LONDON — Improving digital trade would provide huge opportunities for British businesses and help boost economic growth, the government’s Board of Trade said, setting out how it aims to become a world leader in modern services and online goods.
In a report on digital trade to be published on Friday, the board, headed by trade minister Anne-Marie Trevelyan, said the government should look to strike digital trade deals and help shape global trade rules suitable for the modern world.
“By addressing digital protectionism on the global stage and championing a free, open, and competitive digital economy, more UK companies will be able to export their innovative, high-quality services and goods globally,” Ms. Trevelyan said in a statement.
In October, Britain helped broker a deal between the Group of Seven wealthy nations on principles to govern cross-border data use and digital trade in a first step to reducing barriers.
The Board of Trade, a government body tasked with championing exports and inward investment, said Britain should aim to build on the G7 agreement by working with partners to pursue a wider international consensus on digital rules, norms and standards.
Digital trade is broadly defined as trade in goods and services that is either enabled or delivered digitally, encompassing activities from the distribution of films and TV to professional services.
The report said Britain should focus particularly on securing Free Trade Agreements with the fast-growing Indo-Pacific market and large, service-based economies, as well as rapidly progressing the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
It should also seek a Digital Economy Agreement with Singapore, viewed as a global leader on digital, in order to demonstrate the potential for digital trade rules to others in the World Trade Organization, it said. — Reuters
BENGALURU — House price inflation in New Zealand will ease substantially next year, followed by outright price falls in 2023, but affordability is set to worsen in one of the world’s most expensive property markets, a Reuters poll found.
Historic amounts of stimulus to mitigate the pandemic-induced economic recession have helped New Zealand’s economy recover strongly, but have lit a fire under house prices.
They are expected to rise 25% this year, having already doubled in the last seven, making New Zealand’s property market one of the least affordable in the world.
That has increased public scrutiny of the Reserve Bank of New Zealand (RBNZ), whose ultra-easy monetary policy has been blamed for the current property market boom.
Even measures introduced by the government have so far failed to cool the market, leaving new homeowners with ever-larger amounts of debt.
“House price rises remain insanely high, with housing market pressures still going berserk. The goal posts are moving further and further away from many potential homeowners,” said Brad Olsen, senior economist at Infometrics in Wellington.
Home price increases were forecast to slow dramatically to 4.0% in 2022, a Reuters poll of 10 property market analysts taken Nov. 18–25 showed.
But further tightening from the RBNZ next year is expected to end the house price boom, leading to a 2.5% fall in 2023, according to the poll.
“FOMO [fear of missing out] is a common characterization at the moment of the housing market’s ‘animal spirits’,” said Sharon Zollner, chief economist at ANZ.
“Looking through the noise, we are convinced we are now past the peak of the current inflation cycle, but the pace of moderation from here remains very uncertain.”
The housing crisis and the economic impact of coronavirus disease 2019 (COVID-19) have led to increased homelessness and fueled inequality.
That poses a challenge to the Labour Party-led government of Prime Minister Jacinda Ardern, who came to power in 2017 promising an end to the free run of property investors and the building of more affordable homes.
All but two respondents who answered an additional question said affordability would worsen over the next two to three years.
“For every step forward potential buyers take, the finish line advances 10 steps further away… affordability is unlikely to materially improve in the next few years, but might soon stop worsening quite so fast,” said Infometrics’ Mr. Olsen.
When asked what will have the biggest impact on house prices next year, all but one of seven property market analysts said higher interest rates or tighter monetary policy.
Six analysts who answered a follow-up question on how many basis points interest rates would have to rise by to significantly slow housing market activity gave a median forecast of 200, with predictions in a range of 75–300.
“New Zealand households are highly leveraged so it won’t take much of an increase in interest rates to slow house prices significantly, particularly with macroprudential measures also being tightened,” said Justin Fabo, senior economist at Macquarie. — Vivek Mishra/Reuters
IE University in Madrid, Spain. Image via Wikimedia Commons.
Bukas, a local fintech company offering student loans, will partner with IE university in Madrid, Spain, this December. The private education institution is the first international school in the Bukas roster.
“With this partnership, we will now be able to provide Filipinos an opportunity to study abroad,” said Jon Robert F. Emlano, country manager of Bukas.
Bukas, which offers tuition installment plans to Filipino students, saw a near-ninefold increase in applications in the two years since it was founded in 2019.
“This year, we already have over 13,000 [student loan] applications to date, and we expect more to come before the end of the year,” said Mr. Emlano in an email to BusinessWorld. This is an increase from about 1,500 applications in 2019 and 5,000 in 2020.
The startup has also more than doubled its student coverage — or the total number of students that its partner schools have at the tertiary and graduate school levels — to almost 300,000, up from 120,000 at the start of the year.
The idea behind Bukas, which was registered as a corporation in 2019 under the name Bukas Finance Corp., was to democratize education in the Philippines.
“We chose education financing because we believe that affordability is a first principles approach in improving the education sector for the Philippines. We want more students to not have to stop their schooling for financial reasons,” Mr. Emlano said.
Bukas has a mobile app that allows for students to submit loan applications, monitor payment deadlines, and pay outstanding loans. Its first student borrower was an engineering student from Mapua University who had his account activated in May 2019.
It has since assisted students enrolled in 35 partner institutions, including Far Eastern University, University of Asia and the Pacific, SoFA Design Institute, University of Bohol, University of the Visayas, Malayan Colleges Mindanao, and Eskwelabs.
There are no minimum grade or year-level requirements to apply for a tuition installment plan. The minimum application requirements are as follows:
Must be a Filipino citizen and at least 18 years old
Must provide a school ID or government issued ID
Must be enrolled in, or is in the process of enrolling in, one of Bukas’ partner schools with a proof of enrollment
Must have a guarantor who’s at least 21 years of age and has a proof of income
Working students can be self-guarantors.
Bukas disburses the full tuition amount directly to the student’s enrolled school as soon as an application is confirmed. Students can re-apply for additional tuition coverage every semester.
According to the Department of Education, K-12 enrolment for the 2020–2021 academic year declined 14%, equivalent to 3.8 million pupils, to 23.2 million. Total enrollment in private schools also plunged 60%, reflecting an exodus to public schools as parents’ finances took a hit during this pandemic.
LONDON — The European Union (EU) set out its third wave of reforms in six years on Thursday to try to build a seamless securities market that can compete better with London and New York, a step that will pit stock exchanges against rival platforms.
The EU project to create a capital markets union (CMU) suffered a blow when Britain and its large financial sector left the bloc.
To keep the project on track, the EU’s executive European Commission proposed establishing a “tape” or record of stock and bond prices, and giving investors free information on companies. It also proposed tweaks to long-term investment funds, and plans to better coordinate how they are regulated.
The Commission wants to make it easier to raise money for companies to meet climate goals and recover from the financial blow of the coronavirus disease 2019 (COVID-19) pandemic. Brexit also leaves Brussels with a financial competitor on its doorstep.
“It’s important that we develop our own capital markets,” EU financial services chief Mairead McGuinness said.
The tape of securities prices and single point of information will create a “decisive moment” for CMU when implemented, she said.
“There are a lot of good factors pulling together to make the development of capital market union more likely than if we didn’t have those forces pushing us to sustainability,” she said.
The proposals will need approval from the European Parliament and EU states to become law, with compromises expected.
Markus Ferber, a German center-right member of the European Parliament, said the proposals make modest progress but fail to match the ambition of the CMU project by leaving out big items like changing taxation rules.
German investment funds association BVI said the proposed European Single Access Point for company information would help asset managers meet increasing reporting obligations in a more cost-effective way.
‘ELABORATE EXPERIMENT’
Lawmakers and EU states will face industry lobbying over the proposed consolidated tape to provide stock transaction prices as “close to real time as technically possible” — and at a low cost or free to retail investors.
Exchanges want a 15-minute delay before the mandatory handing over of their data. Banks and investment funds say a tape will be of no use if not in real time.
The Federation of European Securities Exchanges (FESE) said the CMU package is “one step forward, one step back” as it fails to increase the competitiveness of EU markets.
“Exchanges remain deeply concerned by the risks of such an elaborate and complex experiment,” FESE director general Rainer Riess said of the proposals for a tape.
The Association for Financial Markets in Europe (AFME), which represents investment banks and funds, said a real-time tape was essential for delivering CMU.
Cboe, which owns pan-European exchange Cboe Europe, said the tape proposal discriminated against across-Europe platforms like itself, and lacked ambition by not including pre-trade prices.
Thursday’s proposals make some types of off-exchange or “dark” trading harder, with the aim of funneling more transactions onto bourses. Industry officials say this could divert business to London, where regulators are taking a more liberal approach since Brexit.
The EU is using its CMU package to make other changes, such as banning payment for order flow or where retail brokers forward clients’ orders to other traders for a fee. — Huw Jones/Reuters
Scientists in South Africa are studying a recently identified new coronavirus variant of concern, stoking fears the country may face a potentially severe fourth wave that could spread internationally.
The new discovery, called B.1.1.529 until a Greek letter is assigned to it by the World Health Organization (WHO), carries an unusually large number of mutations and is “clearly very different” from previous incarnations, Tulio de Oliveira, a bioinformatics professor who runs gene-sequencing institutions at two South African universities, said at a briefing on Thursday.
“Here is a mutation variant of serious concern,” Health Minister Joe Phaahla said at the same media event. “We were hopeful that we might have a longer break in between waves — possibly that it would hold off to late December or even next January.”
Virologists have detected almost 100 cases linked to the variant in the country to date, said Anne von Gottberg, clinical microbiologist and head of respiratory diseases at the National Institute for Communicable Diseases. WHO officials have met to discuss the virus, which has also been detected in Botswana, according to a separate statement.
In Botswana — a neighbor of South Africa — the new variant has been detected in vaccinated people, Kereng Masupu, coordinator of the Presidential COVID-19 Task Force, said in a statement.
B.1.1.529 is likely to have evolved during a chronic infection of an immunocompromised person, possibly in an untreated HIV/AIDS patient, said Francois Balloux, director of the UCL Genetics Institute.
With 8.2 million people infected with HIV, the most in the world, South Africa’s efforts to fight the coronavirus pandemic has been complicated, as immuno-compromised people can harbor the virus for longer, scientists say. Mr. De Oliveira has previously said that the Beta variant, a mutation identified last year in South Africa, may have come from an HIV-infected person.
FOURTH WAVE
The findings come as several European countries battle a renewed surge in COVID-19 case numbers, with hospitals in some German cities starting to feel the strain. Governments are considering a fresh round of restrictions, largely against the unvaccinated, to try and curb the spread. South Africa is currently on the lowest level of lockdown measures, though the new variant prompted the cabinet and coronavirus council to call a meeting for the weekend.
One key difference is that while European countries have broadly got vaccination levels to a healthy majority and have moved on to booster shots, only about 35% of South African adults are fully inoculated. The health department has even asked Johnson and Johnson and Pfizer Inc. to hold off on new deliveries due to a slump in demand.
The rest of Africa is in an even worse position, with only 6.6% of the continent’s population fully vaccinated, Africa CDC Director John Nkengasong said at a virtual briefing. The challenge of securing supplies has given way to a lack of demand, with about 45% of the 403 million doses delivered to the continent yet to be administered, he said.
RISING CASES
South Africa has started to see a renewed surge in COVID-19 case numbers, particularly in the most-populous province of Gauteng. There were 2,465 infections recorded on Thursday, up from fewer than 900 two days previously, with the positivity rate — or the ratio between cases and tests — rising to 6.5%.
Almost 2,000 of the new cases were detected in the hub that includes Johannesburg and Pretoria.
The new variant already accounts for 75% of the genomes tested in the country, Mr. De Oliveira said in a later tweet.
While the government opted for a very strict lockdown at the start of the pandemic in March 2020, subsequent curbs have generally been driven by hospitalization rates. A preferred tactic is to ban the sale of alcohol, as it spares health centers from the burden of drink-related accidents and fights.
The outbreak of the new variant is at an early stage and studies are ongoing, but officials “do expect, unfortunately, to start seeing pressure in the healthcare system in the next few days and weeks,” Mr. De Oliveira said. — Bloomberg
SCB Philippines CEO Lynette Ortiz, together with Director for International Corporates Anthony Flores, led the roundtable session on building a career in banking.
Standard Chartered Bank (SCB) held its 2021 Early Careers Asia Event last October 27, 2021. This is the bank’s curated flagship event aimed at showcasing its Asia franchise to prospective graduate students who are based across its markets.
The event showcased SCB’s purpose and unique proposition to hundreds of students who participated in a fireside chat with SCB’s Regional CEO, Andrew Chia, Head of Corporate Commercial and Institutional Banking, China, Jean Lu- Co, and Head of Sustainable Finance for Greater China and North Asia, Tracy Wong. The students also had an opportunity to visit the different markets of the bank through a virtual roundtable networking session with the business leaders of each market including business segment leads in Financial Markets, Client Coverage and Retail Banking.
SCB Philippines CEO Lynette Ortiz and Director for International Corporates Anthony Flores led the roundtable session for Client Coverage where they engaged with different students and addressed their questions on building a career in banking. SCB Philippines Head of Human Resources Frida Torres highlights the bank’s commitment to develop talent and provide opportunities to accelerate personal and professional growth. She said, “This programme offers a range of exciting opportunities beyond traditional banking. It aligns with the bank’s vision to drive real impact in increasing financial inclusion, tackling climate change, and accelerating globalization.”
SCB’s Early Careers programme aims to provide a learning platform for those who are looking for a fulfilling, high impact career. In the Philippines, the bank offers opportunities for Financial Markets Analysts for Sales and Trading and International Graduate Program for Client Coverage.
Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their stories directly on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.
Having brought a health and economic crisis worldwide, the COVID-19 pandemic has caused concerns over various aspects of people’s welfare. To understand and help with the worries of Filipinos during the crisis, Cocolife conducted its first research study under its pilot research community — Cocolife Idea Hub.
With the title “Cocolife Cares: Insights into the COVID-19 pandemic”, the study looks into the health and financial worries of Filipinos and their viewpoints on purchasing insurance and investment products amid the crisis. “Cocolife Cares” surveyed close to 3,500 Filipinos through an online questionnaire throughout the 2nd, 3rd and 4th quarters of 2021.
While health and financial worries are already anticipated, a distinctive finding in Cocolife’s study is that Filipinos are more worried about their families getting sick (99%) than themselves (97%). 96% of Filipinos concerned about their health due to COVID-19 have also taken steps to protect themselves such as taking vitamins, eating healthy foods, and praying.
Additionally, the uncertainties over the crisis make finances worrying for most, regardless of their socioeconomic class. Medical bills are what most respondents are concerned about (97%), followed by expenses because of the pandemic (97%) and then saving money (93%).
Respondents also shared that they and their family members have either lost their jobs, had reduced working hours, or been temporarily laid off due to the pandemic. The majority also viewed their personal financial situation as fair to poor (71%). 41% added that their financial status worsened this year.
Insurance preferences and hesitancy
Amid such a crisis, Filipinos increased their awareness about the value of security and protection. This has led to a greater appreciation of insurance products, with 46% realizing the need for insurance protection now more than ever for their families. 89% also considered that life and health insurance coverages are beneficial during the pandemic.
Ma. Rowena Asnan, Vice President for Marketing and Corporate Communications
“The more Filipinos worry about their family, the more they prioritize their family’s well-being and financial security,” said Ma. Rowena Asnan, Vice President for Marketing and Corporate Communications of Cocolife. “These priorities elevated the interest of Filipinos towards insurance. One third of them are actually willing to purchase financial products this year.”
Cocolife’s research showed that 36% of Filipino respondents intend to buy life insurance plans; 31% for HMO plans; and 30% want to invest this year. These respondents are mostly single millennials, a majority of which are females from lower to middle-income socioeconomic classes.
Among those intending to buy life insurance, 52% prefer whole life insurance. Topping the list of their priorities is family’s income protection (23%). On the other hand, the top priority of those planning to avail of HMO in the following months is the coverage for hospitalization and confinement (24%).For the respondents intending to invest this year, their leading investment objective is to earn a combination of income and capital growth (34%).
The study also saw that Filipinos prefer an insurance plan customizable to their life stage, budget, and needs, more than unique product features.
But whether life insurance, HMO, or investment, the primary reason why some of Filipinos do not plan or are uncertain to purchase these products is the insufficiency of money. With 71% rating their financial situation poorly plus the rising cost of living in the country, Filipinos think they cannot afford financial products in addition to their expenses. The second reason is having an unstable source of income. Earnings instability makes it more difficult for Filipinos to pay for bills, necessities, and even setting aside funds for savings. Having unstable income flow only exacerbates many of the problems Filipinos deal with.
Such results of “Cocolife Cares” presented the gaps and challenges that Filipinos face in buying insurance, thereby telling the insurer as well how to improve its products and services.
Cocolife’s role
“Insurers should welcome the positive perception of the respondents as a sign of progress,” said Ms. Asnan. “Consequently, they should take steps in addressing the gap as to why majority are still not encouraged to actually purchase insurance and investment plans.”
The study thus urged Cocolife to leverage digital tools and platforms to bring financial education programs to Filipinos, where they can learn concepts that help make responsible financial decisions. Importantly, these programs should be inclusive and appropriate to the needs of different economic classes.
With the pandemic affecting people regardless of their financial capacities, Cocolife also expressed its commitment to developing products that attend to the realistic needs of every economic group and adapt to their life stages. This includes creating more entry-level and affordable insurance products like term plans and individual personal accident plans for the financial protection of Filipinos undergoing financial difficulties.
Halfway through 2021, Cocolife launched their new protection plans: the Cocolife Protect and Protect Plus. These comprehensive plans with affordable premiums as low as P2,000 are designed to provide Filipinos and their families the financial security they need in the event of an accident resulting in injury, disability, or death. The coverage for both Cocolife Protect and Protect Plus range from P500,000 to P1,000,000 for accidental benefit with additional burial benefit offered under 1-year, 2-year, and 3-year terms so Filipinos can feel more secured especially during these trying times.
Responding to Filipinos’ needs, Cocolife adds another product to their comprehensive product portfolio. Cocolife Term Shield, a term life insurance plan that ensures maximum financial security at an affordable cost. It provides guaranteed financial protection equal to 100% of the face amount in case of loss. With Term Shield, Filipinos can tailor their plan according to their budget and financial goals.
Term Shield’s coverage can be as short as 1 year or as long as 10 years, 20 years, or up to age 65. For as low as P13 per day, a 25-year-old can enjoy up to P1,000,000 of life coverage for a whole year. It also allows convenient renewal and conversion of the plan to a new permanent life insurance without any proof of insurability within the given timeframe.
“The pandemic highlighted what we are as a corporation, what we stand for, and what we care about. We have consistently stayed true to our thrust of improving the quality of life of Filipinos, equipping them with tools to achieve their goals and dreams.” said Atty. Martin Loon, Cocolife’s President and Chief Executive Officer. “We at Cocolife emphasize the faith and trust we have in the Filipino: Filipino talent, Filipino values, the Filipino dream.”
“It’s really what the insurance business is all about,” he added. “It’s about helping people capture their dreams no matter what happens, the best way we can.”
“Cocolife Cares: Insights into the COVID-19 pandemic” is the company’s first research study under the Cocolife Idea Hub. The Idea Hub was created to better understand the perceptions of Filipinos on a wide number of topics in order to innovate services and products that will improve their lives.
Find out more about Cocolife’s products and services by visiting www.cocolife.com.
Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their stories directly on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.
Oishi Prawn Crackers, Kirei, and Ribbed Cracklings are some of the Oishi snacks we bought from our neighborhood sari-sari stores growing up.
From making our favorite chichiryas, Oishi has grown its roster of unique products with online best-sellers like the hit fish kropek Fishda, the cult-favorite O-Puff, the chicharon with 30% less fat Baked Porky Popps, the healthy on-the-go Grab Nuts, the sensational seafood O-Pusit, and the kids’ ultimate biscuit treats Bread Pan and Pillows. Oishi has also expanded into having their own delicious drinks, like the refreshing Smart C+, and the creamy milk with oats, Oaties Milk.
From having to make time to go to sari-sari stores and supermarkets, you now have the power to purchase your favorite Oishi snacks and grocery items online from the comfort of your homes. Check out the Oishi Flagship Store in LazMall (www.lazada.com.ph/shop/oishi) and the Oishi Official Store in Shopee Mall (www.shopee.ph/oishiph).
Also, don’t forget to check out Oishi’s seasonal Cuckoo Bags and Weeshee Bags, which are the perfect gifts for your family and friends this season of giving. Order these festive bags (now with a big discount at Lazmall and Shopee Mall until Dec. 31!) while chilling at home and avoiding the Christmas rush.
Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their stories directly on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.
A worker is seen balancing on steel frames at a construction site in Metro Manila, Dec. 23, 2016. — REUTERS/ROMEO RANOCO
By Jenina P. Ibañez, Senior Reporter
THE budget deficit eased to a six-month low in October even as it widened year on year, the Bureau of the Treasury (BTr) reported.
Preliminary data from the BTr showed the fiscal gap stood at P64.3 billion in October, or 4.77% higher than a year ago. This was 64.46% lower than the P180.9-billion deficit in September and was the lowest since the P44.4-billion gap in April.
Government spending jumped by 9.60% to P317.4 billion in October from a year earlier, but was lower than the P412.4 billion in September.
“Ninety percent or P285.8 billion of the total disbursements for the month was for primary expenditures, which posted 6.86% or P18.3-billion growth for the month,” the Treasury said in a statement.
Primary spending refers to total expenditures minus interest payments. Interest payments grew by 42.89% to 31.5 billion in October.
Meanwhile, state revenues jumped by 10.9% to P253.1 billion in October. Accounting for 87% of the total, tax revenues went up by 7.21% to P219.1 billion year on year.
Broken down, collections from Bureau of Internal Revenue (BIR) rose by 6.60% to P162.1 billion, while the Bureau of Customs (BoC) collections increased by 9.76% to P55.5 billion.
Other tax collecting offices generated P1.4 billion last month, or 14.76% lower than a year earlier. Non-tax revenues jumped by 42.50% to P34 billion.
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.
The budget deficit has reached P1.2 trillion in the 10 months to October this year, or 27.94% higher than the shortfall in the same period last year.
The 10-month total was 65% of the revised P1.9-trillion full-year deficit ceiling.
ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa in an e-mail said the latest deficit numbers suggest that the 2021 total could still slip below the P1.9-trillion projection.
“Improved collections due to improving economic output is helping limit the impact on the overall deficit,” he said in an e-mail.
“Spending, however, appears to be on auto pilot with the growth rate posting a modest double-digit gain despite a torrid pace of public construction, suggesting spending in other areas remains soft. Authorities appear to be holding back on spending to rein in rising deficit and debt levels.”
Total spending increased by 11.51% to P3.7 trillion as of end-October, or around 79% of this year’s P4.7-trillion disbursement plan.
Revenue collection growth in the 10-month period inched up 5% to P2.5 trillion. This figure was “equivalent to 86% of the P2.9-trillion revised program for the year,” BTr said.
Tax collections representing 90% of the total rose by 9.11% to P2.25 trillion. Broken down, Customs collections jumped by 17.1% to P525.4 billion and the BIR generated P1.7 trillion, or 6.83% higher than a year earlier.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the deficit in October, which was at its narrowest since April, was due to the reopening of the economy. More business activity spurred higher tax collections, he added.
“Narrower budget deficits could fundamentally lead to reduced need for additional government borrowings and debt, thereby a step in the right direction to improve the country’s fiscal performance and debt management in a more sustainable manner,” he said in a Viber message.
Further reopening of the economy and the reduced risk of more lockdowns that could prompt more government spending for pandemic support programs could help narrow the deficit further, he added.
Meanwhile, Mr. Mapa said that the improved economic outlook may help limit the impact of softer spending on the country’s debt-to-GDP ratios. The country’s debt-to-GDP ratio was 63.1% as of September, the highest in 16 years, government data showed.
“Should this measure remain above 60% by mid next year, we do expect some ratings action from at least one of the major agencies,” Mr. Mapa said.
Market goers pictured at marikina Public Market last November 05, 2021 as IATF implements a much relax quarantine status to alert level 2. (PHoto by Michael Varcas)
THE central bank will continue to maintain its accommodative stance as the Philippine economy is “not quite out of the woods yet,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Thursday.
“Given the risk of new cases as we have seen in other countries, like the rest of the region, our economy is not quite out of the woods yet and we would prefer to see evidence of sustained recovery first,” Mr. Diokno said at an online briefing on Thursday.
The Philippines has recently seen a steep decline in the number of new coronavirus disease 2019 (COVID-19) infections, which prompted the further easing of mobility curbs. The Health department reported 975 new COVID-19 cases, bringing the active cases to 17,796 as of Thursday.
While the economy has further reopened, there are worries the Philippines may see a COVID-19 resurgence similar to the ones currently experienced by Europe and the United States.
Last week, the BSP kept the key policy rates unchanged at record lows, noting the need to continue supporting a recovery that has gained traction.
“The BSP continues to closely cooperate with fiscal authorities in ensuring continued policy support for the economy while preparing the groundwork for a coordinated gradual exit from stimulus measures when conditions warrant,” Mr. Diokno said.
The country’s gross domestic product expanded by a better-than-expected 7.1% in the third quarter. Year-to-date growth is at 4.9%, putting the Philippines on track to meet the government’s 4-5% full-year GDP target.
Mr. Diokno said their monetary policy decisions will track outcomes seen in the economy instead of being anchored on a specific calendar date.
“The timing for policy normalization will really depend on when we are able to see solid, sustainable recovery in the data and when the slack in the economy disappears based on the output gap,” he said.
“We will also pay close attention to liquidity and credit conditions, the state of public health as well as external developments and potential spoilers,” he added.
The central bank will have its last policy review for the year on Dec. 16. Mr. Diokno has earlier said he does not see the need for policy rate adjustments until at least the end of 2021.
Meanwhile, he said the BSP is keeping its target to bring down the reserve requirement ratio (RRR) of banks to a single digit by 2023.
“The BSP’s decision on the RRR will be made in conjunction with the BSP’s broader strategy to normalize monetary policy settings when domestic demand conditions attain significant recovery from the pandemic,” he said, noting they will be looking at credit activity and liquidity dynamics.
To boost liquidity last year amid the crisis, the central bank reduced the reserve requirement for big banks by 200 basis points (bps) to 12%, while RRR of thrift and rural lenders were cut by 100 bps to 3% and 2%, respectively.
Also, Mr. Diokno said the BSP’s purchase of government securities in the secondary market has already “significantly gone down” from last year.
RELIEF MEASURES
Meanwhile, the BSP is still assessing the duration of the policy relief measures it has implemented during the pandemic.
“Retention of the measures that form part of the BSP’s regulatory policy toolkit is currently the subject of an ongoing study which will consider assessment of economic developments and financial conditions,” Mr. Diokno said at an online briefing.
“The measures that incentivize lending to vulnerable sectors, such as underserved market segments, micro-, small- and medium-sized enterprises (MSMEs) will be retained for as long as necessary to support the recovery,” he added.
The BSP last year allowed loans to MSMEs to be counted as part of banks’ alternate reserve compliance. Mr. Diokno said the relief measure will be in place until the end of 2022 or will be reviewed once the P300-billion limit will be reached.
As of the reserve week ending Nov. 4, he said banks have utilized P202 billion so far as part of their alternate compliance, Mr. Diokno said.
The BSP governor said there are no changes to the ceiling for credit card charges, which will be subjected for review every six months.
“This will continue to help ease financial burden on consumers through affordable credit card pricing,” he said. — Luz Wendy T. Noble
THE Department of Finance (DoF) plans to focus on debt management as it transitions to the next administration after the national elections in May 2022, its top official said.
Finance Secretary Carlos G. Dominguez III said the Duterte administration plans to address four key economic issues during the transition.
“These include ways on how to prudently manage the debt we have accumulated and grow our GDP (gross domestic product) at a rate of higher than 6% per annum as we have done,” he told the BusinessWorld Virtual Economic Forum 2021 on Thursday.
Outstanding government debt ballooned to P10.2 trillion last year from P8.2 trillion in 2019 as the state ran big deficits to battle the coronavirus pandemic.
The country’s debt-to-GDP ratio was 63.1% as of September, the highest in 16 years, government data showed.
“Nevertheless, this (debt-to-GDP ratio) remains eminently sustainable — especially as more than two-thirds of our borrowings are being sourced from our very liquid domestic market. The stability of the peso indicates this. We expect to begin working down our debt by next year,” Mr. Dominguez said.
Although borrowings rose, the Finance chief said the average annual interest rate on domestic and external debt fell to 3.9% in September this year from 6.3% in 2010.
Fitch Ratings has warned that rising public debt could lead to a credit rating downgrade for the Philippines in the next few years.
Mr. Dominguez said the department will also assist with managing inflation brought about by global shortages.
Headline inflation last month eased to 4.6% from 4.9% in September amid a slower increase in food prices. Still, this was the third straight month inflation exceeded the 2-4% target of the central bank for the year.
“We need to manage the inequalities exacerbated by the COVID-19 pandemic — both within the country and among countries,” Mr. Dominguez said.
“And finally, we need to address climate change without stretching the fiscal space of the country.”
At the virtual event, Mr. Dominguez said the Duterte administration will also continue to modernize governance, speed up the rollout of the infrastructure program, and develop reforms to attract more investments.
“To maximize the impact of these interventions, we are urging our entrepreneurs to continue innovating sustainably by shifting to the circular economy and using more renewables,” he added.
BRIGHTER PROSPECTS
Meanwhile, Mr. Dominguez said the Philippines’ full-year GDP growth will likely reach the high-end of the government’s 4-5% target, after a better-than-expected third-quarter growth of 7.1%.
“Our year-to-date growth is presently at 4.9%. There is now a greater likelihood that our full-year growth will hit the higher end of our 4-5% GDP target for this year,” he said.
The Finance chief said the government will continue easing restrictions as the coronavirus disease 2019 (COVID-19) infections decline and vaccinations increase.
“With brightening prospects for the economy, we expect to do even better in the fourth quarter as we continue to relax mobility restrictions,” Mr. Dominguez said.
“With current trends, we expect to achieve the full reopening of the economy by the onset of the New Year. We are ready for a strong recovery.” — Jenina P. Ibañez
THE government plans to borrow P70 billion from the domestic market in December, as it reduced borrowings after seeing strong demand for its retail Treasury bonds (RTB).
In an advisory posted on Thursday, the Bureau of the Treasury (BTr) said it would borrow P30 billion in Treasury bills (T-bills) and P40 billion in Treasury bonds (T-bonds) next month.
The December borrowing plan is lower than the P200-billion program initially set in November.
The BTr will offer T-bills worth P30 billion in total next month. Broken down, the government will offer P2 billion in 91-day debt papers, P3 billion for the 182-day instruments, and P5 billion for the 362-day notes on Nov. 29. The Treasury will again offer the same amounts on Dec. 6 and Dec. 13.
For the longer-term T-bonds, the government will auction off P20 billion in 10-year securities on Dec. 7, and another P20 billion for its 7-year debt papers on Dec. 14.
National Treasurer Rosalia V. de Leon told reporters in a Viber message on Thursday that the December borrowing program is lower because there will be fewer auctions in the lead up to the Christmas holidays.
“Moreover, given that we have been seeing strong demand for our ongoing RTB 26 issuance, we have the room to scale down our December auction sizes, especially the T-bills as this will allow us to lengthen our domestic average residual maturity,” she said.
“Given these, the reduction in our December borrowing program will ensure that we remain within our annual borrowing program and maintain our debt-to-GDP at sustainable levels.”
The country’s debt-to-GDP ratio was 63.1% as of September, the highest in 16 years, government data showed.
A bond trader in a Viber message said the lower borrowing program in December is expected due to the strong reception to the RTB offering.
“Since December borrowing program is much lower compared to the P200-billion plan this month, we may see yields to continue to move range bound with downward bias on strong investor demand.”
The Treasury raised a total of P130 billion from T-bills and T-bonds in November, lower than the programmed P200 billion after it canceled auctions of the longer-term securities.
Broken down, it raised P60 billion as planned via the weekly T-bill auctions, then raised P70 billion out of the programmed P140 billion in T-bonds.
The BTr canceled the auctions of P35 billion each in five-year and seven-year T-bonds on Nov. 16 and 23 to give way for the RTB offering.
The Treasury raised an initial P113.545 billion at its price-setting auction on Nov. 16 for its offer of 5.5-year RTBs. This was oversubscribed by more than five times versus the initial P30-billion offer. The RTBs had fetched a coupon rate of 4.625%. It will be issued on Dec. 2 and will mature by 2027.
The government borrows from foreign and local sources to plug its budget deficit. The gap has reached P1.2 trillion in the 10 months to October this year, or 27.94% higher than the shortfall last year. It borrows from both local and foreign lenders to plug this fiscal gap seen to hit 9.3% of gross domestic product this year. — Jenina P. Ibañez
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