BSP projects August inflation at 5.9-6.7%

THE growth of consumer prices likely remained elevated in August this year, the Bangko Sentral ng Pilipinas (BSP) said in a statement Wednesday afternoon. In its month-ahead inflation forecast, the BSP said inflation could have settled between 5.9 and 6.7 percent during the month. In July, inflation already hit a 4-year high at 6.4 percent. The BSP said inflation for August was driven by the continued increase in key food prices. This could, however, be offset in part by the decline in global oil prices, the reduction in electricity rates, lower meat and fish prices, and appreciation of the peso.

BIR, Customs get P3.5-B digitalization funds 

The government’s two main tax agencies secured more than a quarter of the Marcos administration’s budget for information and communications technology (ICT) next year, the Department of Budget and Management (DBM) said. Budget Secretary Amenah F. Pangandaman said on Aug. 31, that the Bureau of Internal Revenue (BIR) and Bureau of Customs will receive P3.56 billion in 2023 to fund their digital transformation programs. Pangandaman said that the budget for the BIR and Customs’ digitalization efforts is equivalent to 28.6 percent of DBM’s P12.4 billion proposed budget for ICT projects throughout the bureaucracy.

House panel approves GUIDE bill

THE HOUSE Committee on Banks and Financial Intermediaries approved a measure that would expand the government’s lending programs to help small businesses recover from the coronavirus disease 2019 (COVID-19) pandemic. The proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act is one of the priority bills mentioned by President Ferdinand R. Marcos, Jr. at his State of the Nation Address (SONA) last month. During a hearing, the House Committee on Banks approved the measure, which would consolidate House Bill No. (HB) 1, 685, 3460, and 3700. The measure will be referred to the House Committee on Appropriations for funding, and the Ways and Means panel for the tax provisions.

IT-BPM sector targets 1.1M new jobs in 6 years

THE PHILIPPINES’ information technology and business process management (IT-BPM) sector is expected to boost its revenues by as much as 10% this year, and create over 1.1 million jobs in the next six years, as the economy recovers from the coronavirus pandemic. “The IT-BPM industry has become an indispensable pillar of the Philippine economy… and a very potent source of foreign exchange and exports,” IT and Business Process Association of the Philippines (IBPAP) President and Chief Executive Officer Jack Madrid said at a virtual press conference on Wednesday. IBPAP is projecting an 8-10% increase in revenues and a 7-8% rise in the number of full-time employees by the end of 2022.

DOT seeks P3.5-B budget; no full recovery till 2025

THE Department of Tourism (DOT) is projecting foreign visitor arrivals of at least 3.23 million by 2023, still below the 8.26-million historic high in 2019. This was revealed by Tourism Secretary-designate Christina Garcia Frasco at Wednesday’s hearing for the DOT budget at the House of Representatives’ Committee on Appropriations. “Under present conditions, we will not be able to recover to pre-pandemic levels until 2025,” she said. The DOT is seeking a budget of P3.58 billion next year, although a number of legislators support an increase to help revive the tourism sector and give back jobs to workers, who lost them due to the pandemic travel restrictions.

House bill proposes P15-B annual allocation for RCEF 

A BILL filed in the House of Representatives proposes to raise the annual allocation for the Rice Competitiveness Enhancement Fund’s (RCEF) to P15 billion from the current P10 billion. House Bill No. 212, which was filed by Nueva Ecija Rep. Mikaela B. Suansing and Sultan Kudarat Rep. Horacio P Suansing, Jr., seeks to raise the program’s allocation to “maximize its efficacy in improving the productivity and incomes of Filipino rice farmers.” The RCEF is a component of the Rice Tariffication Law. RCEF receives P10 billion from rice import tariffs a year for six years to support farm mechanization, seed development, training, and credit assistance. “The RCEF was designed to reduce palay production costs by 30%, to increase yields by 50% and to double farmer incomes in six years to boost Filipino farmers’ competitiveness (following) the liberalization of the Philippine rice trade in 2019,” according to the bill.

FIRB convenes members under new admin, tackles rationalization and streamlining guidelines

The Fiscal Incentives Review Board (FIRB) convened its new members under the Marcos administration to discuss the rationalization of investor fees and streamlining of the FIRB’s monitoring and evaluation processes, among other matters. The powers and functions of the Cabinet-level inter-agency body were enhanced and expanded by the Corporate Recovery and Tax Incentives for Enterprises or CREATE Act. “The mandate of the FIRB is crucial in our efforts to strengthen the government’s economic recovery initiatives and to implement sound fiscal management in the country,” said Secretary Diokno on Thursday (August 4) after the 15th FIRB meeting. Secretary Diokno underscored the importance of leveraging the CREATE Act to realize the country’s huge potential as an investment destination, in line with the economic priorities of the Marcos administration.

Diokno urges LGUs to embrace greater role post-Mandanas

LOCAL government units (LGUs) will be expected to take on a greater role in guiding the economy to a recovery, after LGUs gained a greater share of funds from the National Government in the wake of the Supreme Court’s Mandanas ruling, Finance Secretary Benjamin E. Diokno said. “Local government finance, in particular, will be even more important now as the revenue share of LGUs has increased with the implementation of the Supreme Court ruling… You are now primarily responsible and accountable for the provision of basic services and facilities fully devolved to LGUs,” he added, calling for improvements in revenue collection and resource mobilization through digitalization, among others. The Supreme Court granted LGUs a larger share of the national taxes after resolving a long-running dispute over their 40% share of the National Government’s “internal revenue,” as the Local Government Code of 1991 was originally worded. As a result, the National Government used to release to LGUs the Internal Revenue Allotment (IRA), based largely on the collections of the Bureau of Internal Revenue.

FIRB says extension of WFH scheme lacks legal basis

THE PHILIPPINE Economic Zone Authority’s (PEZA) decision to extend the work-from-home (WFH) arrangement for Information Technology and Business Processing Management (IT-BPM) firms does not have any legal basis, according to the Fiscal Incentives Review Board (FIRB). In a position paper submitted to Finance Secretary Benjamin E. Diokno, the FIRB Secretariat said PEZA’s decision “lacks legal basis. Finance Assistant Secretary and FIRB Secretariat Head Juvy C. Danofrata said the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, as well as existing FIRB resolutions, do not give investment promotion agencies (IPAs) such as the PEZA the power to unilaterally approve WFH arrangements. Ms. Danofrata said that the FIRB is working with the Board of Investments (BoI) to come up with options to allow a WFH setup for IT-BPM firms in economic zones. The issue will be discussed at the FIRB’s next meeting in mid-September, she added.

BSP reports 12% growth in bank lending in July

LENDING activity in the country continued to be strong in July amid high prices, as the Bangko Sentral ng Pilipinas (BSP) reported a double-digit growth in loan expansion during the month. The BSP said that outstanding loans of universal and commercial banks expanded by 12 percent year-on-year in July, the same rate of growth as in June. The BSP said the sustained growth in bank lending and liquidity will support the recovery of economic activity and domestic demand. “Looking ahead, the BSP will continue to ensure that liquidity and credit dynamics remain in line with the BSP’s price and financial stability objectives,” the Central Bank said in a statement.

NG to borrow P200B locally in September

THE NATIONAL Government (NG) plans to borrow P200 billion from the domestic market in September, the Bureau of the Treasury (BTr) said. The September borrowing plan is 7% lower than the P215-billion program for August. The government raised just P162.021 billion from domestic borrowings this month, along with an additional P35 billion when the Treasury opened its tap facility in three separate Treasury bond (T-bond) auctions.

Jobs growth fastest since 2017 for manufacturing

THE local manufacturing sector recorded an improved performance in August this year, particularly on the rate of hiring for new employment in the sector. In its monthly report on the country’s purchasing managers index (PMI), S&P Global said the Philippines hit a PMI of 51.2 in August, “marginally” improving from the 50.8 PMI recorded in July. “August PMI data signaled an improvement in operating conditions across the Philippines manufacturing sector. Encouragingly, employment increased strongly and at the sharpest pace since mid-2017,” Maryam Baluch, Economist at S&P Global Market Intelligence, said. The report further said strong gains in workforce numbers helped boost the latest headline PMI figure during August.

PIDS: Pandemic deepened income gaps, hurt poor

THE pandemic was not the “great equalizer” that many believed it to be, as it hurt the poor more and exacerbated existing inequalities in the country, according to the Philippine Institute for Development Studies (PIDS). At the launch of the Development Policy Research Month (DPRM), PIDS Senior Research Fellow Valerie Gilbert T. Ulep said more poor Filipinos than those belonging to higher-income households saw a decline in their income and lost their jobs. Ulep said more Filipinos belonging to poor households also suffered moderate and severe food insecurity during the pandemic.