US, Philippine top diplomats express concerns over Chinese militia boats

April 9, 2021 | 5:27 pm

WASHINGTON – U.S. Secretary of State Antony Blinken and Philippine Foreign Affairs Secretary Teodoro Locsin, in a phone call on Thursday, expressed their shared concerns about Chinese militia vessels in the South China Sea, the U.S. State Department said in a statement.

Blinken also reaffirmed that a U.S.-Philippine Mutual Defense Treaty applied to the South China Sea, the statement said.

The Philippines has described the presence of hundreds of Chinese boats inside its 200-mile exclusive economic zone at Whitsun Reef in the South China Sea as “swarming and threatening.”

Chinese diplomats have said the boats were sheltering from rough seas and no militia were aboard.

Brunei, Malaysia, the Philippines, Taiwan, China and Vietnam have competing territorial claims in the South China Sea, through which at least $3.4 trillion of annual trade passes. – Reuters

Speed up your game with the new vivo
Y20s [G]

April 9, 2021 | 5:01 pm

vivo’s newest budget smartphone can be pre-ordered on April 10-15, with free True Wireless Earphones

Playing games like Mobile Legends or League of Legends on smartphone has become one of the ways Filipinos pass time, especially with the lockdown still keeping many at their homes most of the time. As smartphones get more upgraded and enhanced, users can enjoy playing more sophisticated games for hours without compromise on the stability and performance of their phones.

Global technology brand vivo continues to upgrade its industry-leading gaming technology packed in its smartphones, and it will launch this April its latest upgrade – the vivo Y20s [G], a budget smartphone loaded with features that will provide users a smooth and high-performing gaming experience.

Enabling its capacities for gaming, the Vivo Y20s [G] is powered by a MediaTekHelio G8O gaming processor that optimizes performance as well as effectively manages all of the budget smartphone’s resources.

This high-octane processor also gives vivo’s leading AI camera technology a boost, perfectly utilizing the smartphone’s triple camera setup which consists of a 13MP Main, 2MP Bokeh, and 2MP Macro lenses.

Complementing this processor is the smartphone’s 6GB RAM and 128GB ROM, which eliminates lag and provides enough space for all the user’s gaming needs.

All of these notable features are supported by a powerful 5000mAh battery with 18W fast charge technology, allowing users to keep playing and winning the games they want whenever they want.

Set to speed up users’ gaming experiences, the new vivo Y20s [G] is priced at a budget-friendly price of P9,999.

vivo Y20s [G] will soon be enjoyed by Filipino gamers as it will be available for pre-order from April 10 to 15 in vivo stores and kiosks nationwide. Customers who pre-order on those dates will get a free pair of vivo True Wireless Earphones, which are originally worth P2,499.

For more information about the new vivo Y20s [G], visit www.vivoglobal.ph or www.facebook.com/vivo.philippines.

A taxing question for multinationals leaves stocks unscathed

April 9, 2021 | 4:17 pm

LONDON — A global minimum corporate tax rate could deal a major blow to the multinationals which some governments allege shift billions of dollars in profits every year to low-tax havens, as well as triggering a fundamental reassessment of corporate earnings.

The chances of such reform rose this week as Treasury Secretary Janet Yellen threw the weight of the US government behind a push to upend international tax rules.

Yet stock markets held near record highs, boosted by the near-zero US interest rates as well as a bet that a proposed 21% minimum tax rate, regardless of where companies make their sales, would not be implemented for years.

But some such as Grace Peters, investment strategist at J.P. Morgan Private Bank, think future earnings estimates “could be underpricing the full potential impact of tax increases.”

“The issue is definitely right up as a major risk for companies,” Ms. Peters said after the proposals were aired.

High-profile names including Apple, Google, and Starbucks have been accused by governments in Europe of using legal loopholes in fragmented global taxation regimes to pay less tax.

A minimum corporate tax level would stamp out the ability of companies to move income from “intangible” sources, such as patents, software, and royalties, to countries with lower rates.

This could double the existing tax paid on profits for some companies and cause a major headache for countries such as Ireland which have attracted many with a 12.5% rate, which research last year showed is half the global average.

The companies have not commented on the latest proposals.

A paper by Thomas Torslov at the University of Copenhagen and University of California academics Gabriel Zucman and Ludvig Wier calculated that profit shifting amounted to almost 40% of multinational profits and that 35% of these profits came from non-haven EU nations, while 25% were from the United States.

Although technology and healthcare firms are seen as major beneficiaries of tax arbitrage, stock market investors appear not to be fazed by the threat to companies’ earnings.

Their focus is possibly on an expected rebound in corporate earnings, with US companies set to report a 25% jump in profits this year, and a near 14% rise in 2022 after the damage inflicted by the coronavirus disease 2019 (COVID-19) pandemic.

INVESTMENT HURDLE?

Irish finance minister, Paschal Donohoe, voiced “reservations” about the proposal, while the World Bank has warned against setting a minimum tax rate that is too high, saying it would hinder poor countries in attracting investment.

Ireland is positioning itself for lower corporate tax receipts and has budgeted for them to fall by 500 million euros a year from 2022 and by 2025 to lose two billion euros a year.

The proposed reforms would probably also lower public revenues in poorer European Union states Hungary and Bulgaria with statutory tax rates of 9% and 10% respectively, UniCredit economist Andreas Rees said.

And it would shift taxable revenues back to high-tax countries such as France, Germany, and Italy where rates range from 28% to 32%, Mr. Rees added.

Marija Veitmane, senior multi-asset strategist at State Street Global Markets said markets appeared skeptical a 21% rate would be adopted and “it would take a long time to negotiate.”

US THREAT

US multinationals face another blow; the prospect of a domestic corporate tax rate rise to 28%, from the 21% levy set by former President Donald J. Trump in 2017. That plan too faces stiff opposition within Congress

Companies have come in for withering criticism for paying little or no US federal tax, and Amazon chief executive Jeff Bezos said this week he supported hiking tax rates to overhaul infrastructure.

UBS analysts predict that a 28% tax rate would deliver a 7.4% hit for S&P 500 companies’ earnings per share. They expect the hike to go into effect in 2022, though at a slightly lower 25% rate, which would result in a 3.6% earnings hit.

President Joseph R. Biden, Jr., signaled on Wednesday he was willing to negotiate how much US companies would pay.

Pimco managing director and the head of public policy Libby Cantrill dismissed fears of a major equity setback.

“While tax increases are likely on the horizon, they are also likely to be watered down in the final version, take longer to pass, be less of a headwind to economic growth, and, as a result, give even more runway for equities and risk assets to rally,” Ms. Cantrill told clients in a blog last month. — Thyagaraju Adinarayan and Sujata Rao/Reuters

Asia’s rising coronavirus cases a worry as vaccine doubts cloud campaigns

April 9, 2021 | 3:58 pm

Singapore — India, South Korea, and Thailand faced mounting coronavirus infections on Thursday, undermining cautious hopes that Asia might be emerging from the worst of the pandemic as worries about safety threatened to delay vaccination drives.

India reported a record 126,789 new cases, the third day this week tallies have surged to more than 100,000, catching by surprise authorities who have blamed crowding and a reluctance to wear masks as shops and offices reopen.

More infectious variants of the virus may have played a role in India’s surge, some epidemiologists say, with hundreds of cases found of variants first detected in Britain, South Africa, and Brazil.

The alarming numbers have led to New Zealand putting a temporary ban on anyone arriving from India, even for the first time blocking New Zealand citizens from coming home, for about two weeks.

“We are temporarily suspending entry into New Zealand for travelers from India,” Prime Minister Jacinda Ardern told a news conference in Auckland.

New Zealand, which has virtually eliminated the virus within its borders, recorded 23 new cases at its border on Thursday, 17 from India.

Two other countries that managed to largely keep the coronavirus under control during the first year of the pandemic were also grappling with new waves, though smaller than India’s.

South Korea reported 700 new cases on Thursday, its highest daily figure since early January, and the prime minister warned that new social distancing rules would likely be needed.

Thailand, which has been planning a cautious re-opening of its tourist industry, reported a rise in new daily infections to 405 on Thursday, taking its total number of infections to 30,310, with 95 deaths.

Adding to Thai worries, it has detected 24 cases of a highly contagious virus variant first detected in Britain, its first reported domestic transmission of the variant.

Booming market for fake COVID-19 vaccine passports sparks alarm

April 9, 2021 | 2:38 pm

Fake coronavirus vaccine passports are being sold online for “peanuts” in a fast-growing scam that has alarmed authorities as countries bet on the documents to revive travel and their economies, cybersecurity experts said.

From Iceland to Israel, a number of countries have started to lift lockdown restrictions for people who can prove they have been vaccinated—letting them visit leisure venues or cross borders if they show vaccine papers.

“People are trying to circumvent that by creating false documents, essentially putting the lives of others at risk,” Beenu Arora, founder of cyber-intelligence firm Cyble, told the Thomson Reuters Foundation in an online interview.

“We’ve seen hundreds of websites on the dark web where these documents are being sold … at the price of peanuts,” he said.

The dark web is a part of the internet that lies beyond the reach of search engines, where users are largely anonymous and mainly pay with cryptocurrencies such as bitcoin.

Fake vaccination papers can be bought for as little as $12, Mr. Arora said, adding that the number of listings had mushroomed since the first started appearing in late February.

Oded Vanunu of cybersecurity company Check Point said researchers at the firm had found numerous dark web adverts offering documents purportedly issued in the United States, Russia and other countries.

“There’s a big demand for it,” he said.

Forgeries have also appeared on regular websites and e-commerce platforms, said Chad Anderson, a senior security researcher at online threat intelligence firm DomainTools.
Last week, 45 attorneys general from the United States signed a letter calling on the heads of Twitter, eBay, and Shopify to take immediate action to prevent their platforms from being used to sell fraudulent COVID-19 vaccine cards.

Details of sweeping effort to counter China emerge in US Senate

April 9, 2021 | 1:31 pm

WASHINGTON — Leaders of the US Senate Foreign Relations Committee introduced major legislation on Thursday to boost the country’s ability to push back against China’s expanding global influence by promoting human rights, providing security aid, and investing to combat disinformation.

The draft measure, titled the “Strategic Competition Act of 2021,” mandates diplomatic and strategic initiatives to counteract Beijing, reflecting hard-line sentiment on dealings with China from both Democrats and Republicans in Congress.

It was first reported by Reuters earlier on Thursday.

The 280-page bill addresses economic competition with China, but also humanitarian and democratic values, such as imposing sanctions over the treatment of the minority Muslim Uighurs and supporting democracy in Hong Kong.

It stressed the need to “prioritize the military investments necessary to achieve United States political objectives in the Indo-Pacific.” It called for spending to do so, saying Congress must ensure the federal budget is “properly aligned” with the strategic imperative to compete with China.

The bill recommends a total of $655 million in Foreign Military Financing funding for the region for fiscal year 2022 through 2026, and a total of $450 million for the Indo-Pacific Maritime Security Initiative and related programs for the same period.

It would expand the scope of the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes financial transactions for potential national security risks. However, like many provisions of the bill, this clause could be changed as it moves through the committee and full Senate.

The draft legislation calls for an enhanced partnership with Taiwan, calling the island “a vital part of the United States Indo-Pacific strategy” and saying there should be no restrictions on U.S. officials’ interaction with Taiwanese counterparts. China considers Taiwan a breakaway province.

The bill also says Washington must encourage allies to do more about Beijing’s “aggressive and assertive behavior,” including working together on arms control.

Introduced by Senators Bob Menendez, the committee’s Democratic chairman, and Jim Risch, its ranking Republican, the draft bill was released to committee members overnight to allow a markup, a meeting during which the panel will discuss amendments and vote, on April 14.

“I am confident that this effort has the necessary support to be overwhelmingly approved by the Senate Foreign Relations Committee next week and the full Senate shortly thereafter,” Mr. Menendez said in a statement.

Mr. Risch said in a statement he was also pleased the bill included a “strong and actionable” plan to counteract China’s influence efforts at US universities.
The measure is part of a fast-track effort announced in February by Democratic Senate Majority Leader Chuck Schumer to pass legislation to counter China.

“Congress is extremely focused on the various challenges that China poses to American interests and is trying to develop effective responses that are within its purview,” said Center for Strategic and International Studies Asia expert Bonnie Glaser.

The Senate Commerce Committee will hold a hearing on April 14 on its bipartisan measure, the “Endless Frontier Act,” to bolster the U.S. semiconductor industry. — Patricia Zengerle and David Brunnstrom/Reuters

Singapore deputy PM unexpectedly steps aside as future premier, in succession setback

April 9, 2021 | 1:15 pm

Singapore’s Deputy Prime Minister Heng Swee Keat will step aside as the designated successor to current premier Lee Hsien Loong, in an unexpected decision that disrupts the city-state’s succession plans.

“We need a leader who will not only rebuild Singapore post-COVID-19, but also lead the next phase of our nation-building effort,” Mr. Heng said in a letter published on Thursday.

Mr. Heng, who will turn 60 this year, is set to give up his portfolio as finance minister at the next cabinet reshuffle expected in about two weeks.
Succession in the wealthy Southeast Asian city-state—which has been governed by the People’s Action Party (PAP) since independence in 1965—is normally a carefully planned affair.

The pandemic, however, has set back a handover of power. Mr. Lee, 69, has flagged that he may delay his plan to pass the reins to a successor by the time he is 70 to see Singapore through the aftermath of the pandemic.

“As the crisis will be prolonged, I would be close to the mid-60s when the crisis is over,” Mr. Heng said, referring to the COVID-19 pandemic.
“But when I also consider the ages at which our first three Prime Ministers took on the job, I would have too short a runway should I become the next prime minister then,” he said.

Mr. Heng will continue as deputy prime minister, but will step aside as head of the ruling party’s so-called fourth-generation team of leaders.

“This unexpected turn of events is a setback for our succession planning. We recognize that Singaporeans will be concerned. We seek your support and understanding, as we choose another leader,” the 4G leaders said in a separate statement.

“The 4G team will need more time to select another leader from amongst us,” they added.
They said Mr. Lee had agreed to stay on as prime minister until a new successor is chosen by the team and is ready to take over.

The PAP was stung by its worst-ever election result last year. Heng scraped through with only 53% of the vote in his constituency, in what some analysts said could be a sign of a lack of public support for his expected future premiership.

Mr. Heng, who had steered the central bank through the global financial crisis, has doled out billions of dollars in stimulus to help the country weather its worst-ever recession caused by the pandemic.

But questions were also raised about his health after he suffered a stroke and collapsed during a cabinet meeting in 2016.

“I do see PM Lee’s successor being clear within the next 18–24 months,” said Eugene Tan, a former nominated member of parliament. “The pandemic has led to a delay but Singapore’s next PM will take over just before or after the next general election which must be held by end 2025.”

The city-state’s small and open economy was badly hit by the pandemic, but is now on a recovery path. It has brought the COVID-19 situation under control and has been ramping up vaccinations, although external demand and reopening of international borders is seen as key to growth.

“For such an announcement to be made this early, it seems that the leadership is pretty confident that the economy is in a far better shape today than a year ago and they are on top of the situation,” said Song Seng Wun, an economist at CIMB Private Banking.
“I always saw Heng as a bridge between the older and newer group of leaders.”
The Singapore dollar was steady following the announcement on Thursday, made after the close of trading in the stock market. — Aradhana Aravindan and Anshuman Daga/Reuters

Pru Life UK receives four Golden Arrows for solid corporate governance

April 9, 2021 | 10:00 am

Leading life insurer Pru Life UK was bestowed four Golden Arrows awards by the Institute of Corporate Directors (ICD), marking another milestone in the company’s history of good performance on the ASEAN Corporate Governance Scorecard (ACGS).

“In a step-up from the three Golden Arrows awards we were presented in 2018, we are very honored to receive this prestigious recognition. These distinctions serve as testimony to our unwavering effort and deep commitment to tirelessly keep elevating and strengthening our standards for all our stakeholders as we endeavor to help Filipinos get the most out of their lives,” shared Pru Life UK President and CEO Antonio De Rosas.

For four consecutive years, Pru Life UK has consistently ranked first among Insurance Commission (IC)-regulated companies based on the overall governance scores determined by the ICD.

The ICDimplemented the ACGS to raise corporate governance standards and practices and showcase well-governed ASEAN publicly listed companies. The assessment is based on publicly available information and benchmarked against international best practices to encourage listed companies to go beyond local regulatory requirements.

The ACGS was adopted by the Philippine insurance industry to enhance its competitiveness, improve public perception, and increase its penetration rate. The IC prescribed the assessment, enjoining participating companies to publicly disclose the necessary information and supporting documents on their company websites.

STADA Philippines shows resilience with triple-digit growth in 2020

April 9, 2021 | 9:00 am

Newly-established pharmaceutical player STADA Philippines showed resilience amid the coronavirus pandemic by achieving triple-digit sales growth of 478% in 2020.

Fueling the growth is the expansion of the STADA Philippines portfolio, with the banner acquisition of the FERN-C line (consisting of the established, 15-year-old vitamin c brand FERN-C, and two children’s vitamin products — FERN C Kidz and Kiddimin). Total sales growth of the Fern-C portfolio in 2020 reached 100% compared to the previous year.

STADA Philippines’ revitalization of the Oilatum brand, likewise, established the company as a major player in the Philippine skin care market, with Oilatum sales growing 1,012% versus the previous year. Acquired from GSK in 2019, Oilatum is a full emollient range that generates significant sales in Europe, as well as helping to build up growth in the Asia-Pacific region.

“The acquisition of these products is in line with our strategy of strengthening our portfolio with well-established consumer healthcare brands and also expanding in selected emerging markets,” states Carsten Cron, STADA EVP for Emerging Markets.

Sharmaine Abarientos, general manager of STADA Philippines, adds: “With our successful portfolio expansion activities, we are able to offer quality medicines at reasonable prices, across all segments of healthcare; specialty, generics and consumer health.”

Carsten Cron, STADA EVP for Emerging Markets and Sharmaine Abarientos, General Manager of STADA Philippines

PHL performance mirrors STADA Worldwide’s strong growth journey

STADA Philippines’ performance contributed significantly to the strong global STADA growth journey, with the Germany-based parent company posting 18% sales growth. This performance, even in the midst of a stagnating market, is testament to the agility and entrepreneurship with which STADA’s diverse global workforce acted under difficult circumstances to keep supplying medicines to patients and healthcare professionals.

“Throughout 2020, ensuring the health and safety of all employees and their families has been STADA’s utmost priority,” explains STADA’s CEO Peter Goldschmidt. “While STADA has responded with agility to the pandemic, we have continued to strengthen our supply-chain infrastructure for a sustainable future. I am proud of how STADA has worked tirelessly with hundreds of partners amid the pandemic to keep supplying medicines and deliver on our purpose of caring for people’s health as a trusted partner,” said Mr. Goldschmidt.

Synergies derived from acquisitions, as well as ongoing efficiency measures in areas such as supply chain, procurement, and sales and marketing contributed to the growth of the company.

“Our above-market sales increases reflect the extraordinary engagement and entrepreneurship of our diverse global workforce,” Mr. Goldschmidt stated. “Our strategy to position STADA as the go-to partner for consumer healthcare, specialty pharmaceuticals and generics is succeeding.”

STADA closed multiple acquisitions and in-licensing deals in 2020, building a wider base in the Philippine consumer healthcare market with such brands as FERN-C, Oilatum, Zoflora and Zerochol.

STADA’s optimistic outlook in 2021

Through a clear growth strategy that is based on a shared purpose, vision and set of values, the business expects a continuation of its growth journey in 2021. Outlining reasons for this optimistic outlook for 2021, Mr. Goldschmidt observed that STADA enjoys a well-stocked Generics pipeline, while the group’s Specialty presence is expanding through biosimilar partnerships and through launches such as the entry of a novel patented product for late-stage Parkinson’s disease. Newly-acquired Consumer Healthcare brands are gaining traction in several countries, and are set to enter the Philippine market in the near future.

With STADA continuing to evaluate further acquisitions, in-licensing and business development opportunities, the group is confident of delivering further organic and inorganic growth in 2021. “As a go-to partner for consumer healthcare, specialty pharmaceuticals and generics, STADA is broadening its portfolio and delivering on our purpose of caring for people’s health as a trusted partner,” Mr. Goldschmidt concluded.

Semirara Mining and Power Corporation announces schedule of annual stockholders’ meeting

April 9, 2021 | 8:00 am

Feb. trade gap widens as imports rise

April 9, 2021 | 12:35 am

THE COUNTRY’S trade-in-goods deficit widened in February as imports grew for the first time in 22 months and exports contracted albeit at a slower pace, the government’s statistical agency reported on Thursday.

Merchandise imports rose by 2.7% to $7.60 billion in February following a 12.1% annual decline in January, preliminary data by the Philippine Statistics Authority showed.

The import tally for February was bigger than the $7.40 billion in February 2020, but smaller than the $8.40 billion in January 2021.

Moreover, the value of imports for February was lowest since June 2020’s $6.96 billion.

Nevertheless, February imports marked the first expansion in 22 months or since April 2019 when it posted an annual growth of 2.9%.

“The rebound in imports… may be more a result of base effects rather than a true recovery for the sector with the economy still stuck in recession amidst an ongoing 12-month lockdown with daily COVID-19 (coronavirus disease 2019) infections spiking in March,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a statement to reporters.

Meanwhile, merchandise exports declined by 2.3% in February to $5.31 billion, lower than the 4.8% contracted recorded in January.

Pantheon Macroeconomics Senior Asia Economist Miguel Chanco in a statement said the continued decline in merchandise exports was “particularly discouraging.”

This brought the trade deficit to $2.29 billion for February, bigger than the $1.97-billion gap in the same month last year.

Year to date, imports of goods fell 5.6% to $16 billion, while exports slid 3.6% to $10.83 billion.

These figures were below the Development Budget Coordination Committee’s growth targets of 8% and 5% for imports and exports this year.

That brought the year-to-date trade balance to a $5.17-billion deficit, smaller than the $5.72-billion shortfall in the same two months last year.

The country’s total trade — the sum of export and import goods — was $12.91 billion in February, up 0.6% year on year. For the first two months of the year, total trade amounted to $26.83 billion, down 4.8% from $28.19 billion a year ago.

As of last year, the imports and exports of goods made up 16.3% and 28.7% of the country’s gross domestic product, PSA’s national accounts showed.

Raw materials and intermediate goods, which account for 39% to the goods imports bill in February, jumped 6.4% to $2.97 billion year on year.

Capital and consumer goods likewise increased by 5.7% (to $2.56 billion) and by 3.9% ($1.32 billion) in February, respectively. On the other hand, imports of mineral fuels, lubricant and related materials contracted by 20.1% to $692.46 million.

On the export side, the sales of manufactured goods rose 2.6% year on year to $4.53 billion last year. These goods made up 85.3% of total goods exports in February.

Electronic products, which made up more than half of the total export sales in February, inched up 0.4% to $2.98 billion.

However, declines were seen in the sales of agro-based products (-22.3% to $336.63 million), mineral products (-26.3% to $318.03 million), and petroleum products (-97.9% to $808,090).

BRIGHT SPOTS
Mr. Chanco noted some “bright spots” in the data, particularly the turnaround in capital goods imports.

“This was more than enough to keep their recovery from last year’s lockdown broadly intact. On the other hand, though, imports of consumer goods continued to struggle, and they look set for a renewed collapse, due to the headwinds posed by the second virus wave,” he said.

“All told, the weakness in domestic demand will continue to dominate, keeping the trade deficit well above the 2018 nadir,” he added.

Security Bank Corp. Chief Economist Robert Dan J. Roces expects “renewed demand for inputs” by the time the enhanced community quarantine (ECQ) imposed in Metro Manila and the provinces of Bulacan, Cavite, Laguna, and Rizal will be lifted on April 11.

“When the ECQ is lifted, renewed demand for inputs should cause some rebound in imports of capital goods and raw materials, while a global reflation trade is possible once major economies reopen again. Thus, we still anticipate a trade rebound notably in the second half…,” Mr. Roces said.

For Mr. Mapa, imports of goods and services will continue to expand in the next few months due to base effects and with manufacturers moving to restock depleted inventories.

“Meanwhile, exports may face some challenges in the near term with global trade expected to take a hit after select countries reinstate lockdowns to deal with spiking COVID-19 cases in their areas…” he said.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the government’s export target of 5% this year “is modest and very much attainable.”

“However, imports may be slightly hampered and largely depends on how the government curbs the virus effectively,” Mr. Asuncion said. — Lourdes O. Pilar with inputs from Beatrice M. Laforga

No ‘drastic’ liquidity moves for now — BSP

April 9, 2021 | 12:34 am

THE CENTRAL BANK is not keen on “drastic” liquidity-infusing moves as the impact of the pandemic is better addressed by fiscal measures, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said.

“Where we are right now is that we feel that our current monetary policy stance is still appropriate for the recovery. I don’t think there will be any drastic moves on our part to inject more liquidity into the system,” Mr. Diokno said in a Bloomberg TV interview on Wednesday, noting the impact from the measures rolled out in 2020 have yet to be fully absorbed by the financial system.

The Monetary Board maintained its key policy rate at a record low of 2% at its policy setting in March, as support for the pandemic-hit economy even as inflation surpassed the annual target range of 2-4%.

Central bank officials have assured that they will remain watchful of the inflation spike’s second-round effects such as wage and transport fare hikes.

The National Economic and Development Authority (NEDA) earlier estimated the two-week enhanced community quarantine in Metro Manila and nearby provinces could shave off around 0.8 percentage point from this year’s gross domestic product.

Mr. Diokno said the economy will likely grow by 6%-7% this year, below the official target range of 6.5%-7.5% set by economic managers.

For now, Mr. Diokno said heavier lifting should be on the fiscal side.

“I think there’s still a need for some fiscal stimulus. I think for example, we need to take care of the poor and the vulnerable who were affected by the lockdown,” he said.

Lawmakers are pushing for a third stimulus measure to support affected businesses and drive recovery. House Bill 8628 or the Bayanihan to Arise as One Act, which proposes to allocate P420 billion for a social amelioration program, wages subsidy for affected workers and the acquisition of more COVID-19 vaccines and medicine, among others.

EXTENSION
Mr. Diokno also confirmed that the BSP extended the maturity of the P540-billion loan to the National Government by three months. It was originally supposed to have been repaid in March.

National Treasurer Rosalia V. de Leon said in a Viber message that the no-interest BSP loan should be repaid by July 12.

“We are fortunate that under the revised charter of the central bank, we are really allowed to lend to the government in extraordinary times and these are extraordinary times,” Mr. Diokno said.

Finance Secretary Carlos G. Dominguez III on Tuesday said the government is looking to wind down its loans from the central bank this year or next. — Luz Wendy T. Noble with inputs from Beatrice M. Laforga