Citing timing, BSP treads slowly on RRR cut
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HE Bangko Sentral ng Pilipinas (BSP) is not keen on cutting the Reserve Requirement Ratio (RRR) even if it reduces key policy rates as early as the third quarter of the year. In a recent briefing, BSP Governor Eli M. Remolona Jr. said the Monetary Board aims to cut the RRR but is still studying the right “timing” and how deep these cuts will be. Currently, the RRR is at 9.5 percent, deemed still high by the region’s standards. Earlier, Remolona said cutting the RRR may happen in 2024.
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“We want to eventually reduce the reserve requirement. We’re trying to figure out the right timing. We’re hoping that we will raise it at the [next meeting of the] Monetary Board Meeting at some point soon,” Remolona said. The last time the BSP cut the RRR was in June 2023, when it slashed it by as much as 250 basis points, bringing down the effective ratios across banks to a single digit, as it seeks to ensure “stable” domestic liquidity and credit conditions.
This was the first RRR reduction made by the BSP since 2020, when it cut the ratio by 200 basis points to the present 12 percent. On Monday, the Monetary Board decided to retain the BSP’s Target Reverse Repurchase (RRP) Rate at 6.5 percent. With this, interest rates on the overnight deposit and lending facilities also remain at 6 percent and 7 percent, respectively. Remolona said they are more hawkish than before, given the 3.7 percent inflation print in March 2024. This
prompted the MB to raise its risk-adjusted inflation forecast to 4 percent this year from the initial 3.9 percent in January 2024. He said if the data improves, the Monetary Board could start cutting rates as early as the third quarter. Initially, analysts expected the BSP to start cutting rates in the second quarter of the year. The imminent risks to inflation are food and transport prices. For food, the single commodity that could turn the tide for inflation is rice, the country’s staple. Cai U. Ordinario
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DEBT INSTRUMENTS SPUR
89.9% RISE IN JAN FDI By Cai U. Ordinario @caiordinario
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HE country’s foreign direct investments (FDI) nearly doubled in January 2024, according to the latest data released by the Bangko Sentral ng Pilipinas (BSP).
Data showed FDI net inflows surged 89.9 percent to $907 million in January 2024 from the $478-million net inflows posted in January 2023. However, this was mainly driven by debt instruments which more than doubled during the period. Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort told BusinessMirror that overall, this was still good news for the Philippines, indicating that businesses have higher confidence in the economy enough to secure debts for expansion and similar activities. “On the whole, FDIs are among prepandemic highs on a monthly basis, even if mostly financed by borrowings lately,” Ricafort told this newspaper. “[This means] foreign investors are even more confident to borrow to finance more See “FDI,” A
HELLO MODERN, GOODBYE TRADITION
In Baclaran, Manila, a blend of modern and traditional public transportation thrives on the streets. The Land Transportation Franchising and Regulatory Board (LTFRB) reaffirmed the April 30, 2024, deadline for the Public Utility Vehicle (PUV) modernization program, emphasizing its commitment to enhancing the nation’s transportation infrastructure. Meanwhile, a jeepney association is seeking approval for a fare hike from P13 to P15, attributing this request to escalating operational expenses and economic challenges faced by drivers and operators. NONIE REYES
RECTO: PPP, ODA BEING EYED PBBM: Traffic-busting plan focuses on mass transit FOR MINDANAO RAIL FUNDING By Samuel P.Medenilla @sam_medenilla
By Reine Juvierre Alberto @reine_alberto
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HE Department of Finance (DOF) is looking to finance the long-pending Mindanao Railway Project (MRP) through Public-Private Partnerships (PPP) and official development assistance (ODA). Finance Secretary Ralph G. Recto told the BusinessMirror on Monday that his initial plan to procure the MRP through a PPP is still on the table. “We’re also looking at ODA to finance [the] project,” Recto said and expressed confidence that multilateral agency Asian Devel-
opment Bank (ADB) and “many others” will be open to financing the railway project. This, after a lawmaker asked the Finance chief to seek Japan’s support in financing the MRP so that Mindanao would not be “left behind” in the government’s railway infrastructure development plan. “We urge the Finance Secretary to consider visiting Tokyo, for the purpose of seeking additional official development assistance [ODA] from Japan; this time for MRP,” said Surigao del Sur Rep. Johnny T. Pimentel in a Continued on A
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EDUCING demand for private vehicles through enhanced mass transit system and a crackdown on colorum vehicles will be the focus of the government’s comprehensive plan against traffic congestion in Metro Manila, President Ferdinand R. Marcos Jr. said on Wednesday. The chief executive explained that the construction of additional roads and flyovers in the National Capital Region (NCR) will not address heavy traffic without being complimented by a reliable public transport system in the region. “While workers can afford it, they will continue to buy vehicles. And even if we build so many roads, flyovers, bypass roads, those
insufficient with the rapid increase of vehicles,” Artes said. He noted a study from the Japan International Cooperation Agency (Jica) has pegged the economic cost of the traffic problem to P4.9 billion in 2020. “The economic cost of traffic can rise to P9.4 billion by 2027,” the MMDA head said.
will not be able to keep up [with the increase in vehicles],” Marcos said at the open forum of the Bagong Pilipinas Townhall meeting on Traffic Concerns in San Juan City last Wednesday.
Increasing registration THIS was echoed by Metropolitan Manila Development Authority (MMDA) Officer-in-Charge Romando S. Artes, who said the number of registered vehicles passing NCR last year rose to 3.6 million from 3.2 million in 2022. Data from the Land Transportation Office (LTO) showed, he said, 32,000 vehicles are registered in NCR every month. “The DPWH [Department of Public Works and Highways] has already laid out 1.16 million linear meters of roads since 2019, but it is
Ongoing projects
“While workers can afford it, they will continue to buy vehicles. And even if we build so many roads, flyovers, bypass roads, those will not be able to keep up [with the increase in vehicles].”—President Marcos Jr.
MARCOS pointed out his administration is now prioritizing the completion of major public transport systems to address traffic congestion, including the Tutuban to Malolos part of the North-South Commuter Railway (NSCR) project, which is now 61 percent complete. He also reported the progress of See “PBBM,” A
PESO EXCHANGE RATES US 56.5740 Q JAPAN 0.3732 Q UK 71.4699 Q HK 7.2262 Q SINGAPORE 41.9315 Q AUSTRALIA 37.1861 Q SAUDI ARABIA 15.0832 Q EU 61.3262 Q KOREA 0.0419 Q CHINA 7.8227 Source: BSP (April 8, 2024)