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Thread: S&P says PH economy a ‘rare bright spot

  1. #321
    BSP on guard against price spikes as inflation hits 3-year high

    By: Daxim L. Lucas, Doris Dumlao-Abadilla - @inquirerdotnet Philippine Daily Inquirer / 05:15 AM February 07, 2018

    The sudden spike in prices of goods and services in the country is a "temporary" phenomenon that central bank planners expect to eventually stabilize, a top monetary official said yesterday.

    In a statement, Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. said the January year-on-year inflation rate - which hit a three-year high of 4 percent - was "expected" by regulators, even as he admitted that the figure was "at the top end" of their forecasts.

    The January inflation rate is significantly higher than the 3.3 percent in December, according to the Philippine Statistics Authority, citing higher costs of food, beverages and tobacco - the most aggressive increase in prices since October 2014.

    All eyes are now on the BSP's monetary setting on Thursday - the first for 2018 - as the spike in the country's inflation rate heightened the possibility of an interest rate hike coming sooner than later. The 4-percent January rate overshot the 3.5 percent market consensus forecast and touched the upper end of the 2-4 percent target of the BSP.

    Espenilla attributed the faster pace of price increases to the combined effects of the administration's tax hikes implemented last month and the rise in world oil prices, "and food [prices] to some extent."

    The government's Tax Reform for Acceleration and Inclusion lowers personal income taxes and simplifies estate and donor's taxes but expands the value-added tax base, increases oil and automobile excise taxes and introduces excise tax on sugar-sweetened beverages.

    "The BSP could hike rates as early as Thursday following the surge in January headline consumer price index," Bank of the Philippine Islands lead economist Jun Neri said in a post on Twitter following the inflation announcement.

    "The likelihood of a tightening move at Thursday's meeting has increased significantly," ING Philippines economist Joey Cuyegkeng said in a research note.

    Cuyegkeng had expected the BSP to tighten interest rates not earlier than March.

    "We continue to believe that the policy statement will shift to a more decisively hawkish tone, highlighting rising inflation risks that could threaten its 2-4 percent target, thus setting the stage for a rate hike in March," investment house Nomura said in a research note.

    "However, we have not completely ruled out a move this week as the BSP may want to act pre-emptively - and after this high CPI (consumer price index) print, we now assign a higher 30-40 percent likelihood to this outcome, from 20-30 percent earlier."

    Nomura forecasts a total of 100 basis points of cumulative rate hikes this year, taking the policy rate to 4 percent.

    "Despite the faster than expected inflation released today, they might have to wait for a few more plots to support higher inflation case," BDO Unibank chief strategist Jonathan Ravelas said in a text message. "But if they act, it's more of a calibrated preemptive response to inflation."

    Nonetheless, Espenilla gave no indication that the central bank would be jolted into tightening monetary policy earlier in the year by the latest inflation numbers.

    "We think these are temporary drivers of inflation and would eventually stabilize," he said.

  2. #322
    Infrastructure spending hit P568.8B in 2017

    Philippine Daily Inquirer / 05:26 AM March 01, 2018

    The amount spent by the government to build infrastructure in 2017 reached P568.8 billion, exceeding the program as more projects were rolled out toward the end of the year, the latest Department of Budget and Management data released yesterday showed.

    In a press conference, Budget Secretary Benjamin E. Diokno said the shift to an annual cash-based budget in 2019 from the multiyear obligations-based system at present would further reduce cases of underspending, which had been on a decline in the past two years.

    Last year's disbursements on infrastructure and other capital outlays surpassed by 3.5 percent the programmed P549.4 billion, DBM data showed. Diokno said they were able to exceed the program as there were many projects left behind by the previous administration that they continued to implement.

    Diokno said they "did not go beyond" the budget as the government underspent on other aspects such as personnel services, maintenance and other operating expenses, allotment to local government units, interest payments, tax expenditures and capital transfers to LGUs.

    Infrastructure spending in 2016 was P493 billion.

    In a report, the DBM attributed the higher disbursements on infrastructure and other capital outlays in 2017 to "the implementation of road infrastructure projects [of the Department of Public Works and Highways], projects under the Armed Forces of the Philippines Modernization Program [of the Department of National Defense], Capability Enhancement Program [of the Department of the Interior and Local Government-Philippine National Police], and other capital outlay projects such as repair and rehabilitation of school facilities [of the Department of Education/state universities and colleges]."

    In December, alone, the amount spent on infrastructure rose 23 percent year-on-year and jumped 87.8 percent month-on-month to P82.3 billion, DBM data showed.

    "This covers road projects such as construction, improvements of roads and replacement of bridges in Luzon, Central Visayas and Mindanao; flood control projects and rehabilitation of dike and river basins in Pangasinan, Central Luzon (Pampanga and Nueva Ecija), and National Capital Region (Marikina, Valenzuela and Quezon City), and projects under the AFP Modernization Program, such as acquisition of munitions and purchase of engineering and information and communications technology equipment," the DBM said.

    Diokno said the share of infrastructure spending to gross domestic product last year was about 5.6 percent, higher than the target of 5.4 percent.

    He expressed optimism that this year's 6.1-percent infrastructure spending-to-GDP goal was attainable. - BEN O. DE VERA

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