BOP deficit hits $2.33B in September—BSP B C U. O @caiordinario
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HE Philippines’s foreign currency debts pushed the country’s balance of payments (BOP) to over $2 billion in September, the highest since April 2021, according to the Bangko Sentral ng Pilipinas (BSP). The BSP reported that the country’s overall BOP position posted a deficit of $2.339 billion in September. The BOP remained in a deficit for the sixth consecutive month this year. “The BOP deficit in September 2022 reflected outflows arising mainly from the Bangko Sentral ng Pilipinas’ net foreign exchange operations and the National Government’s payments of its foreign cur-
rency debt obligations,” the BSP said in a statement. The BOP deficit in the January to September period reached a deficit of $7.831 billion, higher than the $665-million deficit recorded in the same period a year ago. “Based on preliminary data, this cumulative BOP deficit reflected the widening trade in goods deficit as goods imports continued to surpass goods exports on the back of the persistent surge in international commodity prices and resumption in domestic economic activities,” the BSP said. With this, the BSP said the gross international reserves (GIR) level declined to $93 billion as of end-September 2022 from $97.4 billion as of end-August 2022.
However, BSP said the latest GIR level represented a “more than adequate” external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income. The BSP said this buffer ensures the availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans. The Central Bank also said that it is also about 6.6 times the country’s short-term external debt based on original maturity and 4 times based on residual maturity. Short-term debt based on residual maturity refers to outstanding external debt with original maturity of
one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months. Based on preliminary data from the Philippine Statistics Authority, the country’s trade deficit widened 81 percent to $6 billion in August 2022 from the $3.31 billion posted in August 2021. This was the highest increase in the deficit since June 2021 when it rose 133.9 percent. This was largely due to the 2-percent contraction in the country’s export earnings and 26-percent jump in import payments in August. (Full story: https://businessmirror.com.ph/2022/10/12/ trade-gap-widens-81-to-6b-in-august-psa/)
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Thursday, October 20, 2022 Vol. 18 No. 8
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FOOD, ENERGY—PCCI ‘Delay in IRR of PSA to hurt PHL’
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HE Philippine Chamber of Commerce and Industry (PCCI) has called on the national government to focus on attaining food security and enabling the free flow of electricity nationwide by integrating the Luzon, Visayas and Mindanao grids.
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HE House Committee on Ways and Means Chairman on Wednesday reminded the National Economic and Development Authority (Neda) that “the deadline is over” for the release of the implementing rules and regulations of the key investment liberalization law. “The deadline was 6 months after the effectivity of the Public Service Act [PSA]. That deadline lapsed two weeks ago. Where’s the IRR?” Rep. Joey Sarte Salceda asked. “This delay is another self-inflicted wound. Our FDIs are taking a hit due to global conditions. But we can stave off the bleeding by opening up the sectors we already decided to open up by law,” he added. Republic Act (RA) 11659 or “An Act Amending Commonwealth Act No. 146 otherwise known as the Public Service Act” as amended was signed by the President on March 21, 2022. Salceda was its leading author and sponsor in the House of Representatives. This measure allows up to 100 percent foreign ownership of public services in the country, except those classified as public utilities.
The PCCI unveiled a set of policy resolutions which it would submit to President Ferdinand R. Marcos Jr. during its 48th Philippine Business Conference and Expo (PBC&E), which kicked off on Wednesday. “Resolution urging the National Government to achieve food security by amending the Agrarian Reform Law to increase land retention limit from 5 to 24 hectares, implement a debt condonation program for unpaid amortizations of Agrarian Reform Beneficiaries, and convert Certificates of Land C A
VICE President Sara Duterte keynotes the 48th Philippine Business Conference (PBC) and Expo organized by the Philippine Chamber of Commerce and Industry (PCCI) at the Manila Hotel on October 19, 2022. With her are PCCI Chairman William Co, PCCI President George T. Barcelon, PBC Chairman Ferdinand A. Ferrer, and PCCI Director and Treasurer Sergio Ortiz-Luis Jr. CONTRIBUTED PHOTO
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‘Economic team backs extension of EO 171’
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HE President’s economic team will recommend the extension of the validity of an executive order (EO) that allowed the reduction of tariffs on a number of commodities to help cool inflation, according to the National Economic and Development Authority (Neda). At the sidelines of the Philippine Business Conference and Expo which kicked off on Wednesday in Manila, Socioeconomic Planning Secretary Arsenio M. Balisacan told reporters that the economic team is “fully aware” that adjusting interest rates would not be enough to curb inflation. This is the main reason for their recommendation which
has yet to be tackled at the Committee on Trade and Related Matters (CTRM) and will also be subject to a hearing at the Tariff Commission. “My understanding of the sources of inflation is that some of it is on the supply side. So if you are going to use monetary policy to address what is essentially a supply issue, you’re not going to get it right,” Balisacan said. Executive Order (EO) No. 171 s. 2022 which was issued in May 2022 provided for the reduction of tariffs imposed on pork, corn, rice, and coal. Local economists from the Foundation for Economic Freedom (FEF) recommended the extension and expansion of the EO to cover
more commodities in light of the spike in prices. Balisacan said it is possible that the EO will be extended, depending on the decision of the CTRM and the Tariff Commission. He said this must be done before the year ends to prevent tariffs from returning to higher levels. “It’s not the right time to get those tariffs to their old levels,” Balisacan said. FEF earlier said allowing more imports of these commodities would help cool inflation which hurts the poor more because a larger portion of their income is allocated for food items. Food accounts for 55 percent of the 2012-based consumer
price index (CPI) for the bottom 30 households while food and non-alcoholic beverages accounts for only 37.75 percent of the 2018-based CPI for all income households. Lowering inflation would also bring down input costs of businesses. While agriculture only accounts for 10 percent of GDP, the economists said, agricultural and the food manufacturing industries contribute around a third of the country’s total GDP. The CTRM is one of seven interagency committees under the Neda Board, which is the highest policy-making body of the Neda. The Tariff Commission, meanwhile, is an attached agency of the Neda. Cai U. Ordinario
PESO EXCHANGE RATES US 58.9300 ■ JAPAN 0.3951 ■ UK 66.7559 ■ HK 7.5075 ■ SINGAPORE 41.4766 ■ AUSTRALIA 37.1907 ■ SAUDI ARABIA 15.6938 ■ EU 58.1286 ■ KOREA 0.0414 ■ CHINA 8.1874
Source: BSP (October 19, 2022)