banking finance

Bangko Sentral sees April 2020 inflation rate at 1.9% to 2.7%

May 2, 2020

DECLINE of oil prices in the international market is expected to decelerate further Philippines’ inflation rate, with the April 2020 figure seen to stay within 1.9 percent to 2.7 percent range.      In a Viber message to journalists Thursday, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said “the progressive fall in inflation will continue.”     “The collapse in oil prices is expected to moderate inflationary pressure coming from higher prices of rice and other food items, along with upward adjustment in electricity rates in (the) Meralco-serviced area,” he said.     With these factors, Diokno said monetary officials will closely monitor developments vis-à-vis the BSP’s policy stance.     “Looking ahead, BSP will remain watchful of economic and financial developments here and abroad to ensure that monetary policy settings remain consistent with price stability conducive to a balanced and sustainable economic growth,” he added.     Inflation rate last March slowed to 2.5 percent from month-ago's 2.7 percent, bringing the average in the first quarter to 2.7 percent.       Except for a one-month uptick in May 2019 when inflation rate rose to 3.2 percent from month-ago’s 3 percent, domestic inflation rate sustained its slowdown after peaking at 6.7 percent in September and October 2018 caused by supply side factors.     Monetary officials expect inflation to continue to slow in the coming months partly because of the enhanced community quarantine (ECQ) in most parts of the country being implemented to arrest the spread of coronavirus disease (Covid-19).     The government’s inflation target from 2020 to 2022 has been set between 2 to 4 percent.     BSP’s policy-making Monetary Board (MB), during its rate setting meet last March 19, forecast inflation to average at 2.2 percent this year, and 2.4 percent next year.     During its meeting last March 26, the Board adopted a 1.75 to 3.75-percent forecast range for inflation rate this year from 2 to 4 percent previously.     Principals of the inter-agency Development Budget Coordination Committee (DBCC) approved through an Ad Referendum the same projections during their meeting last March 27.     Diokno, in a message to journalists Thursday, said the government’s inflation target is subject to quarterly review and decisions by the DBCC through inputs from the BSP.     He said the central bank forecasts monthly inflation rate through assessment of various international and domestic factors like oil prices, commodity prices, foreign exchange rate, transport fees, utility rates, and minimum wages. (PNA)  

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PH posts highest-ever foreign reserves of $89B in March

May 2, 2020

THE Bangko Sentral ng Pilipinas (BSP) on Thursday reported the country’s highest foreign currency reserves amounting to $88.995 billion as of March 2020.      Data released by the central bank showed that the latest gross international reserves (GIR) figure is only preliminary, but this is already higher than the $88.187 billion as of last February.     In a statement, BSP’s Department of Economic Statistics (DES) said the final end of March GIR will be published as soon as the data becomes available.     “In terms of the final data on GIR, the highest level recorded was as of end-February at $88.2 billion,” it said.     GIR refers to all foreign assets that are available and controlled by the central bank to finance payment imbalances or manage the magnitude of such imbalances.     The BSP’s GIR target this year is $86 billion.     The BSP said the latest foreign reserves level of the country is enough to cover 7.9 months’ worth of imports of goods and services and payments of primary income, higher than the international standard of three months’ worth of cover.     It traced the rise in the GIR level to gains from the central bank’s foreign exchange operations and income from investments overseas, and the national government’s foreign currency deposits with the central bank.     It, however, said these inflows are partly countered by the national government payments of its foreign currency-denominated loans.     During the same month, the country’s net international reserves (NIR), which is the difference between the GIR and total short-term liabilities, increased to $88.99 billion in March from the previous month’s $88.18 billion. (PNA)  

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BSP eases credit weight of banks’ MSME loans

May 2, 2020

THE CENTRAL BANK will ease the weight of loans extended by banks to small businesses until end-2021 to free up capital which can be used for lending amid the pandemic.     In Memorandum No. M-2020-034 signed April 28, BSP Governor Benjamin E. Diokno said banks’ exposure to qualified micro-, small-, and medium-sized enterprises (MSMEs) will only be assigned a credit risk weight of 50%, down from 75% previously.     “The foregoing provisions shall apply until Dec. 31, 2021,” Mr. Diokno said.     Under the Basel III Risk-Based Capital Adequacy Framework and the Basel 1.5 Risk-Based Capital Adequacy Framework, these loans include MSME exposures that meet the criteria of a qualified MSME portfolio as well as current MSME exposures that do not qualify as a highly diversified MSME portfolio.     “This move will free up some portion of banks’ capital which they can use for lending. This will also incentivize banks to lend to the MSME sector,” BSP Deputy Governor Chuchi G. Fonacier said in a text message.     “[This] would further encourage banks to book more MSME loans with less worries about effects on capitalization in view of relatively higher credit risks involved in lending to smaller companies,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail.     The move follows the BSP’s move to include lenders’ credit to MSMEs in computing banks’ compliance with reserve requirements. This is also effective until the end of 2021.     Republic Act No. 9501 or the Magna Carta for Micro, Small and Medium Enterprises (MSMEs) requires banks to allot 8% of their total loanable funds as credit to micro and small enterprises.     On the other hand, two percent should be set aside for medium-sized businesses as the central bank seeks to boost credit to the sector which they can use for production and expansion.     Data from the Philippine Statistics Authority showed that MSMEs totaled almost one million in 2018, accounting for 99.52% of businesses. These MSMEs generate 63% of the country’s total employment and are mostly engaged in wholesale and retail trade as well as repair of motor vehicles and motorcycle industries. MSMEs are seen to be among those hardest hit as the coronavirus disease 2019 outbreak continues to disrupt economic activity.  

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GSIS raises emergency loan amount to P40K

April 30, 2020

GOVERNMENT workers can now avail of emergency loans from the Government Service Insurance System (GSIS) up to P40,000.     During the #Laging Handa PH briefing aired over the state-owned television network, PTV, GSIS president Rolando Macasaet said the agency’s Board of Trustees have decided to increase the loanable amount after noting that some of those who applied for emergency loans have existing loans.     Under GSIS rules, the outstanding loan amount of a member will be deducted from the proceeds of the emergency loan once the application has been approved.     Emergency loans may be availed of within three months after the declaration of a state of calamity in an area.     GSIS members may apply for emergency loans after Malacanang declared a state of calamity nationwide since March 16 and the declaration will last for six months “unless earlier lifted or extended as circumstances may warrant” due to the coronavirus disease (Covid-19) pandemic.     Macasaet said they are accepting online loan applications because of the enhanced community quarantine (ECQ) declared over Luzon, among other areas.     He said the system has yielded good results, with total loan applications reaching nearly 40,000 with payout almost reaching P4 billion.     He said GSIS members who are medical front-liners will get additional life insurance if they die of the virus.     He said GSIS members are automatically given a life insurance coverage amounting to 150 percent of their salary multiplied by 12.     He, however, said that because of the pandemic, GSIS officials decided to give medical front-liners who are GSIS members additional insurance amounting to P500,000.      He said they have been received reports that eight GSIS members who are medical front-liners have died because of Covid-19. (PNA)  

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PH, ADB sign $200-M loan pact for cash aid project

April 30, 2020

THE Philippines and the Asian Development Bank (ADB) signed Tuesday an agreement for a USD200-million loan on additional financing for the government’s efforts to provide unconditional emergency cash assistance to poor and vulnerable households that have been adversely affected by the quarantine measures imposed to contain the coronavirus disease 2019 (Covid-19) pandemic.     This loan accord is the second additional financing provided by the ADB under the Social Protection Support Project (SPSP), which supports the government's conditional cash transfer (CCT) program or the Pantawid Pamilyang Pilipino Program (4Ps) of the Department of Social Welfare and Development (DSWD).       Finance Secretary Carlos Dominguez III signed the loan agreement on behalf of the Philippine government, while ADB Country Director for the Philippines Kelly Bird signed it on behalf of the bank.     “We thank the ADB for its swift and continuing support for the Duterte administration's efforts to blunt the impact of the worldwide coronavirus outbreak on our people and the economy,"  Dominguez said.     "This SPSP loan will help the government achieve the No. 1 priority set by President Duterte in dealing with the Covid-19 pandemic, which is to save lives and extend a lifeline to millions of poor and low-income Filipinos who lost their incomes and livelihoods following the pandemic-driven work stoppage," he added.   For his part, ADB Vice President Ahmed Saeed said, “We commend the Philippine government for rolling out the emergency subsidy program aimed at helping poor and vulnerable Filipinos get through this health and economic crisis, as the pandemic curve is flattened. This USD200 million loan to assist the government in financing Covid-19 cash grants to poor households under the Pantawid Pamilyang Pilipino Program (4Ps) will help achieve this purpose.”   The SPSP aims to provide cash grants to beneficiary-families under the 4Ps covered by the emergency subsidies under Republic Act 11469 or the" Bayanihan To Heal As One Act".   This budget-support loan will help bridge the immediate financing requirements of the government's response to this coronavirus crisis through the distribution via cash cards of cash grants to beneficiaries of the 4Ps.     The loan for the project, which carries a maturity period of 29 years inclusive of an eight-year grace period, is expected to be disbursed by June this year.   Last April 24, the ADB and the Philippines signed another loan agreement that would let the Duterte administration access up to USD1.5 billion in budgetary support from the Manila-headquartered lender to augment funds for its stepped-up efforts to contain the global health crisis.    This loan for the Covid-19 Active Response and Expenditure Support (CARES) program is the largest budget support ever extended to the Philippines by the ADB, according to ADB President Masatsugu Asakawa.   The CARES program loan is under the ADB’s Countercyclical Support Facility Pandemic Response Option, which is a quick-disbursing budget-support facility to aid countries like the Philippines in mitigating the severe economic shocks caused by the Covid-19 pandemic and bankrolling measures to prevent the further spread of this highly contagious virus.   Asakawa said ADB’s financing for the CARES program loan “is part of a well-sequenced support package that will provide financial and technical advice to help the [Philippines] meet the challenges posed by a crisis that is wreaking havoc both globally and nationally.”   The ADB president has commended the Philippine government for “its strong leadership and decisive actions to halt the spread of Covid-19 and quickly implementing financial assistance packages to families and small businesses to address the economic downturn.”   The ADB was among the first multilateral development institutions to provide assistance to the Philippines’ Covid-19 response efforts with its delivery of a USD3-million grant for the government’s purchase of medical supplies for its front line health workers. (PR)    

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BSP waives fees to digital financial services apps

April 30, 2020

THE Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has approved the suspension of charging of filing, processing, and licensing/registration fees for applications to provide electronic payment and financial services (EPFS).      This is an additional relief to BSP Supervised Financial Institutions (BSFIs) affected by the coronavirus disease 2019 (Covid-19) pandemic, the BSP said in a statement Tuesday.     The relief shall be effective for a period of six months from 8 March 2020, the date of declaration of the President of the state of public health emergency under Presidential Proclamation No. 922.    This period may be extended depending on the development of the Covid-19 situation.   Digital channels have enabled continued access to basic financial services, such as payments, fund transfers, and loan availment, and minimized the physical presence of clients at BSFI premises.    These channels include online banking facilities and electronic money platform that support critical payment use cases such as social benefit transfers, payments to merchants or billers, including the government, payments to suppliers, and remittances.    This effectively contributes to the physical distancing measures implemented by the government during the Luzon-wide enhanced community quarantine (ECQ) period to help curb the spread of Covid-19. (PR)

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