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Remittances made faster and safer with Visa

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For better or worse, Filipino culture nowadays is inextricably linked with overseas Filipino workers. Almost everyone has or knows someone who has family and relatives working abroad as their primary source of income, and many young Filipinos today continue to dream of doing the same.

The latest data released by the Bangko Sentral ng Pilipinas (BSP) showed cash remittances sent through banks stood at $2.75 billion in June, the biggest amount since December of last year. The growth in cash remittances was also the fastest in seven months or since the 5.1% rise seen in November 2021.

“The expansion in cash remittances in June 2022 was due to the growth in receipts from land-based and sea-based workers,” the BSP said in a statement.

In June, remittances from land-based workers jumped by 4.9% year on year to $2.23 billion, while money sent by sea-based workers increased by 2.6% to $514 million. For the first six months of 2022, cash remittances rose by 2.9% to $15.35 billion, from $14.91 billion in the comparable period last year.

In a separate discussion paper titled, “Remittances from Overseas Filipinos in the Time of COVID-19: Spillovers and Policy Imperatives”, the BSP re-emphasized the importance of remittances as a driver of growth in the Philippine economy.

“Remittances will continue to be a significant force in the Philippine economy over the medium term. For one, rising incomes in host countries will continue to serve as a magnet to those whose skills are in demand overseas,” the BSP wrote.

The BSP further projected cash remittances to grow 4% this year, after the 5.1% rise to a record $31.418 billion in 2021. This is because the significance of cash remittances will only continue to grow as global demand for overseas workers, particularly medical workers, grow with the reopening of multiple economies worldwide.

The massive role of remittances in Filipino life demands a reliable, efficient, and most importantly, secure way of conducting them. Visa, the world leader in digital payments, provides a fast, convenient, and safe way of doing just that wherever, whenever.

With its reputation of facilitating financial transactions across a global network of consumers, merchants, financial institutions and government entities across more than 200 countries and territories, Visa ensures that sending and receiving money is simple and easy, whether for two individuals are standing in the same room or organizations operating on different sides of the globe.

Anyone can send a Visa Personal Payment through over 100 financial institutions in 20 countries to over a billion enabled Visa cardholders. It’s as easy as entering the recipient’s 16-digit Visa card number and the amount you want to send. The funds will be then be instantly credited to the recipient’s Visa credit, debit or prepaid card.

The recipient can use the received funds at any Visa merchant or ATM. When sent to a Visa credit card, the received amount is offset against the card’s outstanding balance.

With a mission is to connect the world through the most innovative, convenient, reliable and secure payments network, Visa enables individuals, businesses and economies to thrive. And with how important remittances are to the Philippine economy, allowing a fast and secure means of sending and receiving them not only will ensure the livelihood of countless Filipino families all over the country, but energize its onward march towards progress and economic development.

Visit the website to know more about Visa’s remittance partners.

 

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Gas crisis set to worsen after Europe burns through winter stocks

UNSPLASH

HELSINKI/BRUSSELS — Europe may face an even more acute energy crunch next year after draining its natural gas tanks to get through the cold of this winter, the head of the International Energy Agency (IEA) said on Wednesday, as the European Union (EU) looks for ways to ease the crisis.

European countries have filled storage tanks to around 90% of their capacity after Russia cut gas supplies in response to Western sanctions imposed over its invasion of Ukraine.

Gas prices, which surged in the months after the invasion in February, have retreated. But that could be short-lived as countries compete to buy liquefied natural gas (LNG) and other alternatives to Russian pipeline deliveries.

To help tackle the pain, the EU is considering a gas price cap, an issue that has divided the 27-nation bloc as some countries worry it could make securing supplies harder.

“With gas storages almost at 90%, Europe will survive the coming winter with just some bruises as long as there are no political or technical surprises,” said Fatih Birol, executive director of the Paris-based IEA.

The real challenges facing Europe, which had historically relied on Russia for around 40% of its natural gas, will begin in February or March when storage needs to be refilled after high winter demand has drained them to 25%–30%.

“This winter is difficult but next winter may also be very difficult,” Mr. Birol told journalists in Finland.

European governments have moved to cushion consumers from the impact of higher prices and on Wednesday, Germany said it will subsidise power bills next year by paying just under 13 billion euros ($12.8 billion) towards the usage fees charged by the four high-voltage transmission grid companies (TSOs).

The fees form part of electricity bills, accounting for around 10% of overall costs for retail customers and a third for industrial companies in sectors such as steel or chemicals.

Berlin’s intervention stabilizes the fees, which otherwise would have risen three-fold given runaway wholesale power prices and rising operational costs for the TSOs, Germany’s economy minister Robert Habeck said.

Until the Ukraine war broke out in late February, the Nord Stream 1 pipeline beneath the Baltic Sea from Russia to Germany was one of western Europe’s main sources of gas.

Nord Stream 1 comprises two separate lines as does Nord Stream 2, which was filled with gas, but never allowed to deliver supplies to Europe as Germany suspended authorization just before Russia invaded Ukraine on Feb. 24.

Three of the four lines have been disabled by what the West and Russia say was sabotage causing huge leaks and the Danish authorities said the fourth was being depressurized on Tuesday.

SABOTAGE?

President Vladimir Putin on Friday blamed the United States and its allies, allegations rejected by Washington. Russia has condemned what it called “stupid” theories in the West that it sabotaged the pipelines itself in explosions last week.

The Kremlin said on Wednesday that Russia must be part of investigations into the incidents, while one of Putin’s allies said they recalled the US Central Intelligence Agency-backed attacks on oil infrastructure in Nicaragua in 1983.

European Commission chief Ursula von der Leyen for her part said EU countries needed to step up protection of their critical infrastructure by conducting stress tests and using satellite surveillance to detect potential threats.

She was speaking in the European Parliament ahead of a meeting of leaders of the 27 EU countries on Friday in Prague when they will debate the EU price cap plan.

The details have yet to be worked out, but the idea has support from the majority of countries that see it as a way to deal with inflation. It has, however, faced opposition from Germany, Denmark and the Netherlands that cite concerns it will make it harder to secure supplies.

Ms. Von der Leyen said in her speech countries should also start jointly buying gas to avoid EU member states bidding against each other on world markets and driving prices still higher.

Earlier tensions in the gas market had eased as Russia’s energy company Gazprom on Wednesday resumed gas exports to Italy via Austria after resolving an issue over guarantees that had led to the suspension of flows over the weekend.

However, Deputy Prime Minister Alexander Novak said on Wednesday that Russia may cut oil production in order to offset negative effects from price caps imposed by the West over Moscow’s actions in Ukraine.

The price cap plan agreed by Group of Seven wealthy nations calls for participating countries to deny insurance, finance, brokering, navigation and other services to oil cargoes priced above a yet-to-be-determined price cap on crude and oil products. — Reuters

Hotel prices to rise at lower rate in 2023 in major business events cities — report

JOÃO BARBOSA/UNSPLASH

MADRID — Hotel prices will keep increasing in 2023 in most of the key cities for business events worldwide as demand for in-person meetings after pandemic disruptions grows, though at a slower pace due to a worsening economic outlook, American Express Global Business Travel said in its annual forecast. 

Corporate travel managers and buyers have been dealing with difficulties in securing accommodation at good prices, while hotels struggle with inflation and talent shortages amid a rebound in tourism and business events, the consulting firm said. 

“While hotels can continue to benefit in 2023 from pent up demand for in-person meetings and events, the global economic outlook is unlikely to allow them to achieve rate rises on the same scale as seen in 2022”, the report added. 

Rates in London are forecast to rise by up to 6.2% next year as hotels face inflationary cost increases for labor and energy, the study said. In Paris, room rates may rise up to 10%, as the French capital is set to host events such the Rugby World Cup and will be in preparations for the 2024 Summer Olympics. 

New York should see hotel prices increase by 8.2% in 2023, driven by demand for in-person meetings and sustained by resilient leisure demand, it said. 

Cities like Madrid and Barcelona will increase hotel prices in line with the rest of the main business cities in Europe, with average hikes of around 7.2% and 6.6%, respectively. 

The company said forecasting hotel prices after two years of pandemic-related travel disruptions and uncertainty over the global economy was challenging, and that the data team combined historical transaction data with macroeconomic factors to generate the prices forecast for 2023. — Reuters

World Bank says goal of ending extreme poverty by 2030 unlikely to be met

PHILSTAR

WASHINGTON — Shocks related to the coronavirus disease 2019 (COVID-19) pandemic and the war in Ukraine mean the world is unlikely to meet a longstanding goal of ending extreme poverty by 2030, the World Bank said in a new report released on Wednesday.

The COVID-19 pandemic marked a historic turning point after decades of poverty reduction, the report said, with 71 million more people living in extreme poverty in 2020. 

That meant 719 million people—or about 9.3% of the world’s population—were living on just $2.15 a day, and the ongoing war, reduced growth in China and higher food and energy prices threatened to further stall efforts to reduce poverty, it said. 

Barring sharp growth gains, an estimated 574 million people, or about 7% of the world’s population, would still be subsisting at that same income level by 2030, mostly in Africa, it said. 

World Bank President David Malpass said the new Poverty and Shared Prosperity report showed the grim outlook facing tens of millions of people, and called for major policy changes to boost growth and help jumpstart efforts to eradicate poverty. 

“Progress in reducing extreme poverty has essentially halted in tandem with subdued global economic growth,” he said in a statement, blaming inflation, currency depreciations and broader overlapping crises for the rise in extreme poverty. 

Indermit Gill, the World Bank’s chief economist, said failure to reduce poverty in developing countries would have profound implications for the world’s broader ability to combat climate change and could unleash large new flows of migrants. 

It would also limit growth in advanced economies, since extreme poverty rates would prevent these often heavily populated developing countries from becoming bigger consumers of goods on the global market. 

“If you care about prosperity in advanced economies, sooner or later you want these countries to have large markets, countries like India, countries like China,” he said. “You also want these countries to grow so they actually start to become sources of demand and not just supply.” 

To change course, the World Bank said countries should boost cooperation, avoid broad subsidies, focus on long-term growth and adopt measures such as property taxes and carbon taxes that could help raise revenue without hurting the poorest people. 

It said poverty reduction had already slowed in the five years leading up to the pandemic, and the poorest people clearly bore its steepest costs. The poorest 40% of people saw average income losses of 4% during the pandemic, twice the losses experienced by the wealthiest 20%, the World Bank said. 

Government spending and emergency support helped avert even bigger increases in poverty rates, the report showed, but the economic recovery had been uneven, with developing economies with fewer resources spending less and achieving less. 

Extreme poverty was now concentrated in sub-Saharan Africa, which has a poverty rate of about 35% and accounts for 60% of all people in extreme poverty, the report said. — Reuters

 

433 people win a lottery jackpot—impossible? Probability and psychology suggest it’s more likely than you’d think

PHILIPPINE CHARITY SWEEPSTAKES OFFICE/FACEBOOK

More than a few eyebrows were raised at the weekend when it was reported a staggering 433 people won the jackpot of a government-backed lottery in the Philippines—sharing in P236 million pesos.

Perhaps unsurprisingly, this has led to calls for an enquiry into how this seemingly “near-impossible” outcome could have arisen.

However, a basic understanding of probability and human psychology helps explain why this outcome isn’t as implausible as you might think.

HOW THE LOTTERY WORKS

Each person to purchase a lottery ticket picks six numbers between 1 and 55. The winning jackpot sequence is drawn at random. A ticket wins the jackpot if the six numbers on it are the same as the six numbers drawn.

Each ticket therefore has:

  • a six in 55 chance of getting the first number drawn, multiplied by
  • a five in 54 chance of getting the second, multiplied by
  • a four in 53 chance of getting the third, multiplied by
  • a three in 52 chance of getting the fourth. multiplied by
  • a two in 51 chance of getting the fifth, multiplied by
  • a one in 50 chance of getting the last.

Together, this means any given ticket has a 1 in 28,989,675 chance of winning the jackpot. So how is it possible for 433 tickets to have done this?

WHAT ARE THE CHANCES

Without knowing how many tickets were actually sold, we can’t know the exact probability of getting 433 winning tickets.

One widely circulated estimate this week assumed there were around 10 million ticket sales, and claimed the chances were as little as “one out of one followed by 1,224 zeros”—a truly absurd number. This is smaller than the chances of flipping a typical coin 2,800 times in a row and seeing tails every time.

However, this estimate ignores substantial empirical evidence about human behavior and psychology. It naively assumes each person purchasing a ticket has an equal chance of selecting each of the 28,989,675 possible number combinations.

Across the world, it has been clearly observed that some combinations are vastly more popular than others.

This is why some experts often advocate using a random number generator when cashing a ticket. While it won’t increase your chance of matching the winning values, it may reduce your chance of having to share any winnings with multiple other gamblers if you do.

MORE PSYCHOLOGY THAN PROBABILITY

A closer look at the winning numbers—9, 18, 27, 36, 45 and 54—may give some clue as to a possible explanation. Those of you who paid attention when learning your nine times table will recognize a clear pattern in the apparently randomly drawn numbers.

It’s likely this pattern is what has appealed to people, and why more people will have chosen this particular sequence of numbers. Rather than providing a smoking gun to suggest impropriety, this pattern may indeed explain the high number of winning tickets.

A similarly unusual spike of winners was observed in the United Kingdom in 2018, when five of the six numbers were multiples of seven. In 2020, a streak of consecutive numbers (5, 6, 7, 8, 9, 10) produced multiple jackpot winners in South Africa.

Also, you have to remember that the winning sequence in the Philippines lotto is no less likely to be drawn than any other sequence of numbers. The chances of 9, 18, 27, 36, 45 and 54 being drawn are exactly the same as, say, 1, 18, 19, 28, 30 and 46.

Yet many people would (wrongly) perceive the latter sequence to be more likely to occur at random.

In general, humans have been shown to be surprisingly poor judges of what a string of truly random numbers would look like. In fact, they have even been outsmarted at simple probabilistic pattern-matching by the humble pigeon.

In one study, participants were more than twice as likely to select an odd number than an even number when asked to think of a random number, suggesting that some numbers may “feel” more random than others, despite the obvious absurdity of this.

COULD FOUL PLAY BE INVOLVED

The fact that 433 winning tickets were sold is far from convincing evidence of any wrongdoing. It would be interesting to know how many people bought this same pattern of numbers in previous weeks, or which other combinations also attract several hundred ticket sales.

Based on anecdotal evidence from other lotteries, this number may not at all be unusual.

We also need to consider the many thousands of similar lotteries drawn around the world each year, almost all of which receive no international press. While such outcomes are highly improbable for any given draw, the huge number of total lotteries means it’s actually quite likely at least one of them will produce a remarkable outcome by chance alone.

There are often accusations when remarkable lottery results are announced, perhaps most infamously when FC Barcelona legend Xavi was announced the winner of a private lottery shortly after moving to Qatar.

But overall it is highly plausible the only real statistical anomaly at play here is how so many people’s perception of randomness drew them to the same number pattern. That said, I won’t be rushing to buy a lottery ticket any time soon. 

Stephen Woodcock is an associate professor of mathematical sciences at the University of Technology Sydney in Australia.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Marcos open to buying Russian fuel, proposes new Myanmar approach

MANILA – Philippine President Ferdinand Marcos Jr on Wednesday said his nation may need to turn to Russia to fulfil its fuel needs amid rising global energy prices, bucking pressure from Western allies for countries to shun Moscow.

Speaking to the Manila Overseas Press Club, Marcos, who is also agriculture minister, said the Philippines may also deal with Russia for supply of fertiliser.

“We take we take a very balanced view because the truth of the matter is, we may have to deal with Russia for fuel, for fertilizer,” said Marcos.

The Philippines like many countries is grappling with soaring inflation, due to supply woes fanned by Russia’s invasion of Ukraine. The Philippines, a U.S. defence ally, has not imposed any sanctions on Russia.

Marcos, the son and namesake of the ousted late strongman who ruled the Philippines for two decades, also said he wanted his country to play a key role in promoting regional peace, amid challenges posed by North Korea and China-Taiwan tensions.

“We hope to be part of leading, the ones that are leading the effort for peace,” he said.

He said he would propose a new approach to the crisis in Myanmar at an upcoming meeting of the Association of Southeast Asian Nations (ASEAN) in November, which could involved engaging the military government directly.

Myanmar’s ruling junta has been barred from regional summits over its failure to implement a five-point peace plan it agreed with ASEAN in April last year, after violent turmoil erupted in the country following a military coup.

The generals have been outraged by ASEAN’s unusually tough stand and have said they intend to comply with its plan, but will not agree to its call to hold dialogue with a pro-democracy resistance movement they call “terrorists”.

“It’s time to put together, to put forward some concrete proposals on what we can do to at the very least to bring at least representatives of the military government to the table so we can begin to talk about these things,” Marcos said.

On Wednesday, Cambodia, the current ASEAN chair, confirmed to Reuters that a request had been sent to the State Administrative Council, as the junta is known, that it nominate a non-political figure to represent Myanmar at the upcoming leaders’ summits.

“Again, the SAC has refused to send anyone to the summits,” Cambodia Foreign spokesperson Chum Sounry said. — Reuters

WTO warns ‘darkened’ trade outlook could deteriorate further

REUTERS

GENEVA — The World Trade Organization (WTO) forecast a slowdown of global trade growth next year as sharply higher energy and food prices and rising interest rates curb import demand, and warned of a possible contraction if the war in Ukraine worsens.

The Geneva-based trade body said on Wednesday that merchandise trade would increase by 3.5% this year, up from its April estimate of 3.0%. However, for 2023, it sees trade growth of just 1.0%, compared with a previous forecast of 3.4%.

The WTO said there was high uncertainty over its forecasts. It provided a band of trade growth expansion of 2.0% to 4.9% for this year and of -2.8% to 4.6% for 2023.

“The picture for 2023 has darkened considerably,” WTO director-general Ngozi Okonjo-Iweala told a news conference, adding that risks for next year’s forecast were more on the downside.

“If the war in Ukraine worsens, rather than gets better, that’s going to have a huge impact,” she said.

Weather events hitting food-producing regions or damaging energy export infrastructure could further hit trade growth, along with weakness in China, where coronavirus disease 2019 (COVID-19) outbreaks have disrupted production.

She said the world needed a more diversified and less concentrated base for production of goods and services, which should boost growth, increase resilience and promote long-term price stability by mitigating exposure to extreme weather events and local disruptions.

She also warned against the “tempting response” to resort to trade restrictions, saying curbs imposed by various countries on food and fertilizer exports had dropped from 57 to 42 in the past month, but then rose back to 53 due to new measures.

“These would only deepen inflationary pressures and reduce living standards and would likely make us more rather than less vulnerable to the crisis we are grappling with,” she told a news conference.

The WTO’s forecast does not cover services, but the WTO said tourist arrivals were likely to fall after tripling in the first seven months of 2022. Lower shipping rates, it said, might have been greeted before as a sign of supply chains improvements, but was probably more the result of cooling demand. — Reuters

Unemployment rate inches up to 5.3% in Aug.

The ranks of jobless Filipinos went up 79,000 month on month in August, bringing the total unemployed that month to 2.681 million, preliminary data from the Philippine Statistics Authority showed.

This translated to an unemployment rate of 5.3%, rising from 5.2% in July but lower than 8.1% in August last year.

Meanwhile, the size of the Filipino workforce expanded by 557,000 to 50.551 million in August.

New entrants decreased by 271,000 on a monthly basis to 1.018 million.

Employed Filipinos in August picked up by 478,000 to 47.870 million from 47.391 million in July.

This was equivalent to an employment rate of 94.7%, slightly lower than 94.8% in July.

However, underemployed Filipinos rose by 488,000 to 7.031 million in August.

This put the share of the underemployed Filipinos to the total employed population that month at 14.7%, the highest in five months or since 15.8% in March.

Services remained the leading employer in August after cornering 59.9% share. Agriculture and industry logged employment shares of 22.6% and 17.5%, respectively.

An average Filipino worker worked for 40.5 hours a week in August, unchanged from July. — MIUC

Inflation zooms to 6.9% in Sept.

A jeepney driver shows peso bills in this file photo. Commuters began paying higher public transport fares on Monday. — PHILIPPINE STAR/ WALTER BOLLOZOS

INFLATION zoomed to its fastest pace in over 13 years in September, as food, utilities and transport costs spiked.

Preliminary data from the Philippine Statistics Authority (PSA) showed headline inflation accelerated to 6.9% in September, from 6.3% in August and 4.2% in September 2021.

The latest inflation print matched the 6.9% logged in September and October 2018. It was also the fastest in more than 13 years or since the 7.2% in February 2009 at the height of the global financial crisis.

Headline inflation rates in the Philippines

“If you recall in 2008 global financial crisis there were a lot of high inflation rates,” National Statistician Claire Dennis S. Mapa said during the briefing on Wednesday.

September also marked the sixth straight month that inflation breached the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target this year.

The latest headline figure was higher than the 6.7% median in a BusinessWorld poll conducted last week.

“The September 2022 inflation outturn of 6.9% is within the BSP’s forecast range of 6.6 to 7.4%, consistent with the BSP’s assessment of inflation remaining above target over the near term as price pressures broaden and signs of further adverse second-round effects emerge,” the central bank said in a statement.

On a monthly basis, headline inflation inched up 0.4% in September. Stripping out seasonal factors, inflation rose by 0.6% month on month.

This brought average inflation in the nine months to September to 5.1%, higher than 4% a year ago. However, it was still below the BSP’s 5.6% forecast for 2022.

Core inflation, which discounts volatile prices of food and fuel, eased to 4.5% year on year in September but still elevated from 2.6% a year earlier.

Core inflation rates in the Philippines

Out of 13 commodities, nine reported faster inflation in September.

Commodities that contributed to the faster headline inflation in September were the heavily weighted food and non-alcoholic beverages (7.4% annually from 6.3% in August); housing, water, electricity, gas and other fuels (7.3% from 6.8%); and transport (14.5% from 14.6%).

Inflation in the National Capital Region (NCR) jumped to 6.5% in September, from 5.7% in August, while inflation in the areas outside Metro Manila surged to 7% from 6.5% in the prior month.

Of the 17 regions in the country, nine posted inflation faster than the national average of 6.9%. It was led by Zamboanga Peninsula (9.6% in September from 9.1% in August), Davao Region (9.6% from 8.9%), and Caraga (8.2% from 7.5%).

Similarly, inflation as experienced by the bottom 30% income households climbed to 6.7% in September from 5.9% in August. It averaged 4.6% in the nine months to September, lower than 4.9% average last year. However, this segment still uses the consumer price index under 2012 prices compared with the rebased 2018 prices for the national inflation rate.

The National Economic and Development Authority (NEDA) said inflation has been accelerating not just in the Philippines but in other countries as well due to robust domestic demand, high commodity prices, supply chain disruptions, weather disturbances and the strong US dollar.

“The government’s priority is to make sure that there is sufficient and affordable food supply for every Filipino family,” NEDA Director-General and Socioeconomic Planning Secretary Arsenio M. Balisacan was quoted in the statement as saying.

Security Bank Corp. Chief Economist Robert Dan J. Roces attributed the higher inflation to the faster rise in prices of food and beverages, as well as housing, electricity and gas.

“The September print is the first full month where the impact of the [peso’s] depreciation to current levels were felt, along with initial price effects of the recent typhoons. As such, the country remains vulnerable to inflation shocks caused by exchange rate swings,” Mr. Roces said via e-mail.

The Philippine peso breached multi-year record lows in September. It traded to P57 levels against the US dollar for the first time on Sept. 6, and crossed the P58-to-a-dollar territory on Sept. 20. The local unit finished the month at P58.625 against the greenback.

Philippine National Bank (PNB) economist Alvin Joseph A. Arogo said in a separate e-mail the September inflation reflected the impact of the supply shortages “caused by the combination of the delayed effect of higher fertilizer prices and immediate disruption from Typhoon Karding,” as well as rising fuel and transport costs.

Latest government data showed Super Typhoon Karding caused over P3 billion in agricultural damage. Affected regions include Ilocos, Cagayan Valley, Central Luzon, Calabarzon, Bicol, Cordillera Administrative Region, and Western Visayas.

‘REMAIN ELEVATED’
“Inflation is expected to remain elevated for the last quarter of 2022 with the recent fare hike and the impact of Typhoon Karding on food supply,” the Department of Finance (DoF) said in a statement.

The DoF said full-year inflation is still expected to fall within the 4.5-5.5% target by the interagency Development Budget Coordination Committee.

For its part, the BSP cited several upside risks that cloud the near-term inflation outlook, such as “potential impact of higher global non-oil prices, pending petitions for further transport fare hikes, the impact of weather disturbances on prices of food items, as well as the sharp increase in the price of sugar.”

PSA’s Mr. Mapa said October inflation may further rise due to the higher public transport fares that took effect this month.

“The transport commodity group, which carries 9% weight in inflation, we are seeing spillover effects on other subgroups, such as food. The PSA is monitoring this in our data collection, the fare hike in October and the rise in food prices,” Mr. Mapa said.

On Monday, the Land Transportation Franchising and Regulatory Board implemented fare hikes for public utility jeepneys and public utility vehicles, taxis, and Transport Network Vehicle Service.

“For inflation, we continue to expect a possible peak in the headline print this October before slowing in the final two months mostly on base effects,” Security Bank’s Mr. Roces said.

PNB’s Mr. Arogo said his average inflation forecast for the fourth quarter is 7.3%.

“The second-round effects of the global commodities spike earlier in the year and impact of the depreciation of the peso against the US greenback on imported products will likely still be felt in the coming three months. This is evidenced by the upward trend in the price growth in housing & utilities and restaurants & accommodation,” he said.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco raised his average inflation forecast for 2022 to 5.4% from 5%, after the release of the September inflation data.

“The BSP won’t be sitting again until November and, if we’re right about September being the peak in inflation and the underlying sluggishness in the economy — the [third-quarter] GDP report is due before the next Board meeting — then an imminent pause in the tightening cycle will be play,” Mr. Chanco said.

The central bank said it is “prepared to take further policy actions to bring inflation toward a target-consistent path over the medium term.”

The Monetary Board has raised rates by 225 bps so far since May. It will have its next policy-setting meeting on Nov. 17. — Bernadette Therese M. Gadon

PHL launches dollar bond offering

REUTERS

THE PHILIPPINES returned to the global bond market again this year via a three-tranche, US dollar-denominated bond offering.

This is the first global bond offering under the Marcos administration, which took office on June 30.

Documents from the Bureau of the Treasury (BTr) showed the offering consists of dollar bonds with tenors of five years and 10.5 years, as well as 25-year green or sustainability bond, at benchmark size or at least $500 million.

The initial price guidance for the five-year and 10.5-year tenors are set around the level of Treasuries plus 155 basis points (bps) and 220 bps, respectively, the document showed.

The 25-year sustainability bonds are set around 6.550%.

Proceeds of the bonds would be used for general budget financing, as well as the financing or refinancing of assets in line with the Philippines’ sustainable finance framework.

BofA Securities, Goldman Sachs, HSBC (B&D), JPMorgan, Morgan Stanley, SMBC Nikko, Standard Chartered Bank, and UBS have been tapped as joint bookrunners. The latter two are designated as sustainability structuring banks.

S&P Global Ratings assigned a “BBB+” long-term foreign currency rating to the US dollar senior unsecured notes to be issued by the Philippines, while Fitch Ratings gave it a “BBB” rating.

Moody’s Investors Service also assigned the notes a senior unsecured rating of “Baa2” which mirrors the Philippine government’s issuer rating.

The five-year notes will mature in October 2027, the 10.5-year bonds in April 2033, and the 25-year sustainability bonds in October 2047.

Finance Secretary Benjamin E. Diokno previously said that 69% of the current debt stock was sourced domestically. The government targets to increase that to 75% this year, and to 80% in the longer term, to minimize foreign exchange risks.

In a Viber message to reporters, Mr. Diokno said that while 75-25 is the preferred mix, “sometimes one has to be opportunistic.”

The government raised $559 million from a yen-denominated Samurai bond issue in April, and sold $2.25 billion worth of dollar-denominated notes in March.

Last year’s offshore debt issues by the Philippines included $3-billion dual-tranche global bonds, the 2.1-billion-euro triple-tranche global bonds, and the 55-billion-yen Samurai bonds.

The government will borrow from local and external sources to help fund a budget deficit capped at P1.65 trillion this year, equivalent to 7.6% of GDP.

The National Government’s outstanding debt rose to a record-high P13.02 trillion at the end of August due to additional domestic borrowings and a weak peso.

As of the second quarter, the Philippines’ debt-to-gross domestic product (GDP) ratio was at 62.1%, above the 60% threshold deemed sustainable for developing countries. The government intends to bring it down to 52.5% by 2028. — Diego Gabriel C. Robles

PHL banks’ NPL ratio falls to 23-month low

PHILIPPINE STAR/MICHAEL VARCAS

By Keisha B. Ta-asan

SOURED LOANS held by banks fell for a sixth straight month in August, bringing the nonperforming loan (NPL) ratio to a 23-month low amid the economy’s continued reopening.

However, the decline in NPLs may slow in the coming months due to the recent rate hikes by the Bangko Sentral ng Pilipinas (BSP), economists said.

Latest data from the BSP showed the Philippine banking sector’s gross NPL ratio inched down to 3.53% as of end-August from 3.57% as of end-July and 4.51% in the same month last year. 

The NPL ratio in August was the lowest in 23 months or since 3.51% in September 2020.    

Bad loans declined by 15% year on year to P418 billion as of end-August. It was also 0.5% lower than the P420.254 billion seen at end-July.

Loans are considered nonperforming once they remain unpaid for at least 90 days after the due date. They are deemed as risk assets given borrowers are unlikely to settle such loans.

“Continued improvement of cash flows for households and firms due to economic reopening helped borrowers service payments and thus NPLs continued to slide,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail on Wednesday.   

Metro Manila and some provinces have been under the most lenient alert level since March, which meant businesses are now allowed to operate at full capacity.

“We think that the continuous decline of the NPL ratio is indicative of improving business conditions and robust economic recovery post-pandemic,” China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.

“The increase in economic activities as the economy further reopened likely boosted borrowers’ incomes and cash flows, allowing them to settle their loans on time,” she added.   

BSP data showed banks’ gross loan portfolio grew by 8.72% to P11.84 trillion in August from P10.89 trillion a year ago. It also went up by 0.5% from the P11.77 trillion in July.      

Meanwhile, past due loans fell by 14.4% year on year to P496.135 billion in August, bringing the ratio to 4.19% from 5.32% a year ago.

Restructured loans rose by 4.4% to P319.892 billion, which accounted for 2.7% of banks’ loan portfolio. 

Banks continued to beef up their loan loss reserves to P418.059 billion in August from P410.848 billion a year ago. This brought the ratio to 3.53% from 3.77% a year earlier.   

The industry’s NPL coverage ratio improved to 100% from 83.52% in 2021.

However, rising interest rates may slow the decline in bad loans.

“Moving forward, we expect the NPL ratio to remain on a downward trend but the pace of decline may slow, as higher interest rates and inflation as well as the slowdown in the economy continue to pose credit risks,” Ms. Velasquez said.   

The consumer price index at the national level climbed by 6.9% year on year last month. It was the sixth straight month that inflation exceeded the central bank’s 2-4% target.

To tame inflation, the BSP has raised benchmark interest rates by a total of 225 basis points so far this year, bringing the overnight reverse repurchase rate to 4.25%.

The central bank earlier said the NPL ratio of Philippine banks might peak at 8.2% this year. The ratio stood at 3.99% as of end-December 2021, as the economy started to reopen.

Customs exceeds collection target for 9th straight month

Agents from the Bureau of Customs - Customs Intelligence and Investigation Service inspected a sugar warehouse in Quezon City, Aug. 23, 2022. — COURTESY OF BUREAU OF CUSTOMS

THE BUREAU of Customs (BoC) said on Wednesday that it exceeded its target for a ninth straight month in September, amid improved collection and higher duties on oil.

In a statement, the BoC said September collections hit P79.5 billion, exceeding the target of P61.9 billion by 28.4%. This is the ninth consecutive month it has exceeded its monthly target.

“This shows an increase of P21.9 billion in garnered revenues and a 38.1% collection improvement as compared to September of last year,” the BoC said.

In the January to September period, the BoC collected P638.7 billion, surpassing its collection target for the period by 17.8%.

Year on year, Customs collections increased by 35.9%, as oil prices soared.

As of end-September, the BoC has already collected 88.5% of its P721.5-billion target for this year.

The BoC urged all of its offices and collection districts to sustain its performance throughout the year by taking advantage of its modernization programs and reform initiatives of the Marcos administration.

The BoC is set to implement an online processing payment system via selected banks this month called the Philippine Clearing House Corp. Payment Application Secure System Version 6.0.

Last month, Budget Secretary Amenah F. Pangandaman said that P3.56 billion of the 2023 proposed national budget will be allocated to digital transformation programs of the BoC and the Bureau of Internal Revenue.

The BoC was given a P765.59-billion collection target for 2023, up by 6.11%. — D.G.C.Robles

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