booze

Fed move boosts currencies

by BWorld/11.27.08

THE PESO yesterday jumped to a new two-week peak against the dollar on optimism over a US Federal Reserve plan to revive the crisis-hit American economy.

It closed at P49.11 per dollar, thirty-four-and-a-half centavos stronger than Tuesday’s finish.

Most Asian currencies went up against the dollar yesterday as regional stocks rose, but the gains were capped by fears of a sharp economic slowdown in the region.

Analysts said risk aversion, which had dragged the exchange rate to the P50-per-dollar territory last week, has ebbed somewhat as indicated by the first straight three-day rally in US stocks since summer.

The Dow Jones industrial average gained 0.43% on Tuesday in the wake of a US Federal Reserve announcement of a fresh $800-billion massive lifeline to consumers. Stock exchanges elsewhere followed suit.

Under the Fed’s latest plan, the US central bank will buy billions of dollars worth of debt and mortgage-backed securities to increase the flow of credit for mortgages, student loans, car loans and credit cards.

Of the multi-billion new fund, $200 billion will be used to make it easier for consumers to obtain loans to pay for homes, cars and credit cards.

"Risk aversion has stabilized given the positive perception on the measures being adopted by the Fed. The $200-billion facility in the pipeline to directly help consumers was good news," Marcelo E. Ayes, senior vice president of the Rizal Commercial Banking Corp. said.

Gloomy data released on Tuesday showing the US economy contracting at the fastest pace in seven years failed to douse investor confidence, traders said.

Money sent home by Filipino workers abroad as the Christmas holidays draw near also buoyed the peso, analysts said.

The peso opened at P49.30 per dollar and reached a low of P49.40 before settling at P49.11. It averaged at P49.276 per dollar. Volume of dollars exchanged reached $640.25 million.

Meanwhile, the South Korean won rose as far as 1,480.8 per dollar, up almost 1.5% from Tuesday’s domestic close. But it later pulled back to 1,486.6.

The won has lost about 37% against the dollar this year and its near-term outlook remains murky, but analysts at the Barclays Capital said they expected the currency to recover next year.

"Underpinning this view is our belief that Korea is set to see a sharp turnaround in the current account balance over the coming quarters, alongside a stabilization in portfolio flows," they said in client note.

They expect the won to rise to 1,375 by the middle of next year and 1,225 by the end of 2009.

The Taiwan dollar hit a one-week high at 33.184 per US dollar.

The MSCI index of Asia-Pacific stocks excluding Japan rose 1%, extending gains made in the past three sessions.

"While equities will still have a crucial impact on overall sentiment for Asian currencies, markets and investors are rather pessimistic on the real sector in this region," CIMB strategist Suresh Ramanathan said in a note.

The Indonesian rupiah was little changed near 12,500 per dollar.

"The dollar/rupiah should be lower because the dollar is already high enough and selling pressure is there," said a trader in Jakarta.

The Indonesian rupiah, which has fallen almost 25% against the dollar so far this year, hit a 10-year low of 13,100 on Friday.

Meanwhile, the Chinese yuan steadied near 6.8280 per dollar as a government researcher was quoted by state media as dismissing the threat of deflation.

The World Bank has cut its forecast of China’s economic growth in 2009 to 7.5% from 9.2%.

The yuan, which has gained nearly 7% against the dollar this year, has been kept on the tight leash by the central bank since mid-July amid mounting fears of an economic slowdown.

Analysts at DBS Bank said they believed Chinese policy makers would not let the yuan depreciate, despite signs of capital outflows.

"For the time being, it’s better to keep the yuan stable in a tight trading range to anchor economic and financial stability in the region," they said in a research note. — Maria Eloisa I. Calderon with Reuters

dollar rules

BSP eases rules for dollar repo
by Jun Vallecera/BMirror/11.24.08

BANKS may now offer as collateral long-dated dollar-denominated ROPs when they borrow from the central bank’s dollar-repurchase window.

ROPs stand for Manila’s sovereign debt notes denominated in US dollars with maturities of up to 10 years under current guidelines drawn earlier by the Bangko Sentral ng Pilipinas (BSP).

Banks seemed to have run out of ROPs with maturities of 10 years
and below. Hence they urged the BSP to rework the guidelines so that longer-dated ROPs could be used as collateral for borrowings under the central bank’s dollar-repurchase window.

That banks were pushing for longer-dated ROPs as collateral surprised BSP Governor Amando Tetangco Jr., since the guidelines on this have since already been issued.

“The BSP issued a circular and a memorandum to banks the other week liberalizing the guidelines for the US dollar-repo facility. This included the acceptance of dollar-denominated ROPs with remaining maturity of over 10 years,” he said in a text message.

The BSP’s dollar-repurchase window has been made readily available to banks weeks earlier to address what had been described as a perceived inability to obtain commercially available foreign exchange in the market.

Tetangco wanted to dispel the view that foreign exchange, particularly US dollars, has turned difficult to source in the market. That perception pressured the peso against the US, now that the exchange rate is threatening to break the psychologically vital resistance level of P50 per dollar.

Accepting ROPs with maturities beyond 10 years may ease the pressure on banks to put up eligible collateral under the dollar-repurchase window, according to Tetangco.

Apart from the repo facility, the BSP earlier adopted other liquidity-enhancing measures to ensure the flow of credit to corporations and households that need money.

In the US and the European Union, banks and financial institutions have begun turning down new loans for fear that borrowers, pressed for credit in these challenging times, would default on their commitments.

Tetangco is noted that domestic borrowing continues to show positive growth based on data that is at least three-months old.

There is fear, however, that lending has slowed down enough to compel the BSP to adopt preemptive measures to ensure the availability of credit and keep the economy moving.

Such measures include a reduction of banks’ deposit-reserve requirement and the doubling of the BSP’s rediscounting window.

sale! sale!

BPI seeking to raise P5 billion from bond sale
by Erik dela Cruz/BMirror/11.25.08

BANK of the Philippine Islands (BPI), the country’s biggest lender by market value, on Tuesday began offering 10-year bonds to the public worth P5 billion.

The offer represents the first tranche of P15-billion subordinated notes that BPI will sell to raise money to fund acquisitions.

“The offer runs until December 5,” said Girtie Sinio, BPI investor relations officer. “We have approval to issue up to P15 billion.”

The notes are offered at a yield of 8.45 percent, Bloomberg News reported.

Fitch Ratings has assigned an “investment-grade” rating to BPI’s proposed subordinated notes, which qualify as lower Tier-2 capital.

The international debt watcher said in a statement it had assigned a “AA+(ph1)” national long-term rating to BPI’s notes, which will be direct, unsecured and subordinated obligations of the Philippines’ biggest lender by market value.

An “AA” rating denotes expectation of “very low” credit risk, according to Fitch. Such rating indicates “very strong capacity for payment of financial commitments” and that such capacity “is not significantly vulnerable to foreseeable events.”

The rating on the proposed notes is one notch below BPI’s national long-term rating of “AAA(ph1),” which Fitch assigned on November 11 this year.

“The rights of the noteholders will be subordinated to the claims of depositors and other senior creditors, but senior to share capital,” Fitch said.

In October, BPI said it planned to use the supplementary capital for “possible acquisition opportunities” which is widely believed to include the Philippines’ largest insurer, Philippine American Life and General Insurance Co. or Philamlife.

BPI is also partly owned by Southeast Asia’s largest lender, DBS Bank of Singapore.

car bullish

Local car industry lists reasons for bullishness
by Max V. de Leon/BMirror/11.25.08

CONSIDER these: low car-to-people ratio, returning overseas workers who will be looking for new sources of livelihood, local banks still enjoying liquidity and the rising income of Filipinos. These factors inherent to the Philippine market are what, local automakers say, kept them confident these days—even if their counterparts in the developed economies are already frowning. Elizabeth Lee, president of the Chamber of Automotive Manufacturers of the Philippines Inc., said the growth potential in the country remains very high amid the worsening financial and economic crisis. For instance, Lee said, there are currently only 22 owners of vehicles for every 1,000 people in the country, compared with the US where 800 out of 1,000 individuals own a vehicle. With the income of Filipinos rising and the returning overseas Filipino workers turning into entrepreneurs, Lee said the auto industry expects to sell a lot to first-time buyers next year. “The first-time car buyers will come from the expanding upper-C segment who are graduating into the B segment,” Lee, also senior vice president of Universal Motors Corp., said. Supporting the desire of these buyers to purchase vehicles are the financing offers of local banks, which remain liquid and largely unaffected by the financial crisis as attested to by the Bangko Sentral ng Pilipinas, she added. Lee said the high price of oil would not stop them from buying vehicles. It will just influence what type of vehicles they will purchase, which will, of course, be the fuel-efficient types and those that can double for personal and business use. With this, Lee said they remain confident that the industry will reach its target of selling 130,000 units next year even if some of those who already own vehicles will probably postpone making purchases in 2009. Mel Dizon, vice president of Mitsubishi Philippines, said unlike the US and other developed countries, the Asian Development Bank has projected that the Philippines will just experience an economic slowdown and not a recession. “The worst thing that we could do is to import the confidence problem in the US to the Philippines,” Dizon said. He said the government should continue investing in social services, infrastructure, housing and utilities to continue stimulating the economy. Also, Lee said the government should continue giving more support to the micro, small and medium enterprises, especially in terms of financing. With the local banks maintaining their liquidity, Dizon said there will be no credit freeze in the country, although they will put greater emphasis on due diligence. The local car industry continues to grow its sales by 10 percent this year and is poised to achieve its sales target of 125,000 units, as compared to the US and other developed markets that are already seeing declines in vehicle sales.

reverse, unreverse

Lower IBL, reverse-repo deals slow down lending to P2.2T

by Jun Vallecera /BMirror/11.206.08

THE big boys of the banking system, or the so-called regular and the expanded license or universal banks, reported a diminution of their total loan portfolio in September to only P2.237 trillion from P2.35 trillion in August, the first reported for the year. The decline in loans “stemmed from lower interbank loans [IBL] and reverse-repurchase transactions during the month,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said in a statement. This is the market that permits banks to obtain from each other the short-term liquidity they need to meet such commitments as depositor withdrawals or deposit-reserve levels, and this, therefore, reflects the regard they hold counterparty banks of their creditworthiness. Since the subprime-credit problems in the US transformed into a financial crisis of global proportions, Tetangco and the rest of the policymaking Monetary Board have been on the lookout for signs of stresses in the domestic financial landscape. Privately owned banks like the Bank of the Philippine Islands and the Metropolitan Bank and Trust Co. have been quick to point out they continue to lend to regular clients, and this is being validated by BSP data showing sustained bank-lending growth just a shade below 24 percent in August. But some of the more candid private bank officials acknowledge that while banks seem to continue lending as before, a de facto “tightening” has, in fact, started in the form of more stringent documentation requirements. In any case, the decline in aggregate loans in September by an almost imperceptible rate of 0.1 percent could ultimately prove significant given that loan data at the BSP is at least three months old. In August the banks’ total loan portfolio grew by 1.5 percent, according to BSP data. Because the BSP is forced to deal with bank data at least one quarter old, it is often forced to be preemptive. Tetangco said this was the reason the BSP flooded the banking system with tens of billions of pesos worth of extra liquidity when it doubled the budget for rediscounting purposes to P40 billion and lowered the reserve requirement by two percentage points, which effectively freed another P60 billion from the vaults of the central bank and into the private banks for lending. In the same report, Tetangco said the banks also reported a slightly higher incidence of soured or nonperforming loans (NPLs) of 4.04 percent in September, from 3.90 percent in August. “The month-on-month increase in the NPL ratio took place as the 2.54-percent hike in NPLs was accompanied by the 0.96-percent contraction in total loan portfolio,” Tetangco said. The banks’ NPLs rose to P94 billion in September from only P91.67 billion in August even as the total loan portfolio retreated to just P2.327 trillion from P2.350 trillion, he said.

a debt to pay another debt

BDO Leasing to issue debt
by BWorld/11.2608

LISTED BDO Leasing and Finance, Inc. yesterday sought regulatory approval to sell short-term commercial debt worth P2 billion, the bulk of which will be used to pay for maturing loans. The firm will use over 80% of the proceeds to pay Banco De Oro, Philippine National Bank, United Coconut Planters Bank-Trust, Bank of the Philippine Islands, Landbank of the Philippines and Standard Chartered Bank where it has loans that will mature within two months and bear interest ranging from 7.24% to 8.75%. The balance will be used for relending, documents filed with the Securities and Exchange Commission showed. The company, the principal leasing and financing unit of Sy-led Banco De Oro Unibank, said it would pay 4.25% to 5.375% interest for the commercial instruments. It has yet to fix the price. The company chose sister firm BDO Capital Corp. as the underwriter.

the problem with charter

BSP says charter rules out help for non-bank firms
by BWorld/11.26.08

THE BANGKO Sentral ng Pilipinas (BSP) cannot open its lending facilities to non-bank financial corporations because this is not allowed by its charter.

BSP Governor Amando M. Tetangco, Jr. said the central bank charter states that the BSP’s lending facility, particularly its repurchase or overnight lending window, is exclusively for banks’ use.

"One of the important channels of transmission of monetary policy is credit, which is intermediated by banks," Mr. Tetangco told BusinessWorld in a mobile "text" message.

"Therefore, dealing directly with the non-financial corporate sector will run counter to this provision of law and may undermine this important transmission channel."

In its Regional Economic Outlook for Asia and the Pacific released Monday, the International Monetary Fund urged policymakers to ensure liquidity in their respective economies in order to contain the impact of the global financial turmoil and maintain economic activity.

One of its policy recommendations was for central banks to open its facilities to non-bank financial institutions and even to non-financial corporations to address any possible liquidity crunch.

But Mr. Tetangco said there is enough cash circulating in the system, especially after it doubled the budget for its rediscounting window to P40 billion from P20 billion, and after it cut banks’ reserve requirement ratio by two percentage points that freed up P60 billion in the system.

It also opened dollar-denominated lending and borrowing facilities for banks, allowed banks to reclassify their financial assets to trim their losses, and eased its rules on asset cover on banks’ foreign currency deposit liabilities.

Money circulating in the economy grew by 13.5% in September, which, according to monetary officials, was sufficient to sustain economic activity. — Gerard S. dela Peña

from sweet to sour

Banks’ soured loans jump in September
by BWorld/11.26.08

COMMERCIAL and universal banks’ soured debts as proportion of total loans rose slightly in September, the central bank said, although they stayed below the level posted a year ago.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the NPL ratio rising to 4.04% that month, up from 3.9% in August, but lower than the 5.19% posted in the same month a year ago.

This snapped an improving trend that saw the NPL ratio dipping below the pre-Asian financial crisis level of 4%.

The BSP attributed the rise to the 2.54% hike in NPLs to P94 billion from P91.67 billion a month ago, coupled with a 0.96% decline in banks’ total loans to P2.33 trillion from P2.35 trillion.

"The decline in loans stemmed from lower interbank loans and reverse repurchase transactions during the month," the BSP said in a statement.

Loans are considered non-performing when left unsettled 90 days after the agreed upon maturity date.

Excluding banks’ lending to one another, the NPL ratio also rose to 4.56% from the previous month’s 4.49%, but this was lower compared to 6.31% last year.

The rise in the NPL ratio was due to the faster rise in dud loans compared to the 0.86% expansion in regular loans to P2.06 trillion from P2.04 trillion in August. — Gerard S. dela Peña

taking stock

Stocks rally propels peso to two-week high
by BWorld/11.26.08

THE PESO yesterday soared to a two-week high against the dollar, tracking the rally in stock exchanges as plans bared by the US President-elect Barack Obama to stem the economic crisis and after the US government extended Citigroup Inc. a lifeline boosted investor confidence.

It closed at P49.455 per dollar, a steep thirty seven-and-a-half centavo climb from Monday’s finish. The local currency was last seen at this level on Nov. 13, when it settled at P49.49 per dollar.

Traders said financial markets cheered Mr. Obama’s plan of a two-year stimulus package to save a faltering US economy and his introduction of the team that will help him navigate the global financial crisis.

"That showed that he’s ready to tackle the crisis, by his forming a new economic team and creating new policies," a trader said."That was positive for the market. Asian currencies appreciated today."

The MSCI index of Asia-Pacific stocks excluding Japan rose 2.9%, heading towards a third consecutive daily gain.

The stock market rally came after the US government agreed to inject $20 billion of new capital into Citigroup and shoulder hundreds of billions of dollars of its risky assets to limit further damage to the global financial system.

The rally on Wall Street gave the peso a strong start, opening at P49.50 per dollar and climbing to an intraday peak of P49.44.

The central bank, however, was believed to have stepped in, buying dollars to provide the US currency some support. — MEIC with Reuters

It's the alREIT

REITs bill gets committee OK
by Jhoanna Frances S. Valdez with a report from R. A. M. Rubio/BWorld/11.26.08

THE HOUSE economic affairs committee yesterday approved a measure that will allow investors to co-own income-generating real estate assets but said the bill’s tax provisions are still up for perusal by the ways and means committee.

Cebu Rep. Ramon H. Durano, committee chairman, said the unnumbered House bill (HB) on real estate investment trusts (REITs) "has undergone a thorough study and is fit for passage at the committee level" but the tax incentives must have the go-ahead of the ways and means committee.

The bill consolidates three separate bills aimed at establishing REITs.

Finance Secretary Margarito B. Teves, in a letter to Mr. Durano, said he opposes those incentives.

"We believe the proposed DST (documentary stamp tax) exemption on the transfer of property to the REIT, the IPO (initial public offering) tax exemption and the VAT (value-added tax) exemption of the sale of REIT securities will not promote a level playing field," he wrote.

Francis Ed. Lim, Philippine Stock Exchange president and chief executive, who attended yesterday’s hearing, suggested limiting the grant of these incentives to five years as compromise with the Finance department, to which the committee concurred.

Another amendment the committee adopted was to limit REITs’ total allowable borrowings and deferred payments to 45% of deposited property from the original 35% , which can be raised to 60% for as long as the REIT has an "A" credit rating by a agency recognized by the Securities and Exchange Commission.

Aurora Rep. Juan Edgardo M. Angara, one of the bill’s co-authors, doubted the credibility of rating agencies and moved that the panel just settle for a fixed percentage limit.

REITs are stock corporations that pool investors’ funds and invest these in real estate ventures. They acquire property and have independent fund managers.

At least 75% of a REIT’s deposited property must be invested in income-generating real estate located in the Philippines.

Allowable investments are income-producing real properties; real estate-related assets; managed funds, debt securities and shares issued by listed or foreign non-property corporations; government securities; and cash and cash equivalent items.

The House bill requires a REIT company to have a minimum paid-up capital of P1 billion at the time of its registration, while the Senate bill provides for a P100-million capital.

Mr. Lim said he has asked Senator Edgardo J. Angara, author of the Senate version and Rep. Angara’s father, to adapt the House version so his bill will reflect the same amount of paid-up capital.

Some proposed amendments were rejected yesterday. One was to insure investments against souring.

Nueva Ecija Rep. Eduardo Nonato M. Joson said the concept of investment insurance should be introduced to the country to protect investors in the event REITs collapse.

Mr. Lim, however, said the concept of insuring an investment is "easier said than done and too expensive" and no insurance company is offering the product.

Mr. Angara added that a bailout will constitute a moral hazard.

"If there is an investment insurance offered, chances are that investors will take bigger risks, even venturing out to complicated securities like derivatives without fully understanding their consequences," he said.

Mr. Durano said that investor-protection schemes under the bill, which include tight disclosure of of a REIT’s monetary transactions and oversight by independent directors, will have to suffice. —

manufactured numbers

Manufacturing output growth surges in Sept.
BWorld/11.26.08

FACTORY OUTPUT posted strong growth in September, rising by double digits in both volume and value terms, the National Statistics Office yesterday reported.

The volume (VoPI) and value (VaPI) of production indices grew by 12.5% and 19.7%, respectively, traced to higher prices and a weaker peso.

Both had eased a month earlier, with the VoPI up 6.5% from July’s 8%, and the VaPI at 12.7% from 14.2%.

"I think that the rise in the VoPI and VaPI can be traced to the escalation of prices in the third quarter," University of Asia and the Pacific senior economist Cid L. Terosa said.

Philippine Exporters Confederation president Sergio Ortiz-Luis, Jr. said "For one, the dollar was strong during that month ... and this meant more market for the sector."

University of Asia and the Pacific economist Victor A. Abola said "We should be feeling the slowdown already ... so that (the growth) is good news actually."

no growth hormones

Q3 growth may be weakest in 3 years
by Reuters/BWorld/11.26.08

ECONOMIC GROWTH probably slowed to its weakest pace in three years in the third quarter, dragged lower by weaker exports and high inflation, a Reuters poll showed.

The median estimate of 10 economists was for third quarter gross domestic product (GDP) to have expanded 4.4% from a year ago against 4.6% annual growth in the second quarter due to flagging exports as demand from the country’s main trading partners weakens amid the global financial crisis.

The market estimate falls within the government’s July to September growth forecast of 3.8-4.6% from a year earlier.

The economy is likely to have contracted a seasonally adjusted 0.4% in the third quarter from the second quarter, according to the median of three forecasts.

"The slowdown reflects the sharp deterioration in the external environment and the fact that many Asian economies are very externally dependent," said Simon Wong, an economist at Standard Chartered Bank in Singapore.

"This is the first time in many years that we are seeing a contraction in all major developed economies and the Philippines is very dependent on exports."

The government will release official growth data today.

Manila sends nearly a fifth of its exports to the United States and about 14% to Japan, which slipped into its first recession in seven years in the third quarter. Exports account for nearly a third of the economy in expenditure terms.

Economists expect the global economic slowdown to cool growth in the Philippines to 4.5% this year, within the government’s forecast of 4.1-4.8% growth, from a 31-year peak of 7.2% in 2007.

Growth is expected to weaken further to 4.0% next year when the impact of the worst financial crisis in decades takes a further toll, the same poll showed.

Domestic consumption, fuelled by record remittances from Filipinos working abroad, as well as higher government spending on infrastructure should continue to support growth in the fourth quarter, analysts said.

But there are doubts whether remittances would continue to boost growth in 2009 as the weaker global economy endangers jobs held by Filipinos.

Inflation is seen returning to single-digit levels before yearend from a 17-year peak of 12.5% in August, allowing for monetary policy easing by December, analysts said. —

the business of education

Businesses move to boost quality of teachers
by Bernardette S. Sto. Domingo/BWorld/11.26.08

THE NUMBER of students enrolling in education courses may be rising but their population as a percentage of the total number of college enrollees is actually shrinking. And for a group of businessmen, the quality of students in teacher-training courses is suspect.

Concerned over the declining quality of the country’s labor force, especially when it comes to English-language skills, the business advocacy for education reforms is tracing the problem to poor school instruction, particularly at the primary and secondary levels.

It’s easy to see why: education courses are no longer attracting the best and the brightest, considering that a call center worker is paid more than a public school teacher.

Education, though, remains the third most popular college major. Nearly two decades ago, it was next to business management and engineering and technology, with 242,828 students — 18% of 1.3 million high school graduates who went to college that year — enrolling in teacher-training and education courses in 1991.

The share of education majors to the total went down to about 15% in 2005, the latest data available. Out of 2.5 million high school graduates, education and teacher training attracted 388,735, next to the 454,415 who took up medical and allied courses and 544,286 who chose engineering.

Businessmen have started to pool resources to create incentives that will hopefully lure the country’s top high school students into taking up education, and are appealing to others to contribute.

The Philippine Business for Education (PBED) notes that while the number of high school students wanting to become teachers has remained significant, the education profession has become less and less attractive.

"The business community is worried about how Philippine education has deteriorated ... Perhaps the most important [factor] is that the quality of teachers is deteriorating," Philippine Investment-Management, Inc. (Phinma) President and PBED founder Ramon R. del Rosario, Jr. said in a recent interview.

He said qualified students who really want to teach end up choosing other courses which promise a more rewarding career.

Philanthropy, Mr. del Rosario said, is key to bringing opportunities closer to poor families and enticing poor but deserving young people to pursue a career in teaching.

The PBED, composed of 69 corporations, is hoping to make a dent through the 1,000 Teachers program, introduced early this year. The program, which provides scholarships and other perks to high school graduates pursuing an education career, has so far benefited 98 students out of 294 who had applied. The PBED aims to help 1,000 a year in five years.

"This program was adopted to make the profession more appealing. We give these students the means to pursue this career," Mr. del Rosario said.

More than 20 universities have agreed to provide scholarships. The program provides a monthly stipend of P2,000 and book allowances. But graduates must commit to spend five years of teaching in the Philippines, most preferably in the community where they came from.

However, helping students finish education courses is not enough, Philippine American Life and General Insurance Co. (Philamlife) President Jose L. Cuisia, Jr. said, adding compensation plays an important role in enticing students to teach.

"It’s not enough to do this (the program) but it’s a good start. The government needs to see what they can do to increase compensation for teachers," he said.

Bank of the Philippine Islands (BPI) President Aurelio R. Montinola III noted that entry-level teachers started with a P10,000 monthly salary some 10 to 15 years ago. The amount has grown to P17,000-18,000 but this is below what an entry-level call center agent earns.

"Fresh graduates can earn as much as P20,000 to P25,000 in the call center industry," Mr. Cuisia said.

PBED members Phinma, Philamlife and BPI are among the program’s biggest donors.

Mr. del Rosario said major corporations should do their part in helping to improve the quality of teachers. "We want to see Filipinos who can do good jobs and sustain them. The answer to poverty is education ... relevant education to help improve the quality of poor people’s lives."

Mr. Cuisia said the government should set its priorities straight and allocate limited resources properly.

"We see continued misuse of resources every year. The business community can only do so much like pay taxes but the government has to do its part by improving the education infrastructure," he said. —

shocks! more shocks?

IMF says more shocks likely
by Gerard S. de la Peña/BWorld/11.26.08

THE PHILIPPINES and other Asian countries could be hit by more economic shocks, the International Monetary Fund (IMF) warned, as domestic consumption might not be enough to hold up economies given a substantial weakening of export receipts.

An IMF official called for interest rate cuts and said governments must hike public expenditures to stimulate economic activity, as well as make sure financial systems remain stable so banks continue lend — giving them more capital through public funds if necessary.

In a teleconference with journalists on Monday evening, Jerald Schiff, senior adviser at the IMF’s Asia and Pacific Department, said Asian economies would be hit hard hit by external shocks even if economic "fundamentals," like dollar reserves and strong corporate earnings, remained strong.

The IMF expects Asia’s economy as a whole to grow by 6% this year, down slightly from an earlier forecast of 6.1%. Next year, the multilateral agency sees a "substantial slowdown," with growth of only 4.9%. The original 2009 forecast was 5.6%.

"Risks to this outlook are unusually large and tilted squarely to the downside. In particular, a sharper-than-expected global slowdown and a more protracted period of financial turmoil could raise pressures on corporates and households in Asia, contributing to a rise in bad loans and risking an adverse cycle of tightening credit conditions and deteriorating growth," Mr. Schiff said.

He said an export slowdown was a given considering that major markets were drying up, but financial sector links between Asia and developed countries in the West would also drag down the region’s economies.

"We never actually expected the region to de-couple," Mr. Schiff said in response to a question raised by BusinessWorld.

"And ... in this particular situation, we can see that it is not just trade linkages but also financial sector linkages that are causing de-linking to be even less of a plausible expectation."

In its latest Regional Economic Outlook for Asia and the Pacific, the IMF said the Philippine economy would grow by 4.4% this year, unchanged from its previous forecast, and by 3.5% in 2009, lower than the earlier forecast of 3.8%.

The IMF’s 2008 growth projections for the Philippines are well within the government’s revised forecast range of 4.1-4.8%, but its outlook for next year is lower than the official forecast of 3.7-4.7%.

The World Bank has trimmed its 2009 forecast for Philippine gross domestic product (GDP) to 3-4% from 4-4.5% this year. The Asian Development Bank has forecast 4.7% growth next year from 4.5% this year, but could still revise its estimates.

With weaker exports bearing down on growth, Mr. Schiff pointed out that most of economic growth would have to come from demand.

"Domestic demand will be supported to some extent by lower oil prices which represents an important turnaround from the past several years, and also in many countries by policy stimulus.

"But still I think it’s an open question as to how strong domestic demand can be when exports are declining," he said.

Around 70% of the Philippines’ GDP is due to private consumption, fueled by remittances from overseas workers.

Exports, which are equivalent to 40% of economic output, grew by merely 1.2% in September. The government now expects export growth of 2-4% this year from 5% earlier, and only 1-3% next year from the original 7% estimate, with the crisis hitting top markets United States and Japan.

Philippine central bank officials last week said domestic demand may be sustained by robust remittance inflows, which are expected to reach $16.6 billion by yearend, or about 15% more than the $14.4 billion posted in end-2007.

it's not so oily anymore

Oil prices tumble; gas falls to 2004 levels
By Mark Williams, AP Energy Writer/11.26.08 Oil tumbles on weak GDP, housing, consumer confidence figures; gas prices hit 2004 levels.

COLUMBUS, Ohio (AP) -- Oil prices fell nearly 7 percent Tuesday and gasoline prices fell to levels not seen since 2004 as a raft of lousy news about the economy, housing and the consumer state of mind suggested the U.S. is headed toward the worst recession in decades.

The government reported that the nation's gross domestic product in the United States shrank 0.5 percent in the third quarter, which was worse than expected. It was the worst showing since the economy contracted 1.4 percent in the third quarter of 2001, during the last recession.

Consumers and businesses have pulled back on energy spending, with massive layoffs and cost-cutting across almost every sector. That means less money will go toward powering everything from industrial plants to automobiles.

The Paris-based Organization for Economic Cooperation and Development said Tuesday that economic output next year would likely shrink by 0.4 percent for the 30 market democracies that make up its membership, against the 1.4 percent growth prediction for 2008. That would be the worst global recession since the early 1980s.

After spiking Monday on news that the U.S. would bail out financial giant Citigroup, light, sweet crude for January delivery on Tuesday tumbled $3.73 to settle at $50.77 a barrel on the New York Mercantile Exchange.

In London, January Brent crude fell 6 percent, or $3.57 to settle at $50.35 a barrel on the ICE Futures exchange.

The New York-based Conference Board reported that while consumer confidence in the U.S. rose in November as gas prices fell, Americans' views on the economy remain the gloomiest in decades amid widespread job losses, slumping home prices and dwindling retirement funds.

Gasoline prices nationwide continued to decline, falling 2.3 cents overnight to $1.885, their lowest levels since September 2004 when the average price for three days was $1.886, according to auto club AAA, the Oil Price Information Service and Wright Express. The current price is $1.20 below where it was a year ago and down $2.225 from the peak in July when prices hit $4.11 per gallon.

Meanwhile, a widely watched index showed home prices dropping by the sharpest annual rate on record in the third quarter as foreclosures continued to hammer prices and the tumult on Wall Street kept more homebuyers out of the market.

The Standard & Poor's/Case-Shiller U.S. National Home Price Index tumbled a record 16.6 percent during the quarter from the same period a year ago. Prices are at levels not seen since the first quarter of 2004.

Unlike on Monday, when news of Citigroup's rescue seemed to support oil prices, the announcement that the Federal Reserve would buy up to $600 billion in mortgage-back assets provided little optimism at Nymex.

"This independent weakness is indicative of market yet to achieve a bottom," said Jim Ritterbusch, president of Ritterbusch and Associates.

Ritterbusch said he expects Wednesday's weekly government inventory report of oil supplies could indicate even more of a pullback.

Oil analyst Stephen Schork downplayed claims that the Citigroup bailout led to Monday's rally in oil markets.

"Perhaps it is, assuming all of that Fed money that is now carpeting Wall Street actually begins to free up credit so traders can get back to trading," he said in a note Tuesday. "Otherwise, yesterday's pre-holiday short-covering rally was just that."

Even though gasoline consumption remains below year-ago levels, there are signs that the weakness is beginning to ebb, according to the weekly SpendingPulse report by MasterCard.

The report's four-week moving average shows weekly gasoline sales of 63.3 million gallons were down 3 percent from a year ago, the smallest year-over-year decline since the first week of July, according to the report. The year-ago numbers included the week of Thanksgiving.

"It looks like consumers are moving back toward more normal driving patterns," said Michael McNamara, vice president of MasterCard SpendingPulse.

Investors are eyeing the Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, for signs the group may reduce output quotas at an informal meeting Saturday in Cairo.

Venezuelan Oil Minister Rafael Ramirez said Sunday that OPEC should cut oil production by 1 million barrels per day at the Cairo meeting. OPEC President Chakib Khelil said Monday that if the organization met today, a cut of 1 million barrels would not be enough to support oil prices. But Khelil has said in the past that OPEC needs more time to evaluate the effect of previous production cuts.

The group, which cut output by 1.5 million barrels a day last month, will hold its next official meeting on Dec. 17.

In other Nymex trading, gasoline futures dropped 4.76 cents to settle at $1.0949 a gallon. Heating oil slid 8.56 cents to settle at $1.6988 a gallon while natural gas for January delivery tumbled 44.1 cents to settle at $6.386 per 1,000 cubic feet.

Associated Press writers Jeannine Aversa in Washington, Anne D'Innocenzio in New York, Pablo Gorondi in Budapest, Hungary, and Alex Kennedy in Singapore contributed to this report.

firming up

Peso firms up on BSP intervention
by MEIC/BWorld/11.20.08

THE PESO yesterday backed away from the P50-per-dollar territory, thanks to central bank intervention that prompted banks to cash in.

It closed at P49.89 per dollar, five centavos firmer than Tuesday’s two-year trough after banks failed to break the crucial P49.999 per dollar level for two days in a row.

The local currency was locked in a tight trading range, opening weak at its intraday low of P49.999 per dollar and reaching a high of P49.84 per dollar.

"The BSP [Bangko Sentral ng Pilipinas] was obviously there to prevent the dollar from closing at the P50 per dollar territory. Banks just trimmed their long position because it was obvious they would not be successful. It has been two days since they tried to break P49.999 but failed," a trader said.

A "gentlemen’s agreement" that required banks to halve their dollar purchases from $50 million, or 20% of their unimpaired capital, kept banks from loading up on the US currency despite lingering worries over the health of the global economy, traders said.

"We buy on dips. Risk aversion is still there," a trader said.

A lack of demand from importers covering their dollar requirements also gave the peso support.

"There’s no commercial demand so the volume was meager. The trading range was very narrow," a trader said. -end-

tap dancing with the bond market

More firms tap bond market
by Maria Eloisa I. Calderon/BWorld/11.20.08

PHILIPPINE companies are increasingly relying on the domestic bond market to raise capital as borrowing costs have increased elsewhere and global credit conditions have tightened, according to a study by the Asian Development Bank (ADB).

The November issue of ADB’s Asian Bond Monitor showed the Philippine corporate bond market growing by 21.94% by the end of the first half from end-December, outpacing the 6% expansion in emerging East Asia.

It churned out a volume of P260.37 billion in the first six months of the year, faster by 29.27% year-on-year. Volume in the first half of 2007 only amounted to P201.42 billion.

The local currency corporate debt market accounted for more than 10% of total bond issues that included government securities in the first half, rising steadily from only 7.8% in 2006.

Corporate bond issues represented 3.72% of the country’s gross domestic product as of the first semester, a two-fold increase from less than 2% three years ago, according to the ADB report.

"Amid tight credit conditions on international debt markets, corporations opted to finance through the peso market," read the report.

New issues of peso-denominated corporate bonds in the first half reached P43.1 billion, accounting for about 17% of total corporate bonds outstanding.

A large chunk of these issues were subordinated notes floated by banks, including the Banco de Oro Unibank, Inc., the Land Bank of the Philippines and Rizal Commercial Banking Corp., as well as Lucio Tan-controlled Allied Bank and Philippine National Bank, the ADB said.

Only two local firms — First Gen Corp. and SM Investments Corp. — issued debts denominated in dollar in the first half, it added.

First Gen raised $260 million of five-year convertible bonds in February, while SMIC issued $350 million worth of debts of similar tenor.

The study did not take into account recent corporate bond issuances by the Ayala group.

Two other banks — Bank of the Philippine Islands and Security Bank Corp. — have recently announced plans of a subordinated debt offer, indicating that appetite in the domestic corporate bond market has yet to fizzle out.

Eduardo V. Francisco, president of BDO Capital — one of the country’s most active bond arrangers — noted that banks had to raise more capital to keep pace with rising loan demand and to comply with stricter Basel 2 rules.

"Banks have to strengthen their capital base because that’s part of Basel," Mr. Francisco said.

"Also, our loan growth is coming from a low base because during the Asian crisis corporations were a bit gun-shy. The corporates are now ramping up, doing capex that they have to fund. As corporates increase borrowing, banks also have to raise more capital to cover these assets," he added.

Borrowing from the international capital market is becoming less and less attractive after foreign banks began locking their doors as the global financial crisis escalated.

"It’s going to be harder borrowing offshore because of country-risk issues. We’re relying on our own markets. There’s a lot of liquidity on the peso side," Mr. Francisco pointed out.

The same ADB report said Asia’s local currency bond markets have shown resilience to the global credit turmoil and can be a key source of funds for governments looking to finance expansionary fiscal policies to offset an anticipated economic slump.

"Domestic borrowing is likely to increase as funding becomes harder to access on the foreign market," Jong-Wha Lee, head of ADB’s office of regional economic integration, said in a statement.

it's the economy....again

Senators seek tax cuts; deficit-to-GDP ration 0.5% eyed

by Cai Ordinario/B' Mirror/11.20.08
HAVING admitted that hitting a balanced budget is no longer feasible for 2010, the National Economic and Development Authority (Neda) said members of the Development Budget Coordination Committee (DBCC) are now discussing the possibility of having a deficit that's 0.5 percent to 1 percent of the gross domestic product (GDP) by 2010.

Senate President Juan Ponce Enrile said ballooning budget-deficit projections in 2009 would likely prompt Congress to speed up passage of laws to “reduce tax exemptions given to certain sectors of the economy” rather than pass new taxes with the country still reeling from the global financial meltdown.

Sen. Edgardo Angara agreed, saying the government should adopt tax cuts to give the people respite from the backlash of the worldwide economic slowdown.

Angara suggested that the government temporarily cut the 12-percent value-added tax (VAT) to 10 percent for at least two years “to give back spending money to households and spur domestic spending.”

“This and other [tax-relief measures] could be time-bound given that economic experts have predicted that the international financial crisis could last for at least 24 months,” Angara added.

Neda Director General Ralph Recto, also the socioeconomic planning secretary, said the 0.5 percent to 1 percent of the GDP figure is not yet final. He, however, estimated that this might translate into a deficit of around P90 billion to P95 billion.

“It will be hard to do a balanced budget in 2010. A deficit of 0.5 [percent] to 1 percent of GDP, I estimate, would be around P90 billion to P95 billion,” Recto told reporters on Wednesday.

“There is no decision on this yet; there is also no proposal. But this has been discussed [among] DBCC members,” he added.

The DBCC is an interagency committee composed of the secretary of budget and management as chairman; the director-general of the Neda as cochairman; and the Executive Secretary, secretary of finance, and the governor of the central bank of the Philippines as members.

The committee determines the level of annual government expenditures and the ceiling of government spending for economic and social development, national defense and government debt service; the proper allocation of expenditures for each development activity between current operating expenditures and capital outlays; and the amount set to be allocated for capital outlays broken down into the various capital or infrastructure projects.

Recto explained that the 2010 deficit would help finance the government’s increased infrastructure and social-spending program, which will include the conditional cash-transfer program and infrastructure projects, which the government is eyeing to speed up.

Besides this, Recto also cited a need to recapitalize the Bangko Sentral ng Pilipinas (BSP) and provide funds for one-time expenses, such as the possible computerization of the May 2010 presidential elections.

However, besides the fact that a deficit is necessary to finance all the monetary needs of the government, Recto said there is a need to improve the quality of spending the deficit—making sure it will help improve the economy, such as increase the number of jobs created annually.

Speaking to reporters after a committee hearing, Enrile acknowledged that the 2009 budget deficit will increase, “and if there is a need to pass new laws or revise present laws to refine them in order to reduce the exemptions being given to certain sectors of the economy, then it is possible that that will be done.”

Enrile assured, however, that “at the moment, there is no definite effort to impose new taxes [but] the rationalization of tax-incentives laws.”

In the same interview, Enrile confirmed he would stay on as concurrent chairman of the finance committee until the conclusion of floor deliberations on the P1.4-trillion proposed national budget for next year.

“We are in the middle of the debates…I have to finish it because I was the one who heard the matter,” Enrile told reporters.

He said the Senate finance committee is currently reviewing the readjusted revenue projections to support proposed expenditures in the 2009 budget bill, adding that “there is no realignment yet because we are still verifying the assumptions.”

no extra export

Recto:growth targets to hold on export drop by Cai U. Ordinario / Reporter

B' Mirror/Tuesday, 18 November 2008 00:13

EVEN with the Philippines’second-largest export market, Japan, announcing a -0.1-percent gross domestic product (GDP) growth in the third quarter, the National Economic and Development Authority (Neda) remains confident that the government’s growth targets this year and in 2009 will hold. The National Statistics Office (NSO) reported that from January to September 2008, exports to Japan amounted to $6.03 billion, or 15.51 percent of the country’s total export, for the first nine months of the year. This made Japan the Philippines’ second-largest export market, second to the United States. Neda Director General and Socioeconomic Planning Secretary Ralph Recto said the government has already factored in its growth assumptions the possible slowdown in its export markets, such as Japan and the US, in the recent downward revision of its economic forecast for 2008 and 2009. The Development Budget Coordination Committee (DBCC) now projects that the economy will post a growth of 4.1 percent to 4.8 percent in 2008 and 3.7 percent to 4.7 percent in 2009. These were the latest economic target revisions done by the government after the US financial crisis snowballed into a global economic recession. “It’s a fact that our external accounts will be negatively affected. We have factored this in the last revision of the government’s growth targets,” Recto said. What is important right now, Recto said, was the implementation of mitigating measures to help the economy cope. He said this includes encouraging Filipinos to invest in local banks, especially with the global recession. Recto estimates that Filipinos have around $70 billion to $80 billion in foreign banking accounts. If all these funds are invested in domestic financial institutions, this will help cushion the effects of the crisis and strengthen the country’s financial system. “I don’t know why Filipinos still trust foreign fund managers when the credit crisis was made in the West,” Recto remarked. Apart from this, Recto said he believes there is also a need to adopt a more comprehensive tax rate in the medium and long term in order to keep the Philippines’ revenues afloat, even in times of crises. Recto said while the government’s revenues to GDP ratio has been flat and is going down, this is mainly due to problems encountered with individual tax payments. However, Recto said, this is not to say that the individual tax exemptions to be implemented next year will be a cause for concern for the government. Starting January 1, 2009, minimum-wage earners will be exempted from paying income tax, while taxpayers will get higher tax exemptions. Companies will also start to enjoy a lower corporate income tax at 30 percent next year from the previous rate of 35 percent. The Neda chief said while the finance department has not yet released a formal study on how much this will cost the government, tax exemptions and the lowering of corporate income tax can still help the economy next year. Recto explained that higher exemptions and a lower corporate income tax can also spur consumer demand and give more financial room for companies to cope with the crisis and possibly to prevent them from laying off workers next year. This will prove to be crucial, especially with some economists seeing higher unemployment levels next year. State-owned Philippine Institute for Development Studies president Josef Yap earlier estimated that the country’s unemployment rate may hit 8 percent to 9 percent in 2009.

The business of swiping

The Business of Consumers: Say 'no' to surcharges
(11.20.08/B'Mirror)

HE raging preholiday shopping frenzy brings to the fore a perennial sales transgression of business establishments victimizing credit-card holders. When a customer pays with a credit card, some stores tack a surcharge on the tag price of the item, thus, credit-card users pay more than those who do in cash.

Picture this: You wanted to reward yourself this Christmas by buying a flashy new mobile phone, but the trouble is you do not have enough cash yet. Fortunately, the store is accepting credit cards. But the lucky feeling starts to fade when the store gives you the terms for credit-card transactions.

According to the sales representative, the price tag did not indicate an additional 10 percent charge for credit payment plus value-added tax or VAT.

In situations like this, the customer is at a disadvantage because the bank already charges the customer a credit service fee.

Thus, the Department of Trade and Industry (DTI) reminds establishments of the strict enforcement of Department Administrative Order 10, Series of 2006, or DAO 10.

DAO 10 reiterates the “Rules on Price Tags/Labels and Providing Prohibition against the Imposition of a Surcharge, Extra Charge or Additional Charge in the Use of Credit/Automated Teller Machine (ATM)/Debit Cards for Payment of Purchases of Consumer Products or Services.”

Simply put, all establishments must have tags written clearly, indicating the price of the product, including value-added tax (whenever the item is vat-able) and other types of charges per unit in pesos and centavos.

It, likewise, emphasizes the One Price Tag policy, which says that whether the client pays in cash or through card, the same price indicated in the tag of the goods or services will be paid. No extra charge shall be added to the price indicated in the tag regardless of the mode of payment.

However, some retailers try to circumvent the law. For example, according to the price tag a product costs P350, but your official receipt indicates that instead of paying this P350, you have to pay P380 because there is an additional charge for credit transactions, whereas as an incentive for paying in cash, you get to pay less.

Retailers argue that the price on the tag of the item is a discounted price whenever a client pays in cash, and the regular price is charged for credit-card transactions.

Under the Price Tag Law, as embodied in Article 81 of Republic Act 7394, otherwise known as the Consumer Act of the Philippines, consumers who pay in cash shall pay only the price indicated in the price tag, and those who pay through a credit/ATM/debit card shall pay only the price indicated in the price tag. When the retailer offers the consumer an option to pay in cash, card or on installment, the same is allowed provided the payment options shall be disclosed by way of separate information to the consumer, but not in the price tag. A price tag indicating a separate cash price tag and cash price tag on each product or service is not allowed.

Furthermore, Section 3 of DAO 10, or the “Modes of Payment and other Price Tag Practices,” states that: “It is necessary to consider business practices relative to the mode of payment to determine compliance with Price Tag Law. These practices include the following:

1. When the consumer pays in cash, he shall pay only the price indicated in the price tag.

2. When the consumer pays through a credit/ATM/debit card, he shall pay only the price indicated in the price tag.

3. When the retailer offers the consumer an option to pay in cash, card or on installment, the same is allowed provided the payment options shall be disclosed by way of separate information to the consumer, but not in the price tag.

4. Price tag indicating a separate “cash price tag” and “regular price tag” on each product or service is not allowed.

5. Price tag indicating a separate “cash price tag” and “card price tag” on each product or service is not allowed.

The DTI is strictly monitoring stores to see if they are observing the single-price-tag rule that serves as a guide to consumers on the exact amount they have to pay.

At the end of 2007, out of the 338 establishments monitored in the National Capital Region, 20 were found not complying with DAO 10, and most of the complaints are against restaurants padding up prices as against menu price cards and travel agencies charging an additional 5 percent on the amount of tickets on credit-card transactions.

From January to September of 2008, out of the 1,978 establishments monitored nationwide, a 1-percent rate of establishments was found not complying with DAO 10.

Thus, the DTI encourages the buying public to report violators immediately by calling DTI Direct 751-3330 so that other consumers will not be victimized by this unlawful practice.

Administrative fines in such amount as deemed reasonable by the secretary, which shall in no case be more than P300,000 depending on the gravity of the offense, and an additional fine of not more than P1,000 for each day of continuing violation, will be imposed to violators.

Send your feedback and queries to konsyumeratbp@gmail.com. For in-depth information on consumer issues, listen to Konsyumer Atbp. every Saturday, 10:00-11:30 a.m. over dzMM 630kHz. For consumer complaints, call the DTI Consumer Assistance Hotline 751-3330 or Text DTIcomplaint and send to 2920 for Globe and Smart subscribers.This e-mail address is being protected from spambots. You need JavaScript enabled to view it

it's all about the money

10-mo deficit up 50% to P62B

by Jun Vallecera / Reporter

Business Mirror/Wednesday, 19 November 2008 01:

PUBLIC spending accelerated by more than 19 percent in October alone and a little over 10 percent in the first 10 months, allowing the budget deficit to rise by 50 percent from a year earlier to P62.3 billion, the Department of Finance (DOF) reported on Tuesday.

The escalation is positive proof the fiscal-stimulus package is still at work and making progress to help ensure growth averaging at least 4.1 percent in terms of the gross domestic product (GDP) this year, no matter the apprehension of the International Monetary Fund (IMF).

Senior officials, led by Treasury chief Roberto Tan and Finance Undersecretary Gil Beltran, told reporters the deficit in October alone widened from only P1.5 billion a year ago to P9 billion.

“The worries expressed by the IMF on our fiscal-stimulus package is misplaced. Our capital outlay, as you can see, continues to grow,” Beltran said.

According to Beltran, some 40 percent of total spending the past 10 months financed the construction of many infrastructure programs around the country.

“That should take care of our growth target this year,” he said of the public money seen to boost growth ranging from 4.1 percent to 4.8 percent this year.

The IMF previously noted that while the monetary sector has responded to the global financial turmoil with several liquidity-enhancing measures, the fiscal sector has not been as quick or innovative.

The IMF said domestic taxes have been weak through the year and must be monitored in the months ahead; and that the year’s tax effort, or tax collection as percent of GDP, should remain broadly unchanged from last year’s 14 percent.

The IMF also said the impact of higher current spending should be blunted by “lower capital expenditures” resulting from ‘weak absorptive capacity.’”

According to the DOF, the year’s 10-month revenues hit P972.6 billion, up 8.5 percent from last year’s P896 billion.

This was made possible by the 12-percent rise in collections by the Bureau of Internal Revenue (BIR) to P644.8 billion, and the 27-percent rise in collections by the Bureau of Customs; these partially offset the 10-percent and 37-percent contraction in the collections of the Bureau of Treasury and other offices of government
to P53.1 billion and P56.4 billion, respectively.

As the officials pointed out earlier, 10-month spending rose by 10.4 percent to P1.035 billion from year ago of only P937.4 billion.

Thus, the deficit totaled P62.3 billion in the first 10 months, or 50 percent higher than last year’s P41.5 billion.

Beltran, who spoke on behalf of Finance Secretary Margarito Teves who is in the United States on official mission, said the government “remains committed to raising the needed revenues to meet the requirements of our people amid these challenging times.”