According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest NewsBriefs, Central Bank Deputy Governor Nestor A. Espenilla, Jr. said that local banks need not undergo “stress tests” similar to what the United States implemented as credit and capital positions remain healthy. Bangko Sentral ng Pilipinas data showed ratio of commercial banks’ non-performing loans increased in April to 3.65% from last month’s 3.56% as more borrowers failed to make loan payments. Despite the month-on-month results, the ratio was still an improvement over the 4.28% ratio reported in the same period last year.
Likewise, the Department of Finance said that distressed exporters will be prioritized in the tax credit certificates (TCCs) scheme. The government issues an average of Php5-8 billion worth of TCCs every year. In the proposed scheme, cash-trapped companies can cope with taxes using TCCs instead of cash. The government is considering a samurai bond issue of as much as $1.5 billion this year to cover the Php250 billion budget deficit. The country is also looking to secure $500 million worth of official development assistance from the Asia Development Bank to help fund the deficit.
Moreover, the country’s balance of payments swings to a $55 million deficit for the month of May, a reversal from April’s $466-million surplus due to foreign debt repayments. The deficit was second for the year but lower than March’s $472-million shortfall because of robust remittances from OFWs and “hot money” inflows. Revised Bangko Sentral ng Pilipinas (BSP) data showed gross international reserves at the end of May totaled a record $39.589 billion from the previously reported amount of $39.318 billion. The BSP expects an end-of-year rise in the gross international reserves to $39 billion from $37.55 billion in 2008.
Per same published report, the government is eyeing to invest some Php2.5 billion for the development of nanotechnology in the Philippines through research and development within the next 10 years. Five areas will be given particular focus, namely, ICT and semiconductors, energy, agriculture and food, medicine, and environment. The R&D of nanotechnology will be conducted by the DOST in cooperation with public and private research institutions. On the other hand, Manufacturers of car parts, which have a 4% share of total exports in the first quarter, believe that retrenchments in the sector has already reached the bottom in the first quarter. Although hiring has not yet resumed and employees are still working for shorter hours, an industry group official said that the March labor cut off was the last. The stabilizing workforce comes as export sales of vehicle ignition wiring sets have been steadily rising each month from January to April.
Lastly, in an effort to maintain its leadership in broadband, the Philippine Long Distance Telephone Company (PLDT) expects its broadband segment to double by the end of 2009 due to wider reach and fast connectivity. Broadband is the fastest-growing segment of PLDT and could possibly be a source of growth in the next few years, per IDEA.
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