Economic news that matters

According to the Institute for Development and Econometric Analysis, Inc. (IDEA), bids for Treasury bonds were rejected by the government as the average rate of the bids was 7.465%, higher than the market average yield of 7.3654%.

Finance Undersecretary Gil S. Beltran said that the government can afford to reject the P8.425 billion worth of re-issued T-bonds, due to huge cash balances from the recent issuance of global bonds, which was valued at $1.5 billion. Also, strong remittances, along with the exports sector recovery and the strong performance of the business processing industry, may prompt government to raise projections of gross domestic product growth rate of 2.6%-3.6%, according to Acting Socioeconomic Planning Secretary Augusto Santos. Analysts see that growth may hit 4%.

However, former Budget Secretary Benjamin Diokno said that tax reforms fare necessary to evade the possibility of a fiscal collapse. The tax reform must be undertaken within the first one hundred days of the new administration. He proposed that value added tax be raised to 15%, while lowering personal and corporate income taxes to 25%, claiming that this is stronger than the current tax system, as it will result in less deficit in the government’s budget.

On the other hand, baking industry groups announced a P2 increase in the price of a 600-gram bread loaf and a P1 rise in the price of a ten-piece pan de sal pack. The said price increases followed the rise in sugar prices from the P45 level at the end of last year to P54 per kilo. Furthermore, half of the imports of sugar in the second quarter of the year will fall in the hands of industrial users, following the executive order of Malacañang which gives private firms the permission to import duty-free under the name of the National Food Authority. Fifty percent of the 150,000 metric-ton (MT) importation will be divided as follows: 15,000 MT to food processors, and 30,000 MT each for the National Food Authority and institutional users.

Likewise, per same published report, the Philippine Economic Zone Authority received P13.572 billion worth of pledges for 36 projects last month—a 60.8% growth from the previous year. 10,023 jobs are estimated to be created due to the surge in investments. The January growth is expected to help reach the 15% target for this year.

But the National Anti-Poverty Commission reported the failure of the government to meet its 2009 job generation target. The government previously estimated that it will generate 500,000 jobs under its emergency employment program. However, preliminary data showed that the program only created about four-fifth of its target.

Lastly, the Export Development Council is leading the drafting of the 2011-2013 Philippine Export Development Plan, which is aimed at maintaining the share of the Philippine exports and providing guidance to both public and private sectors. The plan will focus on products that generate most revenues for the industry as well as ways to achieve growth for the sector, as per IDEA.

(For questions and inquiries, Mr. Limtingco can be reached at 0917-7220521 or email him at [email protected])