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Posts tagged Bangko Sentral ng Pilipinas
BSP phases out liquidity measures but keeps rates
Mar 12th
The central bank on Thursday said it was phasing out liquidity-enhancing measures as part of a continuing move to tighten monetary policy to control money in the financial system amid the recovering economy.
The policy-making Monetary Board cut its budget for short-term loans to banks under its rediscount facility by a third to P40 billion, [...]
BSP sees February inflation averaging 3.4% to 4.5%
Feb 27th
Higher rice, sugar and bread prices may have pushed inflation up in February, according to the central bank, but the rise would not go higher than its forecast for the year.
The Bangko Sentral ng Pilipinas (BSP) sees inflation averaging between 3.4 percent and 4.5 percent this month despite the uptick in the prices of basic commodities such as rice, sugar, and bread brought about by reduced supply caused by the El Nino weather conditions.
BSP officer-in-charge Armando Suratos said in a text message to reporters that "inflation forecast for February takes into account possible inflationary pressures emanating from the price increases of several food items such as rice, sugar, and bread."
Inflation slowed down for the first time in five months to 4.3 percent in January. It was below the BSP’s forecast of 4.5 percent to 5.4 percent.
Mr. Suratos attributed the increase in rice prices this month to low supply since the harvesting season is over as well as to concerns of expected lower palay output due to the El Niño phenomenon.
The BSP deputy governor also noted the rise in utility rates particularly power rates this month.
However, Suratos pointed out that "the decline in the prices of fish, chicken, and vegetable as supply improved could temper the increase in the overall price level."
Inflation eased for the first time in five months slowing down to 4.3 percent in January from an eight month high of 4.4 percent in December due to lower food prices. Actual inflation was lower than the central bank forecast of between 4.5 percent and 5.4 percent for January.
The BSP has set an inflation target of between 3.5 percent and 5.5 percent this year as well as 3.0 percent and 5.0 percent next year from 3.2 percent last year.
Latest forecast showed that inflation would average 4.7 percent this year and 3.3 percent next year.
"For 2010, our baseline estimate continues to indicate that inflation would settle comfortably within the inflation target, 3.5 percent to 5.5 percent. Preliminary forecast for 2011 would settle also within the 3.5 percent target range," Suratos said.
He pointed out that benign inflation helps monetary authorities maintain its current policy settings.
"This confirms our view that current interest rate settings are broadly appropriate and monetary policy can continue to aim at maintaining the momentum of demand in economic activity while being closely attentive to signs of inflationary pressures," Mr. Suratos said.
BSP warns of artificial coin shortage as polls near
Feb 22nd
MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has urged the public to use coins, especially those kept in piggy banks, to address the artificial coin shortage in some parts of the country especially with the onset of the campaign period for the May 2010 elections.
BSP officer-in-charge Diwa Guinigundo said in an interview with reporters that an artificial coin shortage is being felt in the country despite the fact that the central bank has minted 15.6 billion pieces of P10, P5, P1, 25-centavo, 10-centavo, five-centavo, and one-centavo coins worth P16.9 billion.
Data from the central bank showed that the BSP has minted 419.8 million pieces of P10 coin, 1.3 billion pieces of P5 coins, 4.3 billion pieces of P1 coin, 5.5 billion pieces of 25-centavo coins, 2.4 billion pieces of 10-centavo coins, 1.6 billion pieces of five-centavo coins, and 18.7 million pieces of one-centavo coins.
“As it is we have the highest per capita number of coins in Southeast Asia. In other words, we have more than 150 coins per Filipino but the problem is that we are warehousing these, so we have an artificial shortage but there shouldn’t be considering what we are circulating in the economy,” Guinigundo warned.
He made the appeal to people who usually kept their coins in their homes, particularly in piggy banks as well as church and charitable institutions whose collections consist of coins. He also cited those involved in games that involve the collection of coins.
The habit of keeping coins at home, he said, is probably the foremost cause of the shortage.
“We expect higher demand for one to 10-peso coins. In view of the increasing demand for coins public should cooperate by recycling by getting these coins out of their shelves and appeal to the church were most of these coins are warehoused and to those running games of chance,” he stressed.
A few years ago, the BSP launched a coin recirculation program involving schoolchildren to educate Filipinos on the importance of using them. The program stressed value of saving but stressed that the habit of saving for the future does not only mean keeping one’s coins in piggy banks.
The BSP official pointed out that there is no supply shortage but there is increasing demand especially with the start of the campaign period for the May 2010 elections.
“There is an element of substitution here, we have not yet seen a shortage of coins but there could be an increasing demand for the currency due to the elections so at this point we want to seek help from household and corporate so the appeal of BSP is to keep them circulating,” he said.
The BSP, through its Mint Refinery and Operations Department, spent several millions of pesos to mint fresh supply of coins. It also takes about half a year to mint new coins.
By just recirculating the existing supply of coins, Guinigundo said the BSP would save several millions of pesos, enabling it to realize higher earnings resulting to higher tax and dividend payments to the National Government.
“If we don’t have to mint as much as we do, then that will provide us with additional resources, realize more earnings, allow us to pay more taxes and which will give the government more dividends so they don’t have to borrow more,” he said.
Furthermore, he said the BSP plans to demonetize the existing bank notes and coins within the next two to three years with the release of the new design for bank notes and coins later this year.
“The significance of this is that for the next three years there will be a co generation, but after that there will be a demonetization of the old ones so people have to start recycling them,” he warned.
The redesigned banknotes and coins would include the new P500 bill that would include a portrait of the late President Aquino beside former Sen. Benigno “Ninoy” Aquino.
The new banknotes and coins would feature the country’s natural wonders. Currently, there are seven banknotes and seven coins with portraits of national heroes and prominent figures or their numerical value in front and historical landmarks or events for bills or the BSP logo or name for coins in the back.
IMF sees GDP growth of 3.3% this year
Feb 20th
MANILA, Philippines – The International Monetary Fund (IMF) said yesterday it expects the economy to grow around 3.25 percent this year, slightly lower than a growth estimate it made in November, powered mainly by consumer spending.
In November, the IMF gave a forecast of 3.5-percent growth for the Philippines in 2010.
The IMF said in a statement the Philippines’ monetary policy should remain accommodative until it reaches a sustainable growth path.
“A timely return toward a sustainable fiscal path while avoiding a premature exit from a supportive monetary policy will be important, along with continued reforms to ensure sustained growth in the medium term,” the IMF said.
The growth forecast was also within the target set by economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC) ranging between 2.6 percent and 3.6 percent this year.
In its Public Information Notice released yesterday, IMF said the country’s GDP growth this year would be fueled by private consumption on the back of robust overseas Filipino workers’ remittances.
“Recovery is expected in 2010, led by private demand as confidence and remittances improve,” the IMF said.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that money sent home by Filipinos abroad went up by 5.6 percent to a new record level of $17.35 billion last year from $16.43 billion in 2008.
IMF said investment and exports would also benefit from the global recovery.
The international lender said output losses from the devastation caused by tropical storm Ondoy last September and typhoon Pepeng last October turned up to be larger than expected and resulted in a fiscal blowout.
“On the domestic side, the output losses from the devastation caused by the two recent typhoons could turn out to be larger than currently estimated, and fiscal slippage could raise investor concern,” the IMF said.
However, IMF said post-typhoon rebuilding efforst could spur higher investments.
The country’s GDP growth eased to 0.9 percent last year from 3.8 percent in 2008 due to the full impact of the global economic meltdown while the budget deficit swelled to a new record level of P298.5 billion or 3.9 percent of GDP last year from P68.1 billion or 0.9 percent in 2008.
The IMF expected the deificit to reach 4.5 percent of GDP last year overshooting the budget target of 3.75 percent of GDP after fiscal policy was loosened in response to the crisis that was aggravated by poor revenue performance.
This year, the IMF sees the country’s budget deficit narrowing to 3.3 percent of GDP.
The IMF likewise expects inflation to average 4.3 percent this year from last year’s 3.2 percent. The inflation forecast of IMF was well within the BSP inflation target of between 3.5 percent and 5.5 percent this year.
OFW inflows hit record $17.35 billion in 2009
Feb 16th
MANILA, Philippines – Money sent home by overseas Filipino workers (OFWs) hit a new monthly record high of $1.567 billion in December, enabling the Bangko Sentral ng Pilipinas (BSP) to register a stronger-than-expected growth in remittances for the whole of 2009.
Data released by the BSP yesterday showed that OFW remittances surged by 11.4 percent in December, or $160 million more than the $1.407 billion registered in December of 2008. The amount eclipsed the previous monthly record high of $1.531 billion registered in October 2009.
For the whole of 2009, BSP officer-in-charge Diwa Guinigundo said remittances went up by 5.4 percent to a new record high of $17.348 billion from $16.426 billion in 2008 and exceeded the revised four percent growth forecast set by the BSP for 2009.
“The 2009 level exceeded the BSP’s forecast of $17.1 billion remittance flows or a four percent growth for the year,” Guinigundo stressed.
Major sources of remittances included the US, Canada, Saudi Arabia, United Kingdom, Japan, Singapore, United Arab Emirates, Italy, and Germany.
Guinigundo pointed out that the remittance level accounted for about 10.8 percent of the country’s gross domestic product (GDP) that expanded by 0.9 percent last year from 3.8 percent in 2008.
“Remittances remained resilient amid the recent global financial crisis, providing strong support to domestic demand,” he added
The BSP official attributed the steady growth of OFW remittances to the sustained demand for skilled Filipino workers overseas particularly engineers, medical practitioners, and teachers.
According to him, the stronger-than-expected growth could also be traced to the decision of the Philippine government to conduct bilateral talks with host countries that continue to open up new employment opportunities abroad for Filipinos and to facilitate the hiring of displaced workers who were affected by the global economic difficulties.
Guinigundo said also noted the continued expansion of remittance transfer facilities that has helped capture a large share of the global remittance market.
“The steady remittance flows from overseas Filipinos were underpinned by the continued expansion of bank and non-bank service providers’ international and domestic market coverage to capture a larger share of the global remittance market as well as the introduction of innovative products and services that cater to remitters’ specific needs,” he added.
Commercial banks’ established tie-ups, remittance centers, correspondent banks, and branches or representative offices abroad increased to 4,192 as of 2009 from 3,015 as of 2008.
Data from the Philippine Overseas Employment Administration (POEA) showed that the government processed about 41.6 percent or 221,548 of the total job orders that reached 532,214 last year. These jobs comprised mainly of service, production as well as professional, technical, and related job categories in Saudi Arabia, Qatar, UAE, Kuwait, and Hong Kong.
POEA reported that Middle East countries particularly Saudi Arabia continue to absorb a significant number of deployed OFWs including those that have been displaced elsewhere.
“The geographical diversification of OFWs has also contributed to the resilience of remittance flows,” Guinigundo said.
The BSP was originally looking at a zero growth last year but later revised the outlook to a growth of four percent due to the steady deployment of Filipino workers abroad and the increase access to formal remittance channels.
OFW remittances are expected to grow faster at six percent next year especially with the signing of a memorandum of agreement between the BSP and member banks of the Association of Bank Remittance Officers Inc. (ABROI).
The agreement calls for the use of the central bank’s Philippine Payments and Settlements Systems (PhilPaSS) to send the remitted money to the beneficiaries’ accounts in other banks.
OFW families are expected to save at least P92 million to as high as P922 million due to the faster and cheaper delivery of remittances to the beneficiaries at a lower rate of P50 per transaction instead of the current range of between P100 and P550 per transaction.
This year, the BSP sees OFW remittances growing at a faster rate of six percent.
BSP allows smaller banks to sell microinsurance
Feb 15th
Rural, cooperative and thrift banks may now sell microinsurance products following central bank approval of a new policy that seeks to lower transaction costs to benefit poor clients.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said recent typhoons have highlighted the need for adequate protection against death, injury, property loss and other disasters.
“This move by the BSP is an important response to this urgent need for microinsurance especially for the poor who are more vulnerable to various risks," it added.
The BSP said allowing the nationwide network of 3,500 rural, cooperative and thrift banks to act as distribution points would improve the delivery of authorized microinsurance products.
“Since many of these banks already have existing relationships with microfinance clients, they can more readily deliver a full range of financial services needed by their clients," it pointed out.
It added that banks are ideal distribution channels since these are trusted in the countryside and have a deeper understanding of the low-income market.
“This can only translate to better delivered products, as well as lower transaction costs, ultimately benefiting poor clients," the BSP said.
Microinsurance provides insurance, insurance-like and similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other disasters.
The amount of premiums, contributions, fees and charges for a microinsurance product must not exceed 5 percent of the current daily minimum wage.
Guaranteed benefits must also not exceed 500 times the current daily minimum wage.
RP nets hot money inflows in January
Feb 13th
Foreigners increased their investments in the local stock market despite a sharp drop in the composite index in the latter part of January, with hot money posting net inflows of $170 million during the month.
Central bank-registered investments in locally listed shares went up by more than three-quarters to $437 million last month from a year earlier, bringing the total foreign portfolio investments to $576 million, the Bangko Sentral ng Pilipinas (BSP) said in a statement on Thursday.
The balance of registered investments were in peso-denominated government debt paper (9 percent) and in peso deposits with maturities of at least three months (16 percent).
Portfolio investments or hot money flows are extremely volatile short-term capital that moves in a short notice to any country providing better returns. Unlike foreign direct investments, hot money can leave at the first sign of trouble.
The BSP said the US, Britain, Malaysia, Luxembourg and Singapore were the top investor countries, collectively contributing 85 percent of total registered investments.
Gross foreign portfolio investment outflows reached $406 million in January, the bulk of which were withdrawals from temporary peso deposits.
Registration of inward foreign investments with the central bank, which is voluntary, entitles the foreign investor to buy foreign exchange from authorized banks for repatriation of capital and payment of shareholders’ share in profits.
Last year, net hot money inflows of $388 million were posted amid the global economic slump. The inflows were a major turnaround from $1.8 billion in net outflows in 2008, when the US-led financial crisis reached its height.
Registered foreign portfolio investments for 2009 reached $6.3 billion. Investments in listed Philippine shares accounted for three-quarters of the total, while a fifth of the investments were placed in peso-denominated government securities. The balance was put in peso time deposits and money market instruments, the central bank said earlier.