‘Further delays in easing may cause output losses’
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THE country’s top economic managers pose with officers of the Economic Journalists Association of the Philippines (Ejap) after sharing their updates and outlook on the state of the domestic economy at the annual Ejap Economic Forum, in partnership with San Miguel Corporation (SMC). (From left) Ejap Vice President for External Michelle Ong, Ejap President Neil Jerome Morales, Neda Secretary Arsenio M. Balisacan, Governor Eli M. Remolona of the Bangko Sentral ng Pilipinas, Secretary Frederick D. Go, Special Assistant to the President for Investment and Economic Affairs, Finance Secretary Ralph G. Recto, Principal Economist Joselito Basilio of the Department of Budget and Management, National Treasurer Sharon P. Almanza and Ejap Vice President for Internal Kris Crismundo. CONTRIBUTED PHOTO FROM EJA
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HE Bangko Sentral ng Pilipinas (BSP) believes further delays in the easing of monetary policy may lead to output losses for the Philippine economy. In a forum hosted by the Economic Journalist’s Association of the Philippines and San Miguel Corporation on Monday, BSP Governor Eli M. Remolona Jr. therefore assured that they are on track to reduce policy rates. If the Monetary Board decides to reduce policy rates in August, this will be the first time BSP cuts rates since November 2020. On that day, the monetary authorities cut rates by 25 basis points, reducing policy rates to 2 percent. “We [can] not wait too long for easing because the longer we wait for easing, the more likely it is that we will cause a loss of output which we don’t want. So that’s basically
where we stand. We’re not going to raise,” Remolona said. Remolona said apart from the slowdown in inflation to 3.7 percent, the “single biggest piece of good news” for the monetary authorities is the reduction in rice tariffs to 15 percent from the current 35 percent. The tariff rates are expected to reduce rice prices by around 6 to 7 percent, according to the National Economic and Development Authority (Neda). This is expected to offset any increases in inflation brought by other factors. Based on data from the Philippine Statistics Authority (PSA), rice has a weight of 8.87 percent in the Consumer Price Index (CPI) for all income households and 17.87 percent for the Bottom 30 percent. Apart from these, data points being monitored by the BSP include the natural rate of interest, which,
Remolona said is the interest rate that balances supply and demand for the Philippines. “I think the data points include what we call the output gap, which is the difference between our output and our capacity, that’s one,” Remolona said. “Exchange rate is one of those numbers. Expectations of inflation is another number. We look at all those very carefully and we look at them together and then we decide,” he added. Earlier, the Neda and BSP said inflation may have slowed in June, but they are not convinced that the worst is over in terms of the increase in commodity prices. Remolona sees a 50-50 chance that inflation could still breach 4 percent in July. Given this, he said, “it’s not yet time to declare victory.” Socioeconomic Planning Sec-
retary Arsenio M. Balisacan said rice prices, for one, are still high because of global prices. He also noted nonfood items were crucial in the 3.7-percent inflation in June 2024. (See: https://businessmirror.com.ph/2024/07/06/ june-inf lation-at-3-7-pricesstill-hurt-poor/). Remolona said should inflation stay within the 3 to 4 percent target in July, this bodes well for the BSP’s plan to cut rates by August. However, he does not see this leading to larger rate cuts. Earlier, the BSP said the Monetary Board is poised to cut rates in August, ahead of the United States Federal Reserve, which is expected to ease monetary policy by September. (See: https://businessmirror.com.ph/2024/06/28/lowerrice-tariff-fuels-bsp-interestrate-cut-optimism/). Cai U. Ordinario
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TAX, NONTAX REVENUE
UP 14.6% TO P2.1T IN H1 By Reine Juvierre S. Alberto
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HE national government generated P2.13 trillion from tax and nontax revenues as of the first half of the year, according to the Department of Finance (DOF) on Monday. Finance Secretary Ralph G. Recto told reporters on the sidelines of the Ejap-SMC Economic Forum that the state’s revenue collection from January to June reached P2.13 trillion, higher by 14.6 percent than the P1.9 trillion it generated in the same period a year ago. “It’s more or less half of what we intend to collect for the entire year. So far, we seem to be on track,” Recto said in the forum. The government expects to collect P4.269 trillion in revenues, which makes up 16.1 percent of the GDP, in 2024, as set by the Cabinetlevel Development Budget Coordination Committee (DBCC). Revenues from tax collection for the six-month period rose by 8.8 percent to P1.81 trillion from the P1.667 trillion it raised in the same period in 2023, according to the DOF. The Bureau of Internal Revenue (BIR) generated P1.34 trillion from its tax take, up by 10.2 percent, while the Bureau of Customs (BOC) collected P456.05 billion, also higher by 3.03 percent, as of end-June. Non-tax revenues expanded by
64.5 percent to P316.52 billion during the six-month period, the DOF added. For the remaining half of the year, Recto said that he expects the government to collect half of what is needed to reach the full-year revenue target. About P11.8 billion will be raised by the state daily, he added. In his presentation, Recto said the DOF anticipates a 10.3-percent average annual growth in total revenues, collecting P4.664 trillion in 2025, P5.063 trillion in 2026, P5.627 trillion in 2027 and reaching P6.249 trillion in 2028.
Increased tax take TAX collections are also projected to increase by an average of 11.8 percent every year on the back of digitalization and plugging leakages in the tax system. In 2024, the DOF expects tax collection to reach P3.834 trillion, while it expects P4.332 trillion in 2025, P4.838 trillion in 2026, hitting the P5-trillion mark at P5.385 in 2027, and P5.991 trillion in 2028. See “Tax,” A
PHLJAPAN FORGE HISTORIC DEFENSE PACT The Philippines and Japan signed a key defense pact Monday in Malacañang, allowing the deployment of Japanese forces for joint military exercises, including live-fire drills, in the Southeast Asian nation. This agreement, marking a significant alliance shift, comes as both countries face an increasingly assertive China. The Reciprocal Access Agreement, permitting Filipino forces to train in Japan, was signed by Philippine Defense Secretary Gilberto Teodoro and Japanese Foreign Minister Yoko Kamikawa, witnessed by President Ferdinand Marcos Jr. This is Japan’s first defense pact in Asia, following similar agreements with Australia and Britain. See stories on RAA signing on pages A3 Nation and A5 News. LISA MARIE DAVID/POOL PHOTO VIA AP
4.1% jobless rate highest PHL EYES P47-B LOAN TO HIT TOTAL ELECTRIFICATION BY ‘28 since Jan, but Neda upbeat By Lenie Lectura @llectura
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LOILO —The government may borrow P47 billion from multilateral lenders to achieve the country’s total electrification program by 2028. As of March this year, the household electrification level is 93.12 percent with 26.02 million households served, versus the estimated potential households of 27.94 million. This year’s target electrification is estimated at 94.83 percent or 26.51 million households. A 100-percent electrification
will result in an estimated total net economic benefit of P315 billion or approximately 1.8 percent of last year’s gross domestic product, according to data presented by Department of Energy (DOE) Undersecretary Rowena Guevara. Based on a 2023 DOE study she shared here during the US Embassy’s 16th annual media seminar, titled “Powering Progress: The Path Toward the Philippines’ Clean Energy Transition,” a 24-hour access to electricity will increase an income and expenditure of lowincome families by 49.4 percent and 52.2 percent, respectively. See “PHL,” A
By Cai U. Ordinario @caiordinario
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HE National Economic and Development Authority (Neda) believes the country’s recent employment gains will be sustained in the coming months. The Philippine Statistics Authority (PSA) reported Monday t he c o u nt r y ’s u ne mp l o y me nt rate averaged 4.1 percent in May 2024, the highest since the 4.5 percent posted in January 2024. (See: https://businessmirror. com.ph/2024/07/08/unemploym e n t- i n - p h l- t h e - h i g h e s t- i n four-months-psa/). On the sidelines of a forum hosted
by the Economic Journalist’s Association of the Philippines (Ejap) and San Miguel Corporation (SMC), Socioeconomic Planning Secretary Arsenio M. Balisacan said the 4.1 percent is lower than the 4.3 percent posted in May 2023. “I think the labor market is very robust. But as I said, our focus is not so much now on employment, it’s the quality of that employment,” Balisacan told reporters. PSA said there were 2.11 million unemployed Filipinos in May 2024; this is 61,000 less than the 2.17 million posted in May 2023 and 65,000 more than the 2.04 million posted in April 2024. See “Jobless,” A
PESO EXCHANGE RATES Q US 58.5630 Q JAPAN 0.3643 Q UK 75.0133 Q HK 7.4955 Q CHINA 8.0571 Q SINGAPORE 43.4057 Q AUSTRALIA 39.4832 Q EU 63.3652 Q KOREA 0.0425 Q SAUDI ARABIA 15.6131 Source: BSP (July 8, 2024)