‘Geopolitics, Trump win not suited to sharp rate cuts’ By Cai U. Ordinario @caiordinario
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EOPOLITICAL tensions and even a Trump presidency in the United States should serve as a caution to the Monetary Board to not cut rates aggressively as this could add to inflationary pressures, according to an analyst. In the recent Chamber of Thrift Banks General Membership Meeting, Jonathan Ravelas, senior adviser at professional services firm Reyes Tacandong & Co. said aggressive monetary policy easing could be inflationary by itself. This could be a problem since geopolitical tensions are poised to raise prices while the plan of former
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President Trump to raise tariffs on US imports could drive up prices of goods in the international market. “We’re just being cautious kasi yun ang nangyari dati [that happened before]. Especially now that there’s geopolitical risk, [it seems] this is not the right time to be aggressive in cutting rates,” Ravelas told reporters. Ravelas also said if the BSP will maintain or keep its promise of cutting rates by 25 basis points more this year, that should still make the country’s inflation target attainable. For next year, the BSP would be prudent and limit it to a 25-basis- point reduction in rates per quarter. This will mean the total reduction in rates next year would be 100 basis points. Nonetheless, Ravelas expects the
Monetary Board to maintain policy rates this month but deal another 250-basis-point reduction in the Reserve Requirement Ratio (RRR). Most analysts expect the BSP to reduce policy rates this week. ANZ Research expects a 25-basis-point reduction in interest rates due to the better-than-expected inflation rate in August pegged at 1.9 percent. “To me, it’s more of the geopolitical risk I’m more worried about. That’s why I feel I’d better be the inflation hawk than trying to talk about fantasies [saying, ‘hey’ it’s really getting better!’]. I ask you, nararamdaman nyo ba yung yung bagsak ng inflation [do you really feel the slowing inflation]? . . . So, that’s a challenge,” Ravelas said, however. Ravelas explained that in 2016
when Trump was elected President for the first time, the Philippine peso was at P48 to P49 to the US dollar. But by 2020 when he stepped down, the peso was at P53 to the greenback. The same thing is expected to happen again, especially with Trump indicating that he is keen on raising tariffs. Such a move could discourage the importation of certain goods and increase commodity prices in the US. This could prompt the US Federal Reserve to raise interest rates. If this occurs, this makes the US more attractive for investments, leading to the depreciation of other currencies, including the Philippine peso, against the US dollar. See “Trump,” A2
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Monday, October 14, 2024 Vol. 19 No. 363
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PHL SHELLS OUT P1.55T FOR 8-MO DEBT SERVICE
DBM expects 2025 budget signed before Christmas
By Reine Juvierre S. Alberto
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HE national government’s debt service bill hit P1.550 trillion as of endAugust 2024, paying off roughly three-quarters of its programmed obligations for the year.
Latest data from the Bureau of the Treasury (BTr) showed the government shelled out P1.550 trillion for its debts from January to August 2024, settling 76.47 percent of the P2.027-trillion debt service bill for 2024. Debt servicing rose by 33.50 percent, P389 billion higher than the P1.161 trillion in debt repayments recorded from January to August 2023. Amortization, or the repayment of loan principal over time, accounted for 67.14 percent of the total debt service bill, reaching P1.041 trillion as of end-August 2024. This is 34.73 percent higher than the P772.636 billion the government paid for amortization in the same period in 2023. Majority of the settlements for loan principal went to domestic sources at P879.652 billion, while P161.086 billion was paid to foreign financers during the eightmonth period. Meanwhile, interest payments grew by 31.07 percent year-on-year to P509.441 billion as of the end of August 2024 from P388.676 billion. As such, interest payments to domestic creditors jumped by 38.75 percent year-on-year to P362.721 billion during the eight-month period from P261.422 billion. The bulk of domestic interest payments was allocated to fixedrate Treasury bonds amounting to P236.228 billion, followed by retail Treasury bonds (P95.108 billion) and Treasury bills (P22.426 billion). Moreover, the government disbursed P146.720 billion in interest to external creditors during the eightSee “PHL,” A2
By Cai U. Ordinario @caiordinario
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CHINA-AIDED BRIDGE HALFWAY DONE Officials from the Department of Public Works and Highways (DPWH), led by Senior Undersecretary Emil K. Sadain, inspect the ongoing construction of the 1.34-kilometer Davao River (Bucana) Bridge. Now 53.76 percent complete, the bridge is poised to open before the end of 2025. The bridge will serve as an alternate route for Davao City’s growing traffic, contributing to an advanced national road network and boosting economic opportunities in the region. The project, funded by China Aid-Grant, is under contract with China Road and Bridge Corporation. See story in A5 Economy, “Bucana Bridge construction on track.” DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
FOREIGN TOURISTS STAY LONGER, PAY PREMIUM TICKETS TO PHL By Ma. Stella F. Arnaldo @akosistellaBM Special to the BusinessMirror
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ORE international t rav e l e r s t o t h e Philippines are booking longer, “immersive” holidays and are willing to pay premium air tickets to reach the country. I n a m e s s a g e to t h e BusinessMirror, Forward Keys said the Philippines is “set to experience a shift in travel trends” compared to the same period in 2023. Mediumlength stays (four-13 nights) are seeing a notable surge, with an 11-percent increase, indicating a growing interest in more immersive experiences in the country. In contrast, short stays have slightly declined by six percent, suggesting that travelers may be choosing to
extend their visits. Tickets for arrivals in premium cabin classes increased by 21 percent while economy tickets saw just a 1 percent increase, suggesting high-value
travelers are also driving growth in the Philippines. This developed as the global tourism industry roared back to life this year, with the Asia-Pacific
region fueling the overall growth in international arrivals by 16 percent compared to 2023. See “Tourists,” A2
HE national government expects the 2025 budget to be signed by the President before Christmas, according to the Department of Budget and Management (DBM). Budget Secretar y Amenah Pangand aman re cent ly told reporters on the sidelines of the Chamber of Thrift Banks General Membership Meeting that once the Senate approves the 2025 National Budget by the end of November, the budget will be ready for the bicameral conference committee. The bicameral conference, Pangandaman said, could take two weeks to complete, after which the budget can be submitted to the President. She said the country may already have a budget by around December 18 to 20, just a few days before Christmas. “I expect that the budget will be passed, same as last year, mid [December] 18, 19, 20. Before Christmas, so we can all celebrate,” Pangandaman told reporters. Meanwhile, Pangandaman said in terms of the country’s growth targets, the Development Budget Coordination Committee (DBCC) could conduct its special meeting in the first week of November. This will allow the technical working groups enough time to make the calculations and “if necessary” adjust the government’s economic and fiscal targets based on the latest data. Pangand aman said if adjustments will be made, this will not only include the target for this year but all those targets until 2028. “There’s an IMF-World Bank meeting that we have to go to and attend. So ever yone will be out. When we come back, by that time, I think the technical working group [would be able to] crunch the numbers already,” Pangandaman said. E a r l i e r, t h e b e t te r- t h a n ex p e c te d inf l at ion pr int in See “DBM,” A2
PESO EXCHANGE RATES n US 57.1910 n JAPAN 0.3850 n UK 74.7086 n HK 7.3602 n CHINA 8.0815 n SINGAPORE 43.8044 n AUSTRALIA 38.5353 n EU 62.5555 n KOREA 0.0424 n SAUDI ARABIA 15.2327 Source: BSP (October 11, 2024)