marcopper mine spill case.
“We are relieved that the court has finally rendered a decision in favor of the plaintiffs in the Marcopper mine spill incident. Marcopper operated under the old mining law,” the chamber said in a statement.
“The incident is a constant reminder to miners all over the world that the safety of all stakeholders in host mining communities is paramount. It underscores extreme consequences to people and the environment from catastrophic tailings facility failures are unacceptable,” it added.
The group said that since the incident, new mandatory environmental laws have been put in place to ensure just and timely compensation for damages and for progressive and sustainable rehabilitation for any adverse effect a mining operation or activity may cause.
It also said that mining operators must use specified measures to prevent the catastrophic failure of tailings facilities and to implement best practices in planning, design, construction, operation, maintenance, monitoring, closure, and post-closure activities. — Luisa Maria Jacinta C. Jocson
By Patricia B. Mirasol, Reporter
EASE Healthcare, a women’s health platform, has partnered with doctor influencers on TikTok to raise awareness on contraception in the Philippines.
“A challenge we faced at the start was debunking misconceptions about women’s health,” said Guadalupe Lazaro, co-founder of the Singapore-headquartered Ease, in an e-mail. “We ran into comments from users on social media asking whether the pill would make them infertile (it doesn’t!) — that made us quickly realize we needed to … bust these myths.”
Launched locally this March, the Ease app offers teleconsultation on women’s health issues and the discreet delivery of birth control pills, condoms, and pregnancy tests. Most of its 12,000 Filipina users are 18–35 years old.
Ease tapped doctors on TikTok, including Dr. Michael Christian A. Virata, Dr. Lyien Patricia L. Pascual, and Dr. Riccia Angela Cruz-Tan to fill in education gaps beginning this May.
“We want to create a safe space for women and men alike to talk about their reproductive and health issues comfortably — with no hesitation or judgment,” said Dr. Pascual.
These issues include irregular or delayed menstruation, which warrants a checkup; sexually transmitted infections (STIs); and common gynecologic diseases.
Modes of contraception and surrounding misconceptions will also be tackled. There’s a notion, for example, that the pill is 100% effective in preventing pregnancy, it isn’t: it’s only about 91% effective in real life.
Aside from combating misinformation, Ease aims to address inconvenience, high costs, and stigma.
Recent partnerships include “It’s Okay to Delay,” a social media campaign on family planning developed by the United States Agency for International Development and the Commission on Population and Development (PopCom); and an Instagram giveaway from personal care brands Nala Women, Mink Intimate, and lana.ph.
According to PopCom, family planning use among Filipino women was sustained, with 8 million users in 2020 from 7.6 million users in 2019, based on data from the Department of Health’s Field Health Services Information System.
Teenage pregnancy and STIs are areas of concern. One in every 10 Filipinas of child-bearing age is a teenager, based on data from the Certificates of Live Births submitted by the Local Civil Registry Offices from 2011 to 2014. Meanwhile, there is little available data on the number of STI cases in the Philippines except for HIV (human immunodeficiency virus), in part because of the stigma associated with STIs.
THE Securities and Exchange Commission (SEC) has warned the public anew on the investment activities of Leefire Philippines after receiving multiple reports on the firm’s continued operations.
“In this regard, the public is hereby warned and advised to exercise extreme caution when approached by individuals or group of persons claiming to represent that they can assist in claiming pending withdrawals or earned money in Leefire Philippines,” the commission said in an advisory.
“The public is further advised not to invest or stop investing their hard-earned money in Leefire and in any high-yield, high-risk investment scheme,” it added.
The regulator said that it received numerous reports regarding the activities and operations of individuals or group of persons from Leefire claiming to assist investors to refund their investments for a fee.
In April, the SEC issued an advisory warning the public about Leefire for enticing investors to put their money in the company, which has no prior license or registration.
In its investigation, it found that the unauthorized firm was not registered as a corporation or partnership and was thus not authorized to solicit investments.
Leefire was found to be engaging in an initial coin offering (ICO) with its native cryptocurrency and that it was seeking to fund its projects with money gathered from the public on the “promise of profits.”
Salesmen, brokers, dealers or agents involved with the unauthorized firm may be prosecuted and held criminally liable, with penalties including a maximum fine of P5 million or up to 21 years of imprisonment, according to its previous advisory. — Luisa Maria Jacinta C. Jocson
LONDON — The World Health Organization (WHO) does not believe the monkeypox outbreak outside of Africa requires mass vaccinations as measures like good hygiene and safe sexual behavior will help control its spread, a senior official said on Monday.
Richard Pebody, who leads the high-threat pathogen team at WHO Europe, also told Reuters in an interview that immediate supplies of vaccines and antivirals are relatively limited.
His comments came as the US Centers for Disease Control and Prevention said it was in the process of releasing some Jynneos vaccine doses for use in monkeypox cases.
Germany’s government said on Monday that it was assessing options for vaccinations, while Britain has offered them to some healthcare workers.
Public health authorities in Europe and North America are investigating more than 100 suspected and confirmed cases of the viral infection in the worst outbreak of the virus outside of Africa, where it is endemic.
The primary measures to control the outbreak are contact tracing and isolation, Mr. Pebody said, noting that it is not a virus that spreads very easily, nor has it so far caused serious disease. The vaccines used to combat monkeypox can have some significant side-effects, he added.
It is unclear what is driving the outbreak, with scientists trying to understand the origin of the cases and whether anything about the virus has changed. There is no evidence the virus has mutated, a senior executive at the United Nations agency said separately on Monday.
Many — but not all — of the people who have been diagnosed in the current monkeypox outbreak have been men who have sex with men. But that may be because this demographic is likely to seek medical advice or access sexual health screening more readily, the WHO said earlier in the day.
Most of the confirmed cases have not been linked to travel to Africa, which suggests there may be large amounts of undetected cases, said Mr. Pebody. Some health authorities suspect there is some degree of community spread.
“So we’re only seeing … the tip of the iceberg,” he said.
Given the pace of the outbreak, and lack of clarity around what is driving it, there has been worry that large events and parties this summer could make things much worse.
“I’m not saying to people don’t have a good time, don’t go to attend these events,” Mr. Pebody said.
“It’s rather around what people do at the parties that matters. So it’s about safe sexual behavior, good hygiene, regular hand washing — all these sorts of things will help to limit the transmission of this virus.” — Reuters
