banking finance

ADB okays $200-M loan to aid PH poor amid Covid-19

April 28, 2020

MANILA -- The Asian Development Bank (ADB) on Monday approved a $200-million loan to support the Philippine government’s effort to provide emergency cash subsidies to vulnerable households amid the coronavirus disease 2019 (Covid-19) pandemic.      “This global pandemic, of a kind not seen in the last century, has disrupted the livelihoods of millions of Filipinos and could set back the very substantial gains the country has made in reducing poverty in recent years,” ADB Vice-President Ahmed Saeed said in a statement.     Saeed said the new loan supports the government’s emergency subsidy program, which was designed to “help vulnerable households get through this very difficult period and avoid falling into poverty.”     High, sustained economic growth and job creation in recent years and the government’s social assistance programs have combined to reduce the Philippines’ national poverty rate from 23.3 percent in 2015 to 16.6 percent in 2018, translating to 5.9 million Filipinos escaping poverty during this period.     On March 24, Philippine President Rodrigo Roa Duterte signed into law the “Bayanihan to Heal as One Act”—or Republic Act No. 11469—authorizing the government to implement a Covid-19 emergency subsidy program that provides cash payments of P5,000 to P8,000 per month for two months to 18 million low-income families nationwide.      This large program includes 4.3 million poor households covered under the country’s conditional cash transfer (CCT) program known as Pantawid Pamilyang Pilipino Program (4Ps). ADB has been supporting the 4Ps CCT program since 2010.     ADB’s $200-million loan, under the Social Protection Support Project–Second Additional Financing, will contribute to the $726 million required to provide emergency subsidies to 4Ps households in April and May 2020.     The loan is part of ADB’s comprehensive support to the Philippines to mitigate the damaging effects of the pandemic on the economy and well-being of Filipinos.      It comes after the signing of the USD1.5-billion loan for ADB’s COVID-19 Active Response and Expenditure Support program on April 23.      Two grants approved in March totaling USD8 million are supporting the delivery of food baskets to at least 140,000 vulnerable households in Metro Manila and nearby provinces, purchase of emergency medical supplies, and setting up of a new laboratory that will increase the country’s Covid-19 testing capacity by 3,000 tests a day.     ADB is also preparing an Expanded Social Assistance Project to support the government’s medium-term financing of the 4Ps program. (PR)  

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PH e-payments goal gets boost during ECQ

April 28, 2020

THE Bangko Sentral ng Pilipinas’ (BSP) program to encourage people to use digital payment platforms got a boost during the ongoing enhanced community quarantine (ECQ) in most parts of the country.      Data from the central bank showed that transactions using PESONet and InstaPay visibly increased compared before the ECQ due to restrictions in movement of people outside of their houses.     “To efficiently and safely make payments, the business entities with obligations to pay during this period used EFT (electronic fund transfer) services, particularly, the PESONet,” a central bank bulletin showed.     InstaPay and PESONet are real-time electronic payment systems under the National Retail Payment System (NRPS).      InstaPay offers consumers a safe, affordable, and real-time electronic payment option for up to P50,000 per transaction without limit in a day.      Charges may apply to the one sending the fund and the one receiving it depending on the financial institutions they will tap.     PESONet, on the other hand, is a batch EFT credit payment scheme for business-to-business as well as people-to-business transactions like credit salaries to employees’ existing accounts.     These e-payment options are posting bigger jumps since the ECQ was declared over mainland Luzon last March 16.     The quarantine was supposed to end last April 12 but was extended to April 30 to ensure the initial gains will not be wasted. The government has yet to announce whether this deadline will be further extended or modified.     Before the ECQ, the value of PESONet transactions amounted to about P6 billion daily but surpassed P6 billion in most days since March 17 until April 2, 2020.     Value of InstaPay transactions are also generally higher during the ECQ although there were days that the daily value was lower than before the quarantine period.     “The PESONet volume did not grow along with the PESONet value due to the adverse economic impact of the ECQ on salaried individuals who are also users of PESONet,” the bulletin said.     As a consequence of increased digital payment transactions, both the cheque payments and automated teller machines (ATMs) withdrawals declined.     Before the ECQ, the value of daily cheque transactions surpassed P150 billion daily but this averaged to about P50 billion to P75 billion from March 17 until April 2.     Minimum daily value of ATM withdrawals from March 2 until March 16 is about P3 billion, with the highest at nearly P9 billion.      The daily transactions from March 17 to April 2 is about P3 billion to P4 billion, with the highest at about P5 billion.     The bulletin said cheques “which are predominantly used by business entities substantially declined in volume and value” because of lower business transactions during the ECQ.     “ATM withdrawals were on downtrend, reflecting the unfavorable effect of work suspension on millions of workers in Luzon and other regions,” it said.     It added people were inclined to use the InstaPay service which is a more convenient and safer means to make low-value payments during the ECQ.     “Instead of heavily relying on ATMs, many depositors resorted to using InstaPay. The behavior-changing quarantine sustained the upward trend in InstaPay volume and value,” it said.      Meanwhile, the bulletin said ATM withdrawals and InstaPay demonstrate similar characteristics.     The volume and value of transactions jump on a pay day and Fridays when people anticipate weekend expenses, it said.     It added that volume and value of transactions are high on weekdays than on weekends “as work, household and other expenses are funded on weekdays while only household expenses are incurred on weekends.”     It also cited the “high volume and value on Mondays when people are accustomed to doing personal and business transactions at the start of the week.”      On Wednesday, BSP Governor Benjamin Diokno urged the public to utilize e-payment platforms during the ECQ to help in the government’s bid to address the rise of coronavirus disease (Covid-19) and lessen transmission.     “Fees for these services have been waived by authorized financial institutions during the ECQ period,” he said.     As of end-March this year, the BSP said there are 45 financial institutions that offer InstaPay service while 56 financial institutions provide PESONet service.     The BSP targets to increase the value of e-payment transactions in the country to account for 30 percent of the total by 2020, while volume is aimed to account for 20 percent of the total. (PNA)

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ADB okays $1.5-B financing to Support PH Covid-19 response

April 26, 2020

THE Asian Development Bank (ADB) has approved a $1.5-billion loan to help the Philippine government fund its coronavirus disease 2019 (Covid-19) response program and strengthen the country’s health care system in its fight against the pandemic.      “This assistance is our largest budget support loan to the Philippines ever and reflects our strong commitment to providing cornerstone assistance swiftly and effectively to help the country mitigate the pandemic’s devastating impact on Filipinos, particularly the poor and vulnerable, including women,” ADB President Masatsugu Asakawa said in a statement Friday.     Asakawa said the most vulnerable are developing countries, especially those with densely populated cities such as the Philippines, amid the global pandemic.     “We commend the government for its leadership and clear actions in containing the spread of Covid-19, including scaling up its health response, enforcing an enhanced community quarantine in Luzon to save lives, and rolling out subsidy programs to affected segments of the population,” he said.     The Philippines was among the first set of countries to implement strict social distancing measures through its enhanced community quarantine when it temporarily shuttered schools, government, and private businesses, while closing the borders on the entire Luzon island, where the capital Manila is located, starting 16 March.      The Luzon region accounts for 50 percent of the Philippines’ total population and generates more than 70 percent of gross domestic product.      These measures have been effective in slowing the spread of the disease in the local community.     “We thank the ADB under the leadership of President Masatsugu Asakawa for swiftly responding to the Philippines’ call for funding support in this time of crisis. We thank the bank as well for streamlining its operations to quickly deliver its assistance and for tripling the size of its response package from $6.5 billion to $20 billion to help developing member countries combat Covid-19,” Philippine Finance Secretary and ADB Governor Carlos Dominguez said.     ADB’s Covid-19 Active Response and Expenditure Support (CARES) Program will support the government’s measures to help its citizens overcome the health, economic, and social costs of the pandemic by helping finance the country’s Covid-19 response programs.      Government actions include increased funding for social protection, especially for women who are primary household and family caregivers; small business relief assistance; and wider health measures to stop the spread of Covid-19 in the country.     The government’s Covid-19 relief package includes well-designed and targeted support to Filipino families, including a P205 billion (USD4 billion) emergency subsidy program covering 18 million families engaged in the informal sector and a P51-billion small business wage subsidy to provide a lifeline for 3.4 million workers in the formal sector.      These programs cover 85 percent of all Filipino families.     The CARES Program will establish a country engagement framework focused on supporting policy dialogue with the government as it implements its fiscal response program and bounce back strategy.      ADB coordinated with other development partners in preparing the CARES Program for the Philippines.     The new financing is part of ADB’s $20-billion expanded assistance for developing member countries’ Covid-19 response, which was announced on April 13.       It also builds on the $5-million grant approved on March 18 to deliver nutritious food baskets to up to 140,000 vulnerable households in Metro Manila and neighboring areas, in collaboration with the government and the private sector.   On March 13, ADB approved a $3-million grant to help the Philippine government purchase emergency medical supplies and set up a new laboratory that will increase the country’s Covid-19 testing capacity by 3,000 tests per day.    The new laboratory is expected to be fully functional by mid-May 2020. ADB is also preparing additional financing for social protection and health projects in April and May this year, respectively. (PR)  

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BSP eyes zero to -1% growth this '20

April 23, 2020

PHILIPPINE monetary officials forecast domestic growth this year to be at zero or negative 1 percent as a result of the coronavirus global pandemic.      “Worst case is negative one (percent), best case is zero but many things can still happen,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno told members of the House of Representatives and some economic managers during an online meeting linked to the Facebook page of House Speaker Alan Peter Cayetano Tuesday.     This forecast range is similar to the figures quoted by Finance Secretary Carlos Dominguez III and former National Economic and Development Authority (NEDA) Director General and Socioeconomic Planning Secretary Ernesto Pernia.     To help cushion the economic impact of the pandemic, Diokno said the central bank has reduced its key policy rates by a total of 125 basis points this year and cut by 200 basis points the reserve requirement ratio (RRR) of universal and commercial banks (U/KBs), among others.     He said a 100-basis-point cut in RRR, a portion of banks’ reserves required to be placed in the central bank, is expected to release about PHP90 billion to PHP100 billion into the economy.     The measures, he said, are “really designed to ensure adequate liquidity into the financial system and reduce borrowing cost.”     He said the RRR cuts are designed to help small and medium enterprises (SMEs) that are greatly affected by the pandemic.     BSP also aided micro, small and medium enterprises (MSMEs) by allowing banks’ lending to this sector as part of the financial institutions’ reserve requirements.     Diokno said they “try to be creative” because they really want to help the small and medium scale businesses during these trying times.     He said these liquidity-inducing measures, along with the guarantee to be extended by the Philippine Guarantee Corporation (PhilGuarantee), are measures that will be attractive for MSMEs.     During the same online discussion, Finance Secretary Carlos Dominguez said PhilGuarantee is ready to provide up to PHP100 billion worth of guarantees to loans applied for by MSMEs from banks.     Dominguez said he has also discussed with Land Bank of the Philippines (Landbank) officials about an aid for schools that will have a “study now, pay later” program for secondary and tertiary levels.     He said Landbank could probably extend up to PHP100 billion worth of loans to private schools and this will be used to cover up to 70 percent of the amount based on the promissory notes of the students.     The program will benefit even the returning overseas Filipino workers (OFWs) who want to have another skill, or upgrade their skills, he added.     “This program will be available soon to private schools,” Dominguez said. (PNA)  

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Bank lending picks up in February

April 23, 2020

BANK LENDING in February grew quicker as easing moves by the central bank in 2019 were felt in the financial system.     Outstanding loans disbursed by universal and commercial banks expanded by 12.2% in February, faster than the 11.6% seen in January, according to data from the Bangko Sentral ng Pilipinas (BSP).     Inclusive of reverse repurchase agreements, lending climbed by 11.4%, also quicker than the 11.2% logged in the January.     The central bank attributed the rise to production loans, which made up 86.3% of the total loans. Lending disbursed to the segment grew by 9.6%, quicker than the 8.8% rise in January.     Production loans continued to increase on the back of lending to sectors including real estate activities (20%); financial and insurance activities (19%); electricity, gas, steam and air conditioning supply (9.7%); information and communication (22.5 %); and construction (16.2%).     The BSP said other sectors also saw higher loans in February, except for those in the manufacturing (-2.1%), mining and quarrying (-10.2%), and other service activities (-34.7%).     Meanwhile, growth of loans for household consumption eased to 37.6% from the 40.1% in January. The growth was fueled by the rise in motor vehicle loans.     Analysts said the easing stance of the BSP last year began to translate to faster bank loan growth.     They, however, said lending may weaken or even drop in the months ahead due to the slowdown caused by the coronavirus disease 2019 (COVID-19) and the lockdown in Luzon.     “Bank lending continued to climb in February, largely on base effects and as the lagged impact of the 2019 reversal in monetary policy,” ING Bank N.V.-Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mailed response.     In 2019, the BSP slashed rates by 75 basis points (bp), partially reversing the 175 bps in hikes in 2018.     The Monetary Board also reduced the reserve requirement ratio (RRR) of lenders by a total of 400 bps in 2019.     Apart from policy moves, the government’s infrastructure thrust also boosted lending growth, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC).     “[It also] reflected increased infrastructure spending since the latter months of 2019 that had positive effects on related industries in the supply chain of the infrastructure projects,” Mr. Ricafort said in an emailed response. According to ING’s Mr. Mapa, investment activity, which has an impact on bank lending growth, has been “on the mend” as 2019 came to close and was set to recover in 2020 until the COVID-19 took a toll on the economy. “We could expect to see bank lending activity curtailed as investment appetite drops out,” he said. Still, despite seeing likely slower growth in bank lending, Mr. Mapa said weaker investment appetite could be offset “by demand from consumers and corporates who may need funding to bridge payments after cash flows froze over during the lockdown.” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion likewise expects bank lending growth to be hit by COVID-19. “In the coming months, lending growth is expected to decline, but the policy adjustments, hopefully, will encourage more borrowing from the economy,” Mr. Asuncion said in an email. The central bank has already reduced rates by a total of 125 bps this year. This brought the overnight reverse repurchase, lending and deposit rates to 2.75%, 3.25%, and 2.25%, respectively. Reserve requirement for universal and commercial banks have also been reduced by another 200 bps to 12% since April. Moreover, the BSP has slashed the minimum liquidity ratio of stand-alone thrift and rural banks by 400 bps to 16% until the end of this year as a liquidity boost given the current situation. Aside from the latest rate cut announced last week, the BSP also said that it will count loans for medium-, small- and micro-sized enterprises as part of banks’ compliance with the reserve requirement to aid smaller businesses.  

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BSP okays $2.38-B foreign borrowings

April 23, 2020

THE central bank said they have approved $2.38 billion worth of National Government (NG) foreign borrowings in the first quarter of 2020 which was 30 percent lower than same time last year of $3.42 billion.     The NG or public sector loans were broken down as: Euro bond issuance of EUR1.2 billion ($1.3 billion); four project loans worth $493 million; and two program loans amounting to $800 million.     The Bangko Sentral ng Pilipinas (BSP), in a statement, said the NG will use these foreign loans for general financing requirements and to fund infrastructure development and transport connectivity projects.     The funds will also finance the implementation of the Philippine Competition Act as well as programs to “develop youth employment opportunities and resilience to natural disasters.”     About $219.8 million or 9.23 percent of external borrowings will go to infrastructure flagship projects of the Duterte administration’s “Build, Build, Build” (BBB) program such as those under the Project Management Consultancy of the Philippine National Railways South Long Haul Project.     The BSP is mandated by law or Section 20, Article VII of the 1987 Constitution of the Republic of the Philippines, to review and approve all foreign loans, both from the public and private sector, to ensure its “judicious use” for the management and sustainability of external debt, said the BSP.     The BSP used to impose a limit on foreign loans but with the BBB funding requirements, setting a cap was temporarily suspended. Foreign borrowing limits was an inherited program from the days when the Philippines was still under the tutelege of the International Monetary Fund.     As of end-2019, the country’s outstanding external debt went up by 5.9 percent year-on-year to $83.6 billion.     `Public sector external debt totaled $42.8 billion as of December 2019 from $42.5 billion end-September 2019. About $36 billion were NG loans while $6.7 billion were borrowed by government-owned and con¬trolled corporations, government financial institutions and the BSP.  

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