Teleperformance unveils solar-powered jeepney workstation

March 2, 2022 | 3:50 pm

TP Jeepney — FACEBOOK/TELEPERFORMANCE PHILIPPINES

Outsourcing firm Teleperformance Philippines launched on Monday a mobile workstation that simulates a fully enabled work-from-home (WFH) experience.

The Cloud Campus Jeepney, parked at the Sunlife Amphitheater in Bonifacio Global City (BGC), is a solar-electric hybrid vehicle equipped with a cloud connection.

“This platform will help us really promote our WFH environment, our capabilities, and ensure we have deliverable frameworks for our customers to sustain and be reliable,” said Eduardo Punzalan, Jr., Teleperformance Philippines vice president for facilities and administration, at the launch.

The jeepney, stationed in BGC till March 6, is part of Cloud Campus Solutions, a global operating model launched last year to enable remote work.

Other existing hubs in the Philippines are located at Teleperformance Aura and Fairview, which are the operational command centers of the virtual teams.

The business process outsourcing sector helped keep the economy afloat, according to Labor Secretary Silvestre H. Bello III.

“IT-BPM [Information Technology and Business Process Management] firms were among the sectors that continued doing business due to the digital nature of your work, hence employment generation remained high,” he said in his speech.

Citing data from the labor department, he shared that IT-BPM jobs such as call center, customer service, and sales representatives were among the top 10 employment opportunities nationwide during the pandemic. — Brontë H. Lacsamana

Move over candy bars, New York vending machine now selling NFT art

March 2, 2022 | 3:32 pm

NEW YORK — Digital art collecting platform Neon has launched the first in-person non-fungible token (NFT) vending machine in New York City, aiming to make online art pieces as easily available as soda or a candy bar.

The twist? You have no idea what piece of digital art you might purchase.

“It’s the crypto curious, the people who tried to buy cryptocurrency or they were interested in buying an NFT, but they just hit too many barriers,” Neon Chief Executive Officer Kyle Zappitell said in an interview with Reuters, of the vending machine’s target customer.

Located in a small storefront in Lower Manhattan’s financial district with a sign outside saying “NFT ATM,” it looks like a traditional vending machine, but offers QR codes that come on slips in small paper boxes. The drops range in price from $5.99 to $420.69.

Once the QR code is scanned, the user can see their new piece of art on any smartphone, laptop, or tablet.

At the Lower Manhattan site, the codes lead to two categories of digital art pieces, either a color or a picture of a pigeon.

For Mr. Zappitell, the element of mystery is a natural extension of the digital art space.

“As a NFT collector, over time, one of the things you love is the randomness of, ‘Which one are you going to get?’” he said. “So that’s one of the exciting aspects.”

The art pieces sold in the vending machine rely on the Solana blockchain, which ensures carbon-neutral transactions.

And while digital art is mostly offered via cryptocurrencies, Neon’s vending machine accepts fiat currency — you can use a credit card to make a purchase.

Starting with $3 million in seed money, Neon says it hopes to roll out more vending machines in malls and other public spaces.

“That’s one of the really powerful messages of this, is how it’s using this old world technology to enable the adoption of new world technology,” said Mr. Zappitell. — Daniel Fastenberg/Reuters

Apple, Ford other big American brands join corporate wave shunning Russia

March 2, 2022 | 3:04 pm

Some of America’s best-known companies including Apple, Google, Ford, and Harley-Davidson rebuked and rejected Russia for its invasion of Ukraine, under steady pressure from investors and consumers decrying the violence.

Apple Inc. late on Tuesday said it had stopped sales of iPhones and other products in Russia, adding that it was making changes to its Maps app to protect civilians in Ukraine.

Alphabet Inc.’s Google dropped Russian state publishers from its news, and Ford Motor, with three joint venture factories in Russia, told its Russian manufacturing partner it was suspending operations in the country. Motorcycle maker Harley-Davidson Inc suspended shipments of its bikes.

Many corporations have been unusually clear in their condemnation of Russia.

“We are deeply concerned about the Russian invasion of Ukraine and stand with all of the people who are suffering as a result of the violence,” Apple said in a statement announcing a pause in sales in Russia.

The steady drum beat of companies taking a stance increased later in the day as rockets struck major cities in Ukraine.

“Ford is deeply concerned about the invasion of Ukraine and the resultant threats to peace and stability. The situation has compelled us to reassess our operations in Russia,” Ford said, adding to several days of announcements by global car companies.

Boeing suspended parts, maintenance and technical support services for Russian airlines, a Politico reporter tweeted. The US plane maker suspended major operations in Moscow and will also temporarily close its office in Kyiv, the tweet said.

Restrictions from the West have hit the Russian economy hard, with the rouble currency hitting a record low of 117 to the dollar, down from 75 before Russia recognized two breakaway regions in Ukraine. Financial isolation is rising as shipping companies say they will not serve Russian ports.

And a boom of investor interest in environmental, social and governance (ESG) factors is making it more difficult for those companies that sit on the sidelines.

Russian companies are in particular peril with such Western investors, since they often are not open to talks to change their behavior, said TJ Kistner, vice president at Segal Marco Advisors, a large US pension consultant.

Western investors may respond by pulling out. “The only course of action for many is simply divestment,” Mr. Kistner said.

Moscow has responded by temporarily curbing foreign investors from selling Russian assets.

Big Tech companies also are continuing efforts to stop Russian forces from taking advantage of their products.

Apple said it had blocked app downloads of some state-backed news services outside of Russia, adding, “We have disabled both traffic and live incidents in Apple Maps in Ukraine as a safety and precautionary measure for Ukrainian citizens.” — Dawn Chmielewski and Ross Kerber/Reuters

US, allies set oil reserves release as prices soar

March 2, 2022 | 2:05 pm

TOKYO — The United States and other member states of the International Energy Agency (IEA) on Tuesday agreed to release 60 million barrels of oil reserves to compensate for supply disruptions following Russia’s invasion of Ukraine.

Russian oil trade is in disarray after many nations imposed sanctions on Russian companies, banks and individuals. Oil trade is exempt from sanctions but buyers are shunning Russian oil to avoid unwittingly violating sanctions.

News of the IEA release did nothing to stop a rally on crude futures as investors priced in increasing disruption to supplies. Brent crude rose $7 per barrel to close at $104.97, the highest since 2014.

Half of the planned release will come from the United States, the US Energy Department said after the extraordinary ministerial meeting of the 31 members of the IEA, which represents mostly industrialized nations.

“We are prepared to use every tool available to us to limit disruption to global energy supply as a result of President Putin’s actions,” White House Press Secretary Jen Psaki said in a statement after the IEA meeting, referring to Russia’s Vladimir Putin.

IEA Executive Director Fatih Birol said the current situation in energy markets is “very serious and demands our full attention.”

“Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery,” Mr. Birol added in a statement, which said member states would consider tapping stocks further as needed.

The precise share of member countries in the release will be determined in coming days, Japanese industry minister Koichi Hagiuda said, while some IEA members agreed to provide petrochemical products to Ukraine.

Further disruption of exports from Russia could send prices even higher. Russia, which calls its actions in Ukraine a “special operation,” is one of the world’s top oil producers, exporting around 4–5 million barrels per day (bpd) of crude. Russia also exports 2 to 3 million bpd of fuel.

The 60 million barrels represent 4% of the 1.5 billion barrels of emergency stockpiles held by IEA members, the agency said, and is equivalent to 2 million barrels a day for 30 days.

“The release of the reserves is notable, but as we saw back in November, it’s just not viewed as a kind of game-changer in any way,” said Craig Erlam, senior market analyst at OANDA, referring to an earlier stocks release led by the United States. “The political risk premium of a crisis involving one of the world’s top oil producers is just too high.”

SUPPLY DISRUPTIONS
US Energy Secretary Jennifer Granholm chaired the meeting of the Paris-based IEA, which has coordinated three emergency oil stock releases in the past.

Founded in 1974 as an energy watchdog, the IEA defines one of its main roles as helping “coordinate a collective response to major disruptions” in the oil supply.

Last November, the United States announced a release of 50 million barrels from the US Strategic Petroleum Reserve, a move it said was made in concert with oil-consuming nations including China, India and Japan to bring down high oil prices.

China, the world’s No. 2 consumer and largest importer, never officially committed to that coordinated release, and has instead been buying more for its reserves.

The IEA did not oversee that operation, saying at the time it only responds collectively to major supply disruptions. The IEA last coordinated a release amid the oil supply disruption caused by the Libyan civil war in 2011.

US President Joseph R. Biden, Jr., has faced criticism from political opponents who say his climate-friendly policies have harmed US energy production and driven up energy prices.

The United States is responsible for about half of the world’s strategic petroleum reserves. The other 29 IEA members — including the United Kingdom, Germany, Japan and Australia — are required to hold oil in emergency reserves equivalent to 90 days of net oil imports.

Japan has one of the largest reserves after China and the United States. — Yuka Obayashi and Noah Browning/Reuters

Ukraine war won’t deter Fed and Co. from March rate hikes

March 2, 2022 | 1:36 pm

LONDON — The US Federal Reserve and some of its major central banking peers will press ahead with lifting interest rates this month, money markets suggest, even as a war on Europe’s eastern flank complicates the picture for inflation and economic growth.

The situation is fluid, with rate futures and bond prices whipsawed by conflicting impulses and no indication of which could gain the upper hand: a war that threatens to undercut a global economic recovery or the inflation unleashed by an oil price surge that will be hard for central bankers to overlook.

Still, expectations of big rate hike bets have fallen by the wayside, after Russia’s invasion of Ukraine and sanctions slapped on it by Western powers.

The subsequent bond rally, caused also by an influx of safety-seeking cash, has driven German 10-year yields back below 0% on Tuesday, while their US counterparts have dropped some 30 basis points (bps) from the 2%-plus levels touched two weeks ago .

Wednesday brings the first real test of March when the Bank of Canada (BoC) is expected to stick to its guns and deliver a quarter point rate rise — its first since 2018.

The BoC has pledged to be “forceful” in tackling inflation, running at 30-year highs just above 5%. So markets see a 90% chance of a 25 bps increase this month.

The five to six hikes priced for 2022 are slightly less aggressive than a couple weeks ago, when six to seven moves were expected.

The Federal Reserve and Bank of England (BoE) are also forecast to raise rates by a quarter point mid-March. But before the Ukraine crisis erupted, markets saw a high probability both would opt for half-point moves.

Money markets now predict fewer than six, 25 bps Fed rate hikes in total this year, compared to mid-February expectations for a total 175 bps of tightening.

Jim Caron, chief fixed income strategist at Morgan Stanley Investment Management, called the latest events “a double-edged sword,” given the inflation threat from higher oil prices and the possible hit to economic growth from war.

“There has been a recalibration of rate expectations and that has become very apparent with the pricing out of a 50 bps [Fed] hike for March,” Mr. Caron said.

“So, the question becomes one of trying to figure out what it means for the Fed.”

The dilemma is less acute for the Fed than European peers, given Russia-linked growth setbacks are less likely in the United States. And US inflation is at 40-year highs above 7%, while latest data showed unemployment rolls shrinking to levels last seen in 1970.

BACKS AGAINST THE WALL

Britain faces a similar inflation dilemma, with the added complication of an energy-linked hit to growth.

On Tuesday, 25 bps rate rises were almost fully priced in for the BoE meetings in both March and May, although markets now see a roughly 10% change it may not tighten policy this month — an element of doubt that has only recently crept in.

A total of four quarter-point rate rises are now factored in for 2022, versus five late last week and six in mid February.

“Different central banks are in different boats but the Fed and Bank of England have their backs up against the wall,” senior Mizuho economist Colin Asher said.

“When inflation is 6% to 7%, inactivity is not an option.”

British annual consumer price inflation (CPI) hit 5.5% in January, the highest since 1992. While the BoE expects CPI to peak around 7.25%, Citi economists reckon it could reach 8.1%.

British government bonds have reacted far more than money markets, with two-year yields down 40 bps since Friday’s close at around 0.8%. They hit an 11-year high of 1.565% on Feb. 16.

The fall in yields since the announcement of sanctions against Russia is the sharpest since just after June 2016’s Brexit referendum.

Norway is also expected to raise rates on March 24.

DOVES, HAWKS, DOVES AGAIN

Prior to the Russian invasion of Ukraine, which Moscow calls a “special operation,” even dovish banks were under pressure from inflation.

While the Reserve Bank of Australia kept rates steady as expected on Tuesday, it hinted that uncertainty caused by war could be reason to be patient with tightening.

As for the European Central Bank (ECB), inflationary pressures are building – German CPI soared past 5% in February — but so are economic growth risks.

ECB chief economist Philip Lane has said the conflict may reduce euro zone economic output by 0.3%-0.4% this year.

While the bank had been preparing markets for a further stimulus cut at its March 10 meeting, rate hike bets are shriveling. Just under two, 10 bps moves are priced for 2022, versus 50 bps shortly after the Feb. 3 ECB meeting.

Finally, the dash for safe assets has halted the rise in longer-dated Japanese bond yields — a headache for the Bank of Japan (BOJ), which targets 10-year yields in a band around 0%.

“The pressure is off the BOJ as things have moved in their direction,” Mizuho’s Mr. Asher said of the March 18 BOJ meeting. — Dhara Ranasinghe, Sujata Rao, and Saikat Chatterjee/Reuters

Which international banks are exposed to Russia?

March 2, 2022 | 1:02 pm

MILAN — The latest wave of sanctions on Russia over its Ukraine invasion has thrown the global banking industry deeper into turmoil, as Western countries try to squeeze Moscow’s access to cash for its economy and international trade.

Some Russian banks will be excluded from the SWIFT international payments system and, crucially, other sanctions target the country’s central bank to stop it from using its foreign reserves.

The moves aim to undermine Moscow’s ability to weather the wider economic sanctions but they also impact Western banks which are exposed to Russia’s economy.

The European arm of Sberbank, Russia’s biggest lender, faces failure, the European Central Bank has said, after a run on its deposits sparked by the crisis.

In Europe, Italian and French banks have the largest Russian exposure, representing just over $25 billion each at the end of September, followed by Austrian banks with $17.5 billion, data by the Bank of International Settlements (BIS) show.

The exposure of US banks totals $14.7 billion, according to BIS data.

Following are some of the banks with significant Russian exposure.

US BANKS

CITIGROUP INC.

The US bank on Monday said its total exposure to Russia amounted to nearly $10 billion.

Citigroup listed Russia as 21 among its top 25 country exposures with $5.4 billion of loans, securities and funding commitments at end-2021 — 0.3% of overall exposures based on a regulatory filing.

On Monday, Citigroup gave more details, taking the count for “total third-party exposure” to $8.2 billion. That includes $1.0 billion in cash at the Bank of Russia and other financial institutions and $1.8 billion of reverse repos.

Citigroup also said it has $1.6 billion of exposures to additional Russian counterparties outside of its Russian subsidiary that are not included in that $8.2 billion.

As a comparison, Goldman Sachs Group Inc reported in a filing last month $293 million in net exposure to Russia, as well as a total of $414 million of market exposure as of December 2021.

EUROPEAN BANKS

RAIFFEISEN BANK INTERNATIONAL (RBI)

The Austrian lender’s Russian business ranks as the country’s ninth largest bank by loans. With overall assets of 15.8 billion euros, it employs around 8,700 staff to serve more than 4.5 million customers.

Its equity of 2.4 billion euros represents 18% of consolidated equity.

RBI has operated in Russia since the collapse of the Soviet Union and its business there contributed almost a third to the group’s net profit of 1.5 billion euros ($1.66 billion) last year.

RBI’s Russian exposure totalled 22.85 billion euros, more than half relating to the corporate private sector, it said in its 2021 results presentation.

Russia’s central bank accounts for 8% of RBI’s exposure to the country, sovereign entities for 4% and Russian banks for 2%, based on the presentation.

The overall figure comprises 11.6 billion euros in customer loans (or 11.5% of the group), more than 80% of which are in Russian rubles.

Cross-border exposure to Russia is only 1.6 billion euros with no parent funding from Vienna. Raiffeisen also holds 2.2 billion euros in loans to Ukrainian customers.

Provisions against losses cover 64.3% of RBI’s impaired exposures in Russia.

RBI Chief Executive Johann Strobl told Reuters this week that the group’s Russian subsidiary “had a very strong liquidity position and [was] recording inflows.”

SOCIETE GENERALE

Societe Generale started doing business in Russia in 1872 then left the country in 1917, the year of the Bolshevik revolution, to return in 1973. It has 1.5 million local customers.

Societe Generale, which controls Russian bank Rosbank, had 18 billion euros of overall exposure to Russia at the end of last year – or 1.7% of the group total.

That includes both on- and off-balance sheet items (for example a credit line that has not yet been tapped).

Of SocGen’s Russian exposure, 39% is to the corporate sector and 36% to retail. Sovereign entities account for 21%, financial institutions for 4%.

Actual loans grew 13.3% last year to 10.5 billion euros.

Its Russian retail business — to which 1.05 billion euros of capital was allocated on average last year — produced 115 million euros in 2021 net income, up from 37 million euros in 2020. Including financial services, net income at SG Russia was 152 million euros, versus 76 million in 2020.

The bank said it had implemented measures to adapt to the new sanctions and that Rosbank continued to operate in a “safe manner.”

UNICREDIT

The Italian bank’s Russian subsidiary ranks as the country’s 14th largest bank. UniCredit Russia’s 2.3 billion euros in equity accounts for 3.7% of the group’s total.

UniCredit’s “exposure at default” relating to Russia totaled 14.2 billion euros as of mid-2021.

Of that, around 8 billion euros are loans extended by the Russian arm and locally funded.

The rest includes off-balance sheet items and cross-border loans mainly granted by UniCredit SpA towards large corporates outside of Russia.

UniCredit said last week its Russian franchise accounted for only around 3% of group revenues and provisions covered 84% of its non-performing exposures.

INTESA SANPAOLO

Italy’s biggest bank has financed major investment projects in Russia, such as the Blue Stream gas pipeline and the sale of a stake in oil producer Rosneft. It handles more than half of all commercial transactions between Italy and Russia.

Intesa’s loan exposure to Russia was 5.57 billion euros at the end of 2021, or 1.1% of the total.

Its subsidiaries in Russia and Ukraine have assets, respectively, of 1 billion euros and 300 million euros, which together represent just 0.1% of the group’s total assets.

ING

The Dutch bank has around 4.5 billion euros in outstanding loans with Russian clients and around 600 million euros with clients in Ukraine, out of a total loan book worth more than 600 billion euros.

ING said many sanctions against Russia had been in place since 2014. — Valentina Za/Reuters

A hotter planet means a hungrier planet, climate report warns

March 2, 2022 | 12:35 pm

Typhoon-aftermath-flood — FARMERS try to recover whatever they can after rice fields in Cagayan Valley were flooded when Typhoon Ulysses swept through the region in November 2020. — PHILIPPINE STAR/ MICHAEL VARCAS

LONDON — The future of food is troubling.

Nearly a third of the world’s crop fields and livestock rangeland will be unsuitable for food production by the end of this century if climate-warming emissions aren’t heavily curbed, a report by the UN Intergovernmental Panel on Climate Change (IPCC) says.

Simultaneous crop failures in the world’s breadbaskets and livestock deaths from extreme heat are just a few of the disasters that may befall the world’s food system by 2050 as the planet warms. Such scenarios would lead to higher prices and put an additional 80 million people at risk of hunger.

“The future looks dark if we do not take action,” said Rachel Bezner Kerr, an IPCC lead author and global development researcher at Cornell University. “No region will be spared.”

ON THE FARM

Scientists say the worst effects of climate change would start to be unleashed if global temperatures rise more that 1.5 degrees Celsius (2.7 Fahrenheit) above pre-industrial levels. Having already warmed 1.1°C, the planet is expected to hit the 1.5°C threshold within two decades.

The UN report released on Monday looked broadly at many consequences of climate change, from unliveable cities to shrinking economies. But its outlook on future food supply was especially grave.

Global food production is still increasing, but not as fast as in the past. Climate change has already curbed production growth by some 21% over the last six decades, the report says — at a time when demand is rising with the increasing population.

Heavy rains, high temperatures, poorer soil quality, an increase in pests such as locusts and a decrease in helpful pollinators such as bees will cause grain supplies to stumble. Yields of maize, rice, and wheat are expected to fall 10% to 25% for every degree of warming.

Farms could also see huge labor shortages by 2100, with as many as 250 more days per year becoming unworkable in some regions unless climate change is contained.

Tropical and subtropical countries would see losses of up to $22 billion annually in the dairy industry and $38 billion in beef by 2100 as heat stress thins out herds, the report said.

Hot or humid regions, including the Sahel, Amazon basin and Southeast Asia, would suffer most.

“Living in the Philippines, I have seen how tropical cyclones, flooding, and drought can lead to severe lack of nutritious food on the table,” said Rodel Lasco, an IPCC author and scientist with the country’s Climate Change Commission. “The most impacted are the poorest sectors of society.”

IN THE SEA

Impacts aren’t limited to land. Marine heatwaves, acidifying oceans, saltwater seeping into freshwater areas and harmful algal blooms are taking a toll on fish and other seafood.

Fish currently represent about 17% of global meat consumption and is projected to increase. But global fishery yields have declined 4.1% due to climate change between 1930 and 2010, the IPCC report said, with some areas, such as the North Sea and Iberian Coast, seeing losses as high as 35%.

As global temperatures continue to rise, that trend is expected to continue.

ADAPTIVE POTENTIAL

As food productivity shrinks, feeding the world will become more challenging.

When governments are alerted that crops are at risk, they typically turn to “Green Revolution techniques of using fertilizers, machinery and large monocultures to boost production,” said Olivier De Schutter, a co-chair of the International Panel of Experts on Sustainable Food Systems not involved with the IPCC report. “But that is clearly not the way forward.”

The report highlights farming methods that coexist with nature to scale up production, such as using agroforestry — the practice of planting crops among trees — or community gardens. Shifting diets away from meat and dairy would also make a positive difference.

But containing climate change is key. “If the planet continues to warm beyond 2°C,” Mr. Lasco said, “trade-offs will be more painful.” — Gloria Dickie/Reuters

Pag-IBIG posts record-high P34.73B net income in 2021

March 2, 2022 | 12:10 pm

Members to earn dividend rate of 5.16% on Regular Savings, 5.66% on MP2

Pag-IBIG Fund netted an income of over P30 billion for the fifth consecutive year in 2021 despite the ongoing pandemic, the agency’s top executive announced on Thursday (Feb.24) during the Pag-IBIG Fund Chairman’s Report.

“As we close our books for 2021, I am happy to report that your Pag-IBIG Fund achieved another milestone. Our strong performance last year led us to reach a net income of P34.73 billion! This is our highest net income ever, surpassing by 9.5% our P31.71 billion net income in 2020 and topping the previous record of P34.37 billion netted in 2019. I’d also like to note that this is the fifth time that our net income breached the P30-billion mark. Our members will directly benefit because we shall again go beyond what is required of us by declaring over 86% of our net income as dividends for their savings,” said Secretary Eduardo D. del Rosario who heads the Department of Human Settlements and Urban Development and the 11-member Pag-IBIG Fund Board of Trustees.

Under the Pag-IBIG Fund charter, the agency is required to declare at least 70% of its annual net income as dividends, which shall be credited proportionately to its members’ savings. However, Management has a recommendation to set aside 86.56% of its net income as dividends to maximize the benefit to its members during the second year of the pandemic. This is now up for approval of the Board, he added.

With robust financials, Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy P. Moti meanwhile said that the dividend rates on member’s savings – both mandatory and voluntary – will remain higher than other instruments available in the market.

“We know that many of our members have been asking about the dividend rates. Now we can finally share the news. For 2021, dividend rates will remain above 5%. Returns for the Pag-IBIG Regular Savings is recommended to be at 5.16% per annum, and the Modified Pag-IBIG 2 Savings to be at 5.66% per annum. Considering the challenges caused by the pandemic, Pag-IBIG’s dividend rates are still much higher than other savings accounts and financial products in the market today,” he said.

According to Moti, Pag-IBIG Fund maintained a Capital Adequacy Ratio (CAR) of 15% in 2021, which is higher than the 10% threshold set by the Bangko Sentral ng Pilipinas (BSP) for the banking industry. He added that while the agency is not regulated by the BSP, Pag-IBIG voluntarily maintains a high CAR to account for the current economic challenges, to protect the funds of its members, and to maintain the agency’s financial stability.

“The last two years under a pandemic have not been easy, but Pag-IBIG still managed to claim a number of victories. For 2021, I’m proud to say that we are back to breaking records and attaining the ‘highest evers’ in our numbers. And, we have our members to thank for it. Because by fulfilling their obligations despite the hardships and by increasing their savings in Pag-IBIG, they are helping to keep the Fund healthy and resistant against a downward trend. And with a stable Pag-IBIG Fund, more members are served and our programs remain responsive to their needs. With Pag-IBIG back to its record-breaking form, I’m excited to see what 2022 will bring,” Moti said.

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Oil spike could drive up Q2 inflation

March 2, 2022 | 12:34 am

MODELS of oil barrels and a pump jack are displayed in this illustration photo taken on Feb. 24. — REUTERS

THE SUSTAINED INCREASE in oil prices is likely to drive inflation beyond the Philippine central bank’s target in the second quarter, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.

Despite the heightened global uncertainty, Mr. Diokno said the BSP has the policy space to support economic output, which is expected to go back to pre-pandemic levels in the second half.

“Prices are fairly stable. Our forecast is that we will be within the target range in the first quarter. And then maybe in the second quarter, it will be a little bit because of this oil prices, but it will go down again in the third and the fourth quarter,” he told ABS-CBN News Channel on Tuesday.

The BSP said February inflation likely settled at 2.8% to 3.6%, while a poll of 15 analysts by BusinessWorld yielded a median estimate of 3.3%.

If realized, inflation could be faster than 3% in January but still within the 2-4% target of the BSP. Philippine Statistics Authority will report February inflation data on Friday.

The BSP last month raised its inflation forecast for 2022 to 3.7% from 3.4% due to higher global oil and nonoil prices.

Oil prices have climbed in recent months due to persistent supply issues and geopolitical tensions. Last week, Brent crude exceeded $100 a barrel for the first time since 2014 after Russia invaded Ukraine.

Latest data from the Department of Energy showed gasoline, diesel and kerosene prices have increased by P8.75, P10.85, and P9.55 per liter, respectively, since the start of 2022.

Mr. Diokno said they were closely monitoring developments in the Russia-Ukraine conflict and its impact on the Philippine economy. He noted both countries’ investments in the Association of Southeast Asian Nations (ASEAN) region are minimal, but said the conflict is affecting domestic oil prices.

“This is going to be hard for oil-importing countries like the Philippines,” he said.

For now, the BSP will keep its forecast that Dubai crude oil would average $83.3 per barrel this year.

“As long as it does not exceed $95 per barrel on a sustained basis, not much just a day or two of fluctuation, it will be okay, our inflation target of 2-4% will hold,” Mr. Diokno said.

“Higher than that, there may be some effect but it’s not going to be disastrous for the Philippines. I think we should be more concerned about food rather than oil because oil is not a big part of our consumption index,” he added.

A Nomura Holdings, Inc. report by analysts Sonal Varma and Ting Lu showed the Philippines, along with India and Thailand, will be the “biggest losers” in case of a continued rise in oil and food prices. A 10% rise in oil prices may add 0.4 percentage point to inflation in the Philippines and India, they added.

Instead of suspending the excise tax on fuel, Mr. Diokno supports fuel subsidies for selected sectors.

“The fuel subsidy is a better option than adjusting or maybe suspending the tariff on imported oil. Because it’s targeted, it benefits the mass transport system,” he said.

The 2022 national budget allows such subsidies if crude goes beyond $80 per barrel for three straight months.

The Development Budget Coordination Committee last week said it was preparing to release P2.5 billion in fuel subsidies for qualified public utility vehicle drivers. The Agriculture department also has a P500-million budget for fuel discounts to farmers and fisherfolk.

Apart from rising oil prices, Mr. Diokno also flagged other factors that may cause faster price increases that could hurt the economy’s recovery.

“There is the increase in inflation, both in advanced and emerging market economies, due to firming demand, input shortages caused by supply-chain bottlenecks resulting from mobility restrictions and weather disruptions, and rapidly rising commodity prices,” Mr. Diokno said at a Manila Times forum on Tuesday.

He also said the elevated global commodity prices, heightened geopolitical tensions and uneven pace of vaccinations around the world might dampen global recovery.

At its latest policy review on Feb. 17, the Monetary Board kept the key policy rate at a record low of 2% to support recovery, but said it was ready to respond to second-round effects of inflation.

“The BSP will maintain its accommodative policy stance given a manageable inflation environment and emerging uncertainty surrounding domestic and global growth prospects,” Mr. Diokno said.

“The BSP will remain vigilant over the current inflation dynamics to ensure that the monetary policy stance continues to support economic recovery to the extent that the inflation outlook would allow,” he added.

The central bank will have its next policy review on March 24.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said higher oil prices would cause the country’s import bill to rise further. While this could mean an inflation spike caused by supply issues, he said the impact could hamper inflation expectations.

“The wider trade gap caused by bloated oil imports will then likely drive peso weakness, which in turn would fan inflation even further. Furthermore, the possible emergence of second-round effects could drive the inflation path higher,” Mr. Mapa said in an e-mail.

He said he expects the BSP to start hiking rates by the second quarter to be in line with global monetary policy tightening. The US Federal Reserve has signaled it might start raising interest rates this month.

“We expect BSP to finally relent and reverse course, remembering fully well the repercussions of policy dissonance with the Fed. We continue to price in a rate adjustment by the BSP by the second quarter, all the more given that gross domestic product growth will likely show four straight periods of expansion by the end of the first quarter,” he said. — Luz Wendy T. Noble

2021 budget deficit falls below ceiling

March 2, 2022 | 12:33 am

construction-worker — PHILIPPINE STAR/ MICHAEL VARCAS

By Jenina P. Ibañez, Senior Reporter

THE GOVERNMENT fell short of its budget deficit ceiling in 2021, as it generated better-than-expected revenues but missed its spending target, data from the Bureau of the Treasury (BTr) showed.

This brought the full-year deficit to P1.7 trillion, up by 21.87% from the previous year but missing the P1.9-trillion ceiling by 10%.

The 2021 deficit is equal to 8.61% of gross domestic product (GDP), lower than the programmed 9.3% but higher than 7.65% in 2020.

In December alone, the fiscal gap ballooned to a record P338 billion, up by 11.7% from last year’s P302.6 billion as revenues contracted by 3%.

Government spending rose by 5.21% year on year to P569.3 billion in December.

Primary payments — or total expenditures minus interest payments — grew by 5.08% to P542 billion. Interest payments increased by 7.87% to P27.3 billion during the month.

Revenues in December reached P231.3 billion, down by 3.03% from a year earlier.

Accounting for over 96.6% of the total, tax revenues rose by 6.75% to P223.5 billion.

Tax collections from the Bureau of Internal Revenue (BIR) slipped by 0.60% to P162.4 billion, while revenues generated by the Bureau of Customs (BoC) reached P60.3 billion, or 32.9% higher than last year. Other tax collecting offices posted P800 million in revenue, up by 28.53% from a year earlier.

Nontax revenues from the Bureau of the Treasury reached P4.7 billion, down by 43.41%

The government runs on a budget deficit when it spends more than it makes to fund programs that support economic growth. It borrows from foreign and local sources to plug the gap.

FULL-YEAR DEFICIT
Breaking down the P1.7-trillion full-year deficit, total spending reached P4.68 trillion, up by 10.6% compared with the previous year’s P4.23 trillion.

Spending grew due to “infrastructure and other capital expenditures, continued spending for various recovery measures including vaccine procurement and equity infusion in support of government financial institutions lending assistance programs, as well as higher internal revenue allotment shares of local government units,” the BTr said.

However, this was lower by 1.3% than the P4.74-trillion spending program.

Meanwhile, revenue collection last year hit P3 trillion, or 5.24% higher than the previous year and better than the P2.9-trillion program.

Tax collections, which represent 91% of the total, jumped by 9.4% to P2.74 trillion.

The BIR collected P2.08 trillion, up by 6.52% year on year, while Customs collections increased by 19.69% to P643.6 billion.

BTr said its income contracted by 43% to P125.3 billion “mainly due to lower dividends on National Government shares of stocks, interest on advances from GOCCs (government-owned and -controlled corporations), and other government service income.”

Nontax revenues from the Treasury plummeted by 42.95% to P125.3 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the government should raise its revenue collections after seeing a modest year-on- year decline in 2021.

“There is a need to further increase tax revenue collections, in view of the further reopening of the economy towards greater normalcy,” he said via Viber.

UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message fiscal consolidation should be the priority of the next administration.

“Successful implementation of all the presidential candidates’ promises so far would definitely have budget implications moving forward,” he said.

The record-high deficit was expected given that pandemic-related complications had caused soft revenue streams, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said.

“Government officials were actually holding back on spending to avert a substantial hit on the debt-to-GDP ratio which settled at a precarious level of 60.5% of GDP,” he said via Viber.

“The challenge for the incoming administration would be to find a way to improve our fiscal position in the near term while still ensuring that fiscal authorities provided enough support for the recovery.”

Philippines’ manufacturing PMI highest in over 3 years

March 2, 2022 | 12:32 am

MANUFACTURING ACTIVITY in the Philippines rebounded to its highest level in over three years in February, as demand and production picked up amid the further easing of mobility restrictions.

The IHS Markit Philippine Manufacturing Purchasing Managers’ Index (PMI) jumped to 52.8 in February, from 50 in January. This was the highest PMI reading since the 53.2 posted in December 2018.

A reading above 50 indicates an improvement in conditions for the manufacturing sector versus the previous month, and below the threshold means the opposite.

“February data revealed a return to growth for the Philippine manufacturing sector with the PMI rising to the highest in over three years. There were many key takeaways from the latest data but central to the improvement were solid expansions in both output and new orders,” Shreeya Patel, an economist at IHS Markit, said in the report released on Tuesday.

She attributed the strong growth to looser restrictions in February.

Metro Manila and nearby provinces were under a more relaxed Alert Level 2 in February, as the Omicron-driven surge in coronavirus infections subsided.

Manufacturing companies’ output and new orders increased, IHS Markit said. Production grew at the quickest pace in more than three years, as restrictions eased and more raw materials were widely available, it added.

New orders went up as companies enjoyed improved domestic demand. Exports also expanded in February, ending four straight months of contraction.

IHS Markit noted a sharp rise in purchasing activity among manufacturers who are anticipating greater demand in the next few months.

However, Ms. Patel flagged concerns over high prices and employment levels at manufacturing companies.

“Inflationary pressures were historically elevated which forced firms to push through hikes in selling charges,” she said. The higher prices of energy, raw materials, fuel and transport fueled a sharp rise in costs during the month.

Employment levels also continued to drop, with the latest decline the quickest in five months.

“Voluntary resignations continued, which has been seen since the pandemic hit the Philippines’ economy two years ago. Fortunately, production does not seem to have been impacted by staff shortages and firms are keeping backlogs at bay,” Ms. Patel said.

Philippine manufacturers continue to be optimistic about their long-term growth prospects, but the degree of optimism was below the series average, IHS Markit said.

SECOND IN ASIA
The Philippines’ PMI was the second-best reading among six Southeast Asian countries for the month, after Vietnam’s 54.3. It also exceeded the region’s average of 52.5.

Thailand, Indonesia and Malaysia all expanded in February, while Myanmar remained in contraction.

“Manufacturing conditions in ASEAN (Association of Southeast Asian Nations) improved strongly in February, with the PMI remaining among the highest on record as output rose solidly again amid the fastest upturn in new work since last October,” Lewis Cooper, an IHS Markit economist, said in a separate report.

Mr. Cooper said the survey’s price indicators showed a sharp increase in costs facing ASEAN goods manufacturers. “As a result, firms again raised their selling prices, with the rate of inflation the steepest on record,” he added.

Alex Holmes, Asia economist of Capital Economics, said the February PMIs showed that the Omicron surge had less of an economic impact than previous waves and that the industry would strengthen in the first quarter.

“The strong rebound in the Philippines PMI in February, as cases fell back, suggests growth will be quick to pick up again,” he said in a note.

Mr. Holmes said demand for Asian goods might ease in key markets. “But while there are signs of fewer new backlogs, this has only recently begun, and the sheer size of existing unmet orders means that producers will be kept busy for months to come. This will cushion the blow and means regional industrial output and exports are set to hold up well for at least the next couple of quarters,” he added. — Tobias Jared Tomas

Gov’t raises P458 billion from latest RTB offering

March 2, 2022 | 12:31 am

THE GOVERNMENT raised P457.8 billion via its offer of five-year retail Treasury bonds (RTBs) that ended on Monday.

The Bureau of the Treasury (BTr) said P457.4 billion of the total amount raised was fresh funds or “new money.” The remaining P259.5 million was from the bond exchange program. It was the 27^th issuance of RTBs, and the first this year.

“By our funding activities in the domestic space, we are shielding our debt portfolio from volatility in the global financial markets, all while taking advantage of the commitment of the Bangko Sentral ng Pilipinas of supporting the country’s economic recovery,” National Treasurer Rosalia V. de Leon said in a statement on Tuesday.

The bond offer was launched on Feb. 15, with the Treasury raising an initial P120.764 billion from the rate-setting auction.

The retail Treasury bonds fetched a coupon rate of 4.875%, with settlement on March 4. The maturity date is March 4, 2027.

A bond trader said demand was within the expected range.

“It could have been more if not for the external factors during the offer period,” the trader said via Viber. External factors include the oil price surge and the anticipated US Federal Reserve rate hike this month.

Proceeds from the issuance would be used to fund coronavirus disease 2019 (COVID-19) recovery plans, the BTr said.

The five-year bonds were sold in denominations of at least P5,000 and in multiples of P5,000 thereafter.

Holders of fixed-rate Treasury notes maturing on March 14 and July 4 also swapped their holdings for the RTBs. The minimum exchange offer was P5,000.

The Treasury offers retail bonds to small investors who want low-risk, higher-yielding savings instruments backed by the National Government.

“The BTr’s pursuit of financial literacy and inclusion continues to be the backbone of many of our investor-centered initiatives,” Ms. De Leon said.

“This year, we strive to improve not only our ordinary investors’ access to government securities but to also help them understand the value behind developing a habit of investing.”

In November 2021, the government raised P360 billion from its offering of five-and-a-half-year RTBs. Of the total amount, P330.5 billion was raised from fresh funds, while the rest was from the bond exchange program.

It was the Treasury’s second RTB offering of 2021 after it raised P463.3 billion from three-year retail debt in February. — Jenina P. Ibañez

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