More positive economic news

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest NewsBriefs, local banks‘ increased availment of the central bank‘s rediscounting facility affirms the financial system‘s health. Latest Bangko Sentral ng Pilipinas (BSP) figures showed that rediscount loans in the January-April period increased to Php41.2 billion from Php26.4 billion a year ago. The facility allows banks to exchange debt papers for fresh funds. According to BSP Governor Amando M. Tetangco Jr., the increase in availments is an indication that credit is flowing to productive economic sectors.

Likewise, debt watcher Standard & Poor‘s (S&P) maintained its —stable“ outlook for the Philippine insurance industry after downgrading its  outlook for most insurance markets in the Asia-Pacific region. S&P changed its overall outlook for the Asia-Pacific life insurance market to negative. Such negative outlook was caused by the weakening macroeconomic environment in the region. Meanwhile, the stable outlook on the country‘s life and non-life insurers was retained because of their efforts to hike capital amid tough economic conditions.

 Furthermore, last month, inflation continued to ease to 4.8%, lower than the 9.3% average in 2008. The BSP expects inflation to average 3.42% this year. Such projection is within the 2.5%-4.5% target for 2009. However, upside risks still persist. Examples of risks include world oil price fluctuations, potential price pressures coming from a reduction in global cereal output, high input costs, and tighter credit conditions.   

Lastly, remittances, a major source of domestic liquidity and a driver of domestic consumption hit a record high in March despite the global crunch. Remittances totaled $1.471 billion for the month, a 3.1% improvement from a year ago. It was however slower as compared to the 9.4% growth in March last year. Remittance flows continued to rise because of the steady labor demand for Filipinos. There has also been wider access to expanded money transfer services by OFW s and their families.

Unfortunately again because of the financial crisis, the Bureau of Internal Revenue (BIR) missed its tax collection target for April 2009. According to Internal Revenue Commissioner Sixto S. Esquivias IV‘s estimates, last month‘s collection was lower than its Php100 billion goal. Sadly, it was even lower than the Php 91 billion April 2008 collections. The tax chief reasoned that the tax relief law which exempted minimum wage earners from paying taxes put a dent on collections. The implementation of lower corporate tax from 35% to 30% also helped lower tax revenues. Overall, except for the value-added tax, the collections from all types of taxes went down.

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