‘Rate hike to shield dollar buffer, fortify peso’ By Andrea E. San Juan @andreasanjuan
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IRAN CLOSES STRAIT OF HORMUZ AND FIRES ON SHIPS IN RETALIATION FOR US BLOCKADE
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ITHOUT an increase in interest rates, the speed of the depletion of the country’s dollar reserves could lead to a “significant” peso depreciation, which could de-anchor inflation expectations. In a commentary, Emilio S. Neri, Jr., Bank of the Philippine Islands’ (BPI) Senior Vice President and Lead Economist, said the bank expects the Bangko Sentral ng Pilipinas (BSP) to deliver a 25-basis-point policy rate hike on April 23, as the balance of risks has shifted toward a “more persistent and broad-based inflation environment.” While current pressures remain largely
supply-driven, Neri said historical experience suggests prolonged shocks tend to spill over into demand-side dynamics, increasing the risk of “de-anchored” inflation expectations. The BPI lead economist explained to the BusinessMirror that when inflation expectations become unanchored “it means that businesses, consumers, and investors no longer believe the central bank can or will return inflation to its target.” “This loss of credibility transforms inflation from a temporary headache into a self-fulfilling cycle,” Neri also told this newspaper, adding that this leads to further inflation, which triggers even higher wage demands, creating a feedback loop that is “incredibly difficult to break.”
In his commentary, he said external vulnerabilities further complicate the outlook. For one, Neri said the peso will likely remain under pressure as the situation in the Middle East remains “fluid.” He noted that a sharper depreciation would “amplify” imported inflation. “This foreign exchange-inflation feedback loop may ultimately become a binding constraint, and may require tighter policy even in the face of a supply-driven shock.” He also noted that the country’s gross international reserves (GIR) declined significantly in March to a seven-month low of $107 billion, equivalent to 7.1 months of import cover (See: https://businessmirror. com.ph/2026/04/08/bsp-move-on-pesoseen-behind-7-month-gir-low/).
While still adequate by what he called “traditional metrics,” Neri said the downward trend in the GIR highlights “gradually eroding external buffers amid sustained global pressures.” “Without a rate hike, the speed of GIR depletion amid spot market intervention could lead to significant peso depreciation, which could ultimately de-anchor inflation expectations,” he said. Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said he also thinks a 25-basis-point hike is likely because inflation risks are “resurfacing” and the BSP “doesn’t want to be caught reacting too late.” According to Ravelas, there is a need for See “Dollar,” A2
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Monday, April 20, 2026 Vol. 21 No. 188
P25.00 nationwide | 2 sections 20 pages | 7 DAYS A WEEK
By Reine Juvierre S. Alberto @reine_alberto
HE national government’s debt payments in the first two months of 2026 surged by 258 percent year-on-year due to large bond maturities and a weaker peso. Latest data from the Bureau of the Treasury (BTr) showed debt payments ballooned by 258.18 percent to P568.313 billion as of end-February from P158.664 billion in the same period last year. Broken down, amortization accounted for P391.565 billion while interest payments accounted for P176.748 billion of the total. Amortization in the two-month period soared by 6,669 percent from merely P5.784 billion a year ago due to a spike in domestic repayments. This comes after domestic amortization increased by a whopping
88,166 percent to P386.607 billion from P438 million, despite the 7.25-percent decline in foreign amortization to P4.958 billion from P5.346 billion. According to Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., the surge was mainly driven by the maturity of P232-billion 7-year Treasury bonds (T-bonds) last February 14, which resulted in substantial principal repayments. “Furthermore, the higher US dollar/peso exchange rate in recent years led to higher debt servicing See “Debt,” A2
FISCAL SPACE SHRINKING DUE TO EXTERNAL SHOCKS–DOF
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ITH job creation as the Philippine government’s top priority, Finance Secretary Frederick D. Go urged international partners to scale up financing support as geopolitical and climate risks are limiting fiscal space. During the International Monetary Fund-World Bank Spring Meetings in Washington D.C., Finance Secretary Frederick D. Go pushed for “more accessible, flexible” and scaled-up global financing and cooperation to protect jobs and sustain economic growth.
At the Intergovernmental Group of Twenty-Four (G-24) Ministers’ and Governors’ Meeting, Go said fiscal space is becoming more limited as overlapping global challenges strain countries’ ability to respond to shocks. Go said budget support, emergency funding tools, and greater private capital mobilization are needed to sustain social services and development programs, as well as to drive investments in infrastructure, the energy transition and digital services. See “DOF,” A2
HORMUZ LOCKDOWN A container ship is seen in the Strait of Hormuz off Qeshm Island, Iran, on Saturday, April 18, 2026, as tensions surged after Tehran reversed its brief reopening of the strategic waterway and declared it closed until the US lifts its blockade of Iranian ports, with the Revolutionary Guard warning that any vessel attempting passage could be targeted amid reported attacks on merchant ships in the vital corridor through which nearly one-fifth of global oil flows, deepening fears of an escalating energy crisis and wider conflict as ceasefire talks and backchannel negotiations continue. AP/ASGHAR BESHARATI
DBM releases funds for public projects T
HE Department of Budget and Management (DBM) has released a total of P63.49 billion for infrastructure and education projects across the country in its bid to ramp up public investment spending and reduce implementation delays. In a statement, the DBM said it authorized the release of P46.22 billion to the Department of Public Works and Highways (DPWH) for the construction of 1,743 infrastructure projects across 17 regions. The allocation will fund the DPWH’s Asset Preservation Program, which includes the preventive maintenance of national roads and the rehabilitation and reconstruction of existing road networks. It will also cover the road widening and off-carriageway improvements under the DPWH’s Network Development Program, as well as the Bridge Program, which reha-
bilitates, retrofits, strengthens and widens permanent bridges. The Davao City Bypass Construction Project, which has an allocation of P288.371 million, will be funded, the DBM added. “When the documents are complete and in order, we will not hesitate to release the funds,” Acting Budget Secretary Rolando U. Toledo said. “Because for every day a project is delayed, there are fellow Filipinos who are not yet benefiting—and that is what we want to avoid.” Citing DPWH, the DBM said the projects have undergone “thorough evaluation” and are aligned with the President’s priorities for infrastructure development and the advancement of socioeconomic growth. Meanwhile, the DBM also disbursed P17.27 billion to the Department of Education (DepEd) to build 4,960 classrooms across the
country and to provide school furniture and fixtures. This supports the President’s Nationwide Classroom Building Program, a partnership between DepEd and local government units to accelerate the construction, rehabilitation and repair of classrooms nationwide, the DBM said. The budget was drawn from the P85.40-billion Basic Education Facilities Fund under the 2026 Gen-
eral Appropriations Act, it added. “The release is a decisive step toward closing the country’s classroom gap and ensuring that every Filipino learner has access to a safe, conducive, and dignified learning environment,” the DBM said in a separate statement. As of end-March, the DBM has released a total of P4.625 trillion of the P6.793-trillion national budget. Reine Juvierre S. Alberto
PESO EXCHANGE RATES n US 59.9660 n JAPAN 0.3769 n UK 81.1520 n HK 7.6643 n CHINA 8.7888 n SINGAPORE 47.1282 n AUSTRALIA 42.9297 n EU 70.6579 n KOREA 0.0405 n SAUDI ARABIA 15.9905 Source: BSP (April 17, 2026)