‘Variable-rate RRP to mop up liquidity better’ B C U. O @caiordinario
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HIFTING to a variable-rate Reverse Repurchase (RRP) facility auction format will allow the Bangko Sentral to better mop up excess liquidity in the market, according to central bank officials on Wednesday. In a briefing, BSP Deputy Governor Francisco G. Dakila Jr. said the challenge prior to this shift is that the BSP can only accept a volume of P305 billion using the RRP. However, with the shift, Senior Assistant Governor Iluminada T. Sicat said the shift will allow the BSP to accept liquidity volumes in excess of this amount. “With that [P305 billion], the influence on the market is limited, [we can only] mop up liquidity up to that amount,” Dakila explained, partly in Filipino.
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While there are other ways to mop up liquidity such as the Term Deposit Facility (TDF), these have 7- to 14-day tenors. What is missing now is the overnight (ON) benchmark rate, which the ON RRP rate meets, said Dakila. But more than the challenges, the shift allows the BSP to take advantage of the opportunities according to Department of Economic Research Director Lara Romina E. Ganapin. During the pandemic, the BSP bought a lot of government securities. This allowed the central bank to have an available collateral for this kind of facility. However, even without the pandemic, this has already been in the pipeline for the BSP. Dakila said the pandemic only fast-tracked the creation of the facility. “The ON [presents an] opportunity given the large liquidity. We have to
manage daily liquidity,” Ganapin said. With the shift, the BSP’s policy rate will be renamed the Target RRP rate. The rate will remain part of the monetary policy strategy of BSP and has a medium- to long-term orientation. The rate will be the “ultimate objective” and the intermediate target/ nominal anchor as well as be used for price stability and inflation targeting. However, the ON RRP rate will primarily be used for the implementation of the Target RRP rate. The ON RRP rate has a short-term orientation and serves as an operation target and part of the policy instruments toolkit of the BSP. The BSP said the ON RRP rate is a short-term interest rate and will be used as intervention by the BSP to mop up liquidity. “The formal adoption of an operational target will provide market guidance and help strengthen the
transmission mechanism of monetary policy,” BSP said. The ON RRP facility has an overnight maturity and will be set daily. The auction time will be between 11:30am and 12nn; the bids will be submitted starting at 11:30am and auction results will be available at 12:10pm onward. The auction size will be determined based on the BSP’s forecast of excess liquidity. There will be a daily announcement on the BSP’s Monetary Operations System (MOS) prior to each operation, at least an hour before auction. The BSP said the minimum bid amount is P10 million while the maximum number of bids is only one. “The BSP will announce an offer size based on its forecasts of excess liquidity; Counterparties [banks] will submit bid rates and amount of tenders,” BSP said.
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Thursday, September 7, 2023 Vol. 18 No. 325
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B J M N. D C @joveemarie
THE Department of Health (DOH) admitted on Wednesday that healthcare migration continues to seriously impair healthcare service in the country, with the Congressional Policy and Budget Research Department (CPBRD) citing a lack of livable wages and just benefits, job instability, and a lack of security of tenure and employment opportunities as health workers’ reasons for leaving the Philippines.
During the budget hearing of the DOH and its attached agencies, Health Secretary Teodoro Herbosa said the agency provided a solution to keep Filipino nurses and doctors working in the country. “We are improving our options for the career of nurses because globally, other countries—post-Covid 19—are also building and strengthening their health systems, and their solution is to hire Filipino nurses because our nurses are world-class,” said Herbosa. In its agency notes, the Congressional Policy and Budget Research Department (CPBRD) called on the DOH to address the migration of health workers. “The DOH must stem the steady migration of healthcare workers to other countries by addressing the problems these workers often cite as their reasons for living: lack of livable wages and just benefits, job instability, and lack of security of tenure and employment opportunities,” the House think tank said. The CPBRD said the country experienced an outflow of 15,000 to 20,000 nurses per year, C A
ink pact on data sharing in ecozones B A E. S J @andreasanjuan
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HE Philippine Economic Zone Authority (Peza) and the Bureau of Customs (BOC) have inked a Data Sharing Agreement for the “further enhancement” of monitoring of movements of ecozone goods under the Electronic Tracking of Containerized Cargo (ETRACC) System. In a statement on Wednesday, Peza said the Data Sharing Agreement now gives it access in tracking, monitoring and auditing the location and condition of cargoes, as well as obtain “real-time” alarms on diversion and tampering of cargoes. The investment promotion agency said, “This is to ensure that importation and exportation of tax- and duty-free goods arrive and reach the intended Peza economic zones/ port loading.” This agreement particularly promotes the “integration, interoperability and interconnection” of both agencies’ respective systems in direct compliance with Executive Order 18 establishing Green Lanes for strategic investments as mandated by President Ferdinand R. Marcos Jr.
BOC’s take
cial needs and make the Philippines aligned with global developments,” Ala said. Ala said there are major milestones in the development of the Philippines’s Islamic banking and finance ecosystem. She emphasized the vast opportunities for investments and potential benefits in terms of wider reach and greater financial inclusion that an expanding Islamic banking and finance industry can bring to the country and Filipinos abroad. The BSP’s strategy of promoting Islamic banking and finance supports the BSP’s financial stability mandate as Islamic banking and finance business model empha-
MEANWHILE, in a statement it issued on Wednesday, BOC said key provisions of the agreement focus on data privacy, security, storage, and retention of confidential information. “Both the BOC and Peza emphasize their dedication to upholding data privacy laws and safeguarding confidential information,” BOC said in its statement on Wednesday. The attached agency of the Department of Finance (DOF) also noted that “stringent” measures will be in place to ensure that sensitive data is used solely for its intended purposes. The BOC, as mandated with overseeing the handling, custody, and delivery of goods at all ports of entry, is entrusted with a “pivotal role” in safeguarding the nation’s interests. Introduced through Customs Memorandum Order No. 04-2020, the E-TRACC System has been “instrumental” in real-time monitoring of containerized goods’ inland movements, BOC said. Operating under Republic Act No. 7916 (as amended by Republic Act No. 8748), Peza, on the other hand, is responsible for regulating, supervising, and facilitating business operations within economic zones. BOC Commissioner Bienvenido Y. Rubio said the agreement “will pave the way for improved day-to-day operations and will further buttress our trade facilitation performances.” “We firmly believe that sharing secured data with Peza will enable us to coordinate our efforts and drive collective improvements toward seamless trade facilitation,” Rubio said. For his part, Peza Director General Tereso O.
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BOWED BY TOIL, BOUND BY HOPE
Meet Leo de Vera, a 50-year-old farmer from Taytay, Rizal. Despite enduring losses and hardships, he works tirelessly to restore his rice fields after the devastation of typhoons Goring and Hannah. Leo’s struggles highlight the challenges farmers face, as government subsidies and pesticides often prove insufficient to counter the low prices paid by traders for their palay. His story embodies the unwavering resilience of farmers, who aspire to see fair prices and a brighter future for Philippine agriculture. BERNARD TESTA
AUSTRALIA PRODDED: INVEST BSP: Bid to develop IN, TRADE MORE WITH ASEAN Islamic banking gains
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HE Australian government was advised to invest and trade more with Southeast Asia, including the Philippines, as the region is set to become the world’s 4th largest economy by 2040 thanks to an expanding middle class and higher consumer demand. A report by Special Envoy for Southeast Asia Nicholas Moore said Australia will benefit from increased investment and trade with the region as its consumer market could be over 10 times larger than Australia in two decades. The Philippines, for one, is expected to see 30.2 million households earn US$15,000 a year or roughly P840,000 at the P56 to the dollar exchange rate in 2040. In 2022, this number was estimated to only be at 5.6 million. “As a regional bloc, by 2040, Southeast Asia is projected to become the world’s fourth-largest economy, after the United States, China and India,” the report stated. “It will be critical to continue reducing barriers to trade and investment and pursuing integration. If this occurs, the long-term trajectory
points to a region that will continue to be one of the main sources of global growth,” it added. The report noted that another major population trend is urbanization. According to the United Nations Economic and Social Commission for Asia and the Pacific, the proportion of people living in cities will increase from 51 to 61 percent between 2022 and 2040. This urbanization trend will be more pronounced in Cambodia, Laos, the Philippines, Timor-Leste and Vietnam where rural populations will shift to become urban areas. Most Southeast Asian countries still have young populations with a median age in 2023 of 30.4 years. The United Nations forecasts that by 2040, Southeast Asia’s population will reach 766 million, up from an estimated 687 million in 2023. The working-age population or people aged 15 to 64 years old will comprise 507 million of the total. This leads to a “demographic dividend” that paves the way for higher conS “A,” A
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HE Bangko Sentral ng Pilipinas (BSP) is making headway in its efforts to promote initiatives to develop Islamic banking and finance in the Philippines. The BSP Assistant Governor Atty. Arifa A. Ala, lead advocate on Islamic banking and finance and the Chairperson of the Islamic Finance Coordination Forum, recently led the briefing on “Islamic Banking and Finance in the Philippines” at the Philippine Embassy in Riyadh. “The business model of Islamic banking is beneficial to all types of banking clients regardless of religion. Hence, the goal is to provide the public, in general, whether Muslims or non-Muslims, with appropriate financial choices that suit their risk appetite and finan-
PESO EXCHANGE RATES US 56.7880 ■ JAPAN 0.3845 ■ UK 71.3939 ■ HK 7.2425 ■ SINGAPORE 41.7191 ■ AUSTRALIA 36.2137 ■ SAUDI ARABIA 15.1399 ■ EU 60.9051 ■ KOREA 0.0427 ■ CHINA 7.7773 Source: BSP (September 6, 2023)