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Thursday, September 15, 2022 Vol. 17 No. 342
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LOWER BUDGET DEFICIT
SEN. Juan Edgardo Angara (back to the camera) presides over the hybrid hearing of the Senate Committee on Finance on the proposed 2023 national budget on Wednesday, September 14, 2022. After hearing the Department of Budget and Management’s report, Angara welcomed increases in the budgets of education, health, agriculture, and the calamity fund despite the small increase in the 2023 national budget. In the same hearing, Finance Secretary Benjamin Diokno (below) presented the current state of the country’s economy and updates on its fiscal performance and borrowing efforts. JOSEPH VIDAL/SENATE PRIB
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@jearcalas
BSP ‘MOST AGGRESSIVE’ IN HIKING POLICY RATES
INANCE Secretary Benjamin E. Diokno said the weakening of Philippine peso against the dollar has an upside, as the national government will be able to reduce its budget deficit by P7.6 billion for every peso-worth of depreciation. At a Senate Committee on Finance hearing on Wednesday, Diokno told lawmakers that the depreciation of the peso is “actually favorable” for the country, as it would result in “higher” revenue for the government. Furthermore, Diokno expounded that the additional revenues would help reduce the government’s budget deficit, he added. “The impact of the depreciation actually is favorable to the budget. A P1 depreciation would mean a higher revenue for the government. It would involve about P10 billion additional revenues with little adjustments on the disburse-
ment side and that is mainly on debt servicing,” Diokno said. “We cannot spend what Congress has not authorized. The net effect of a P1 depreciation is P7.6billion reduction in our budget deficit,” Diokno added. The national government’s budget deficit or the difference between expenditures and revenues as of end-July stood at P761 billion, or 9.11 percent lower than the P837.3-billion budget deficit recorded in the same period of last year. For July alone, the national government’s budget deficit also narrowed to P86.8 billion this year
B C U. O @caiordinario
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from P121.2 billion last year as revenues outpaced expenditures. For 2022, the Cabinet-level Development Budget Coordination Committee expects a lower budget deficit at P1.65 trillion, or 7.6 percent of the country’s GDP.
The finance chief also told lawmakers the current administration intends to “borrow less” compared to its borrowing spree at the height of the Covid-19 pandemic,
HE Bangko Sentral ng Pilipinas (BSP) is now considered the “most aggressive” Central Bank in the region in terms of hiking policy rates leading to an increase in the country’s two-year bond yields, according to the Asian Development Bank (ADB). In its latest Asia Bond Monitor, the Manila-based multilateral development bank said the yields increased by an average of 74 basis points (bps) for bonds with maturities of two years or less. The largest increase in yields, ADB said, were in one-year tenor bonds at 134 bps, followed by the 6-month tenor at 111 bps.
“The rise in yields at the shorter end of the curve was largely driven by the monetary policy tightening stance of the BSP,” ADB said. “The BSP has become the most aggressive central bank in the region, raising rates consecutively since May for a total of 175 bps. The moves were largely in response to rising inflationary pressure.” However, there was a decline in yields for bonds whose maturities reached three years or longer. ADB said the yield curve flattened, the spread of the 10-year over the 2-year maturity fell from 262 bps on June 15 to 132 bps on August 15. This, ADB noted, was the largC A
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USDA forecasts PHL rice imports to hit record 3.4 MMT
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HE United States Department of Agriculture (USDA) revised upward anew its total rice import forecast for the Philippines this year to a record level of 3.4 million metric tons (MMT), from an earlier estimate of 3.2 MMT. In its monthly global grain report, the USDA increased its total rice import forecast for the Philippines this year by 200,000 MT due to “large purchases from Vietnam.” The new import forecast for the Philippines, the world’s secondlargest buyer of rice, is 15.25 percent higher than the 2.95 MMT
of rice it imported last year, based on USDA data. Historical USDA data showed that if the 3.4 MMT rice import forecast materializes this year, then it would be the first time in the Philippines’s history that its rice imports breached the 3-MMT level. Likewise, the USDA hiked its rice import forecast for the Philippines next year to 3.3 MMT from an earlier estimate of 3.1 MMT on the back of a projected “smaller” domestic staple production. The USDA projected that Philippine rice output for 2023
would decline to 12.41 MMT from this year’s estimated volume of 12.54 MMT as yield falls to 4.1 MT per hectare from 4.15 MT per hectare. The Philippines’s rice imports in January to August have reached MMT and are poised to surpass the 2.777 MMT it imported in 2021. (Related story: https://
businessmirror.com.ph/2022/09/08/ phl-rice-imports-jump-by-64-injanuary-august/)
The latest data from the Bureau of Plant Industry (BPI) showed that the country’s rice imports during the 8-month period was about 64 percent
higher than the 1.66 MMT recorded a year ago. Imported rice arrivals in August alone rose by more than 50 percent year-on-year to 380,244.5 MT from 228,353.97 MT. BPI data indicated that 5,920 MT of rice entered the country on September 1, bringing to 2.725 MMT the total rice import volume from January 1 to September 1. The agency said 137 eligible traders and importers brought in rice from Cambodia, China, India, Japan, Myanmar, Pakistan, Singapore, Spain, Taiwan, S “USDA,” A
PESO EXCHANGE RATES US 56.8570 ■ JAPAN 0.3929 ■ UK 65.3628 ■ HK 7.2432 ■ SINGAPORE 40.4273 ■ AUSTRALIA 38.3046 ■ SAUDI ARABIA 15.1316 ■ EU 56.6694 ■ KOREA 0.0408 ■ CHINA 8.1586 Source: BSP (September 14, 2022)