Flawed fiscal policy hampers growth—experts
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NEFFICIENCY in collecting revenues, lack of budget transparency and excessive borrowing may be the culprit behind the government’s failure to hit growth targets for three consecutive years, according to economists. When asked which economic policies could have been hampering the growth of Philippine economy in recent years, particularly since 2023, De La Salle University economist Maria Ella Oplas told the BusinessMirror: “Fiscal policy. It’s about revenue and expenditure. We may have all sorts of revenue-generating policies in place yet the question is..is the
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government effective in collecting revenues?” Oplas told this newspaper that being forced to borrow money is a cycle that the Philippine economy cannot seemingly escape from. “Budgeting is another thing... which is the whole brouhaha right now. Legislators are not transparent in terms of allocation of resources that’s why we have allocables and insertion problems right now,” she said. “I am okay with the concept of ‘Build, Build, Build’ and the ‘Build, Better More’ programs but after hearing about the flood control projects, that says a lot about the quality of expenditure that we have. “Since our revenue is less than
our expenditure, we are forced to borrow. It’s a cycle that we seemingly cannot escape. It’s poor governance. That’s why fiscal policy is the problem. We may be able to manage inflation but that’s because BSP [Bangko Sentral ng Pilipinas] is doing something about money supply,” added Oplas. A recent story published by the BusinessMirror noted that the Philippines will face a prolonged fiscal drag, potentially lasting for two to four years, as tighter scrutiny over public infrastructure spending slows budget execution. As such, HSBC Asean Economist Aris D. Dacanay said the government will have a “difficult time” spending this year’s P6.793-tril-
lion national budget due to ongoing institutional reforms and heightened oversight of public expenditures. “It will be a tall order to meet targets. And because of that, there is more uncertainty in growth, and that uncertainty will likely lead to a higher saving rate,” Dacanay said. (See: https://businessmirror.com.ph/2026/01/13/phlfaces-prolonged-fiscal-drag-onslower-infra-spend/). For his part, former Socioeconomic Planning Secretary Dante B. Canlas told this paper that the national government must exhibit “credible reforms” in governance and in budget management. See “Policy,” A2
BusinessMirror A broader look at today’s business
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BSP: BAD LOANS HIGHER BY 4.68% IN NOVEMBER www.businessmirror.com.ph
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Monday, January 19, 2026 Vol. 21 No. 99
P25.00 nationwide | 2 sections 20 pages | 7 DAYS A WEEK
By Reine Juvierre S. Alberto
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HE Philippine banking system saw its bad loans rise to P544.863 billion as of end-November 2025, even as the ratio eased to 3.32 percent, according to data from the Bangko Sentral ng Pilipinas (BSP). Latest BSP data showed the gross non-performing loans (NPLs) went up by 4.68 percent from P520.476 billion a year earlier and were 1.45 percent higher than the P537.027 billion recorded as of end-October 2025. The current gross NPL is equivalent to a ratio of 3.32 percent as of end-November 2025, down from the 3.54 percent ratio logged a year ago and slightly lower than the 3.33 percent recorded at endOctober 2025. Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., the easing of the NPL ratio reflects that banks are managing credit risks well despite a still-fragile environment. “Borrowers are keeping up with payments, underwriting has tightened, and the improvement gives banks more room See “Loans,” A2
ONE FAITH, ONE SANTO NIÑO Devotees paraded images of the Santo Niño along Saging Street in Barangay BF International, Las Piñas City, on the eve of the Feast of the Santo Niño, expressing faith through music, dance, and prayer under the theme “In Santo Niño We Are One,” a call for unity and peace. The devotion, celebrated in communities nationwide, traces its roots to 1521, when the image of the Child Jesus was introduced to the Philippines during Ferdinand Magellan’s Spanish expedition, becoming one of the country’s oldest and most enduring symbols of Filipino Catholic faith. From Cebu’s Sinulog to Iloilo’s Dinagyang, millions of Filipinos continue to honor the Santo Niño each January, blending religious devotion with cultural heritage. NONIE REYES
D.O.T. SEEKS FAIR, CLEAR TAX RULES FOR TOURISM, TRAVEL BUSINESSES By Ma. Stella F. Arnaldo Special to the BusinessMirror
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HE Department of Tourism (DOT) is calling for the equitable application of tax measures on tourism and travel-related businesses through clear and consistent guidelines. In a Viber message, Tourism Secretary Christina Garcia Frasco told the BusinessMirror that she had met recently with Finance Secretary Frederick D. Go, where she “raised the concerns that have been conveyed to me by tourism stakeholders, in-
cluding hotel associations, tour operators, and travel agencies, because these directly affect the sustainability of tourism businesses, especially small and medium enterprises.” She added, “Among the issues brought up were the taxation of tour operators based on the full tour package value rather than only their actual service fee, the alleged inconsistent interpretation of tax rules across Revenue District Offices due to the absence of tourism-specific guidelines, and the lack of clear documentation requirements See “Tax rules,” A2
‘Govt must work with auto makers for reforms’
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OCAL auto parts makers are calling on the government to put in place an “integrated pathway” to reforms that would support car manufacturing, including the supply chain for electric mobility. The Philippine Parts Makers Association (PPMA) said it is committed to engaging in constructive dialogue with government, car manufacturers, and stakeholders to ensure that CARS, RACE, and EVIS “work together as an integrated pathway toward a stronger, more competitive, and future ready” Philippine automotive industry. For one, PPMA President Ferdinand Raquelsantos voiced out the industry’s “strong hope that the Revitalizing the Automotive Industry for Competitiveness En-
hancement [RACE] program will be implemented as soon as possible.” “We underscore that only P125 million is needed to initiate and operationalize RACE, an amount that can unlock significant benefits for the broader industry, especially for local automotive parts manufacturers who are key contributors to inclusive industrial growth,” Raquelsantos said in a statement over the weekend. The industry group of local auto parts makers believes RACE is the “natural complement” to the Comprehensive Automotive Resurgence Strategy (CARS) program, saying it “strengthens” the domestic supply chain by supporting investments in tooling, technology upgrades, quality and safety certifications, productivity improvements and lo-
cal content expansion. The RACE program has been due for implementation in 2025. (See: https://businessmirror. com.ph/2025/02/19/new-perksplan-for-car-makers-out-soon/). Further, Raquelsantos noted that these programs are “critical interventions” that enable more Filipino parts makers to participate meaningfully in local vehicle production and compete within the Asean region. The PPMA chief issued the statement following the government’s announcement that it has finalized a funding solution for the CARS program. “We recognize this as an important step in sustaining investor confidence and reaffirming the government’s commitment to revitalizing domestic automotive man-
ufacturing,” he said. He noted that the P4.32 billion allocation for CARS is “vital” in supporting the continued operations and production plans of the program’s participants, including vehicle manufacturers and the local supplier base that supports them. This “resolution,” he added, strengthens policy stability, protects jobs, and helps preserve the manufacturing ecosystem that the Philippines has worked hard to build over the years. Another concerned industry group said in a separate statement that securing funding for CARS program despite earlier budget vetoes is a “vital step” toward rebuilding investor confidence and honoring commitments to manufacturers. See “Reforms,” A2
PESO EXCHANGE RATES n US 59.4400 n JAPAN 0.3747 n UK 79.5664 n HK 7.6232 n CHINA 8.5304 n SINGAPORE 46.1562 n AUSTRALIA 39.8129 n EU 69.0098 n KOREA 0.0404 n SAUDI ARABIA 15.8507 Source: BSP (January 16, 2026)