Moody’s affirms Philippines’ Baa2 rating, keeps 'stable' outlook

MANILA - Moody’s Investors Service has affirmed the Philippines’ credit rating of “Baa2” with a “stable” outlook, the Bangko Sentral ng Pilipinas said Thursday.

Baa2 is one notch above minimum investment grade, while the stable outlook means neither an upgrade nor downgrade is forthcoming.

Last May, Fitch Ratings and S&P Global also affirmed the country’s BBB and BBB+ ratings, respectively, both with a stable outlook.

The BSP said the rating was a vote of confidence on the ability of the economy to cushion the effects of COVID-19 and to post a solid recovery over the near term.

The central bank noted that the affirmation of the Philippines' credit rating comes amid a series of credit rating downgrades and negative outlook revisions by Moody’s worldwide.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Philippines entered the COVID-19 crisis in a position of strength, with healthy external accounts, sound and stable banking system, and manageable inflation.

“Complementing these buffers are the prompt, decisive, and extraordinary measures implemented by the BSP and the National Government to save lives and livelihoods, and to make sure we emerge from this crisis stronger than before,” Diokno said.

Moody’s said the improvement of the government’s fiscal position in recent years provides a buffer against a rise in public indebtedness due to shocks such as the COVID-19 pandemic.

“Relatedly, the track record of prudent economic and fiscal management, and a robust banking system, contribute to the stable access to funding at moderate costs and support prospects for fiscal consolidation and debt stabilization after the shock subsides,” Moody’s said.

Finance Secretary Carlos Dominguez III said the country has “ample buffers” to cushion the fallout from COVID-19 while keeping debt levels manageable and without compromising fiscal health.

"On the back of such strong fundamentals, the Duterte administration is committed to a calibrated reopening of the domestic economy in order to quickly restore business and consumer confidence while holding on to certain mobility restrictions and strict health protocols meant to further slow COVID-19 spread, save lives and protect communities," he added.

Moody’s projects the Philippine economy to contract by 4.5 percent this year due to the disruptions from the pandemic. But the debt watcher expects the economy to rebound with a 6.5 percent growth in 2021, followed by 6 percent in the succeeding years.

The recovery projection comes on the back of favorable demographics and improving investment climate, Moody’s said.

news.abs-cbn.com

Too much credit card debt? Read this

MANILA - The Bangko Sentral ng Pilipinas (BSP) and member banks of the Credit Card Association of the Philippines (CCAP) launched on Tuesday the Interbank Debt Relief Program that offers credit card loan restructuring.

Under the program, interest rates will be at 1.5 percent or lower depending on the profile of the credit card user.

It also allows repayment period to extend to as long as 10 years for severe cases of indebtedness.

To qualify for the program, credit card accounts must be at least 6 months old with an outstanding balance of at least P10,000 per card and total card obligations of at least P100,000 for all cards.

The program consolidates credit card debts from all banks and the bank with the biggest debt exposure to the applicant will take on the responsibility as the lead bank.

source: www.abs-cbnnews.com

New bills to have bolder colors, more security features

MANILA – Old peso bills will soon be phased out but the Bangko Sentral ng Pilipinas (BSP) is reminding the public that there is still time to have them replaced before they lose value.

The old banknote series, which has been in circulation since 1985, can still be used until December 31, 2015. [PLS LINK TO "old banknote series": http://www.abs-cbnnews.com/business/05/21/15/look-peso-bills-na-wala-nang-halaga-sa-2017]

But by January 1, 2016, it can no longer be used to purchase goods and services.

By then, old banknotes in circulation should be turned over and replaced by authorized agent banks of the BSP.

Maja Gratia Malic, Cash Department Deputy Director at BSP, said these include thrift banks, rural banks, commercial banks, and universal banks.

Malic said those with old banknotes have until December 31, 2016 to have the bills replaced because by January 1, 2017, the old bills will no longer have value.

To replace the old banknotes, go to any bank even if you are not a depositor and exchange the old banknotes with new ones.

For overseas Filipino workers (OFW) carrying old peso bills, Malic said the BSP will implement a special facility for the replacement.

Starting October 1, 2016, OFWs will have to register online, indicate the total amount they wish to replace, and input the specific denominations to be replaced.

They can then have the old bills replaced for a period of one year starting the date of their registration. Registration ends on December 31, 2016.

“Without this registration form, they cannot have these banknotes replaced beyond 2016,” Malic told ANC's "On The Money."

Bills of the new generation currency series have bolder colors and enhanced security features. Images of the heroes on the bill's front side are also "younger-looking."

“This is the approximate age when they started doing their public service…to be an inspiration for the youth, they can be in public service this young," Malic said.

She added that the new banknotes have security features that are at par or even better than other countries, such as bigger and more obvious window security thread that cannot be photocopied; watermark portraits; and denomination markings only seen against the light.

 source: www.abs-cbnnews.com

How a former 'credit card-aholic' got out of debt

MANILA – When a bank offers you a credit card with a P200,000 credit limit, annual fees free for life, and only proof of employment as requirement, will you accept it?

For then-office employee Aldwin Tanjutco, who admitted that his salary wasn’t enough to buy the things he wanted, the decision was easy.

“I felt empowered because I’ll be able to buy already the things that I want to buy even without earning money first. It gave me the illusion of cash, cash that I don’t even have — unlimited cash. With the card, I just spend and spend and spend,” he told ANC’s “On The Money.”

Tanjutco said he had second thoughts on using his credit card for purchasing items, but he gave in to the temptation to spend.

The high credit limit, unfortunately, became a spending target for Tanjutco.

“I thought about it, but the temptation of spending overcame the intention on how I’m going to pay for it,” he said.

In just five months, Tanjutco maxed out his credit card and found himself in huge debt. He also started to incur a large amount of interest because he wasn’t able to pay his monthly dues.

“I am spending more than I’m earning, so I wasn’t able to pay it in full, in fact I was only paying the minimum. Sometimes, even below the minimum. So you can imagine just how much interest they are charging,” he said.

He began paying off a chunk of his debts with mid-year and Christmas bonuses, and when he felt that he could handle his debt, he asked the bank to increase his credit limit.

His credit limit was increased to P230,000, which for Tanjutco, meant he could spend more.

When Tanjutco again found himself struggling to pay off his monthly bill, collecting agents began calling him, which made him realize the serious situation he put himself in.

Tanjutco said he was given a 25 percent discount to make it easier for him to pay off his debt in a 12-month period.

He learned that credit cards can be your friends, if you know how to use your credit wisely.

The next time Tanjutco applied for a credit card, however, he was denied because of his bad credit.

To clear his bad record, he sought the help of the Financial Consumer Affairs Group of the Bangko Sentral ng Pilipinas (BSP).

“I felt relieved because finally there was hope that I can clear my bad record in terms of credit score. After a day of two, a BSP director emailed me and forwarded my letter to the concerned bank,” Tanjutco said.

“I realized that I shouldn’t spend what I couldn’t pay for. I should spend below my means. If I have debts, 20 percent of what I earn, I just maintain it at that level so that I can manage it,” he added.

Tanjutco, who is now a business owner, admits that he still has debt, but now he knows how to manage it well.

“I felt empowered. I cannot say that I am 100 percent financially free, but I feel that I am moving towards what my goal is,” he said.

Abraham Co, board member at Credit Information Corp., advised consumers that being aware that there is consequence to how you behave financially, will change behavior.

“If you think that there is no consequence and you can get away with this, then you will continue your bad habits. But if you value your future, and know that there would be consequence, then that will change behavior,” he told "On The Money."

Credit Information Corp. board member Suzanne Felix, meanwhile, said credit card owners should be more responsible in their spending to protect their credit record.

“It’s about time as borrowers that we develop that sense of responsibility. The banks are doing their part, so the borrowers should also be doing their part,” she said.

source: www.abs-cbnnews.com

Hounded by credit card debt collectors? Read this

MANILA, Philippines - If your credit card debt is piling up and you're having difficulty paying it, chances are you've had to deal with collection agents.

But before you start negotiating with a collection agent on a repayment scheme, here are some reminders from the Bangko Sentral ng Pilipinas.

The BSP said it has recently received complaints and inquiries from the public regarding credit card debt restructuring. This is why it issued an advisory on the the authority of external collection agencies to offer and approve debt restructuring of credit card debt.

The BSP said credit card issuers typically refer "problem credit card accounts" to accredited external agencies for collection. They are not employees of the credit card issuer, but are authorized to collect on its behalf.

"Accounts referred to collection agencies which are restructured often result in complaints on unfair collection practices due to lack of awareness of credit card holders on the extent of the authority of external collection agents to negotiate for debt restructuring," the BSP said.

The BSP said it received complaints regarding the inconsistency between the terms of payment offered to the credit cardholder by the collection agents, and the actual terms approved by the credit card issuer.

The central bank also noted some external collection agencies try to pressure credit cardholders into paying just any amount, even though this amount has not been approved by the credit card issuer.

Collection agents are only authorized to negotiate for repayment schemes based on specific guidelines set by the credit card issuer, the BSP said.

"Only the credit card issuer can give the final approval of any type of repayment scheme reached with a collection agent, which is supported by a conforme letter and/or a promissory note.This must be signed by both the credit card issuer and the cardholder," the BSP said.

The BSP also said credit cardholders do not have to give any payment prior to negotiating for a repayment scheme.

source: www.abs-cbnnews.com

Philippines' end-Jan forex reserves at 5-month high

MANILA – Foreign exchange reserves amounted to $80.182 billion in end-January, the highest in five months or since August when the reserves were at $80.87 billion, the Bangko Sentral ng Pilipinas (BSP) said.

January’s reserves can cover 10.3 months worth of imports and equal to 5.7 times short-term foreign debt based on residual maturity.

The rise in reserves was mainly due to the net foreign currency deposits of the national government, adjustments in the value of the central bank's gold holdings and foreign currency-denominated reserves and its income from overseas investments.

December’s reserves, meanwhile, were revised to $79.541 billion from the earlier reported figure of $79.805 billion.

The Philippines was the second fastest-growing economy in Asia after China in 2014, having gathered momentum in the final quarter of the year.

BSP Governor Amando Tetangco said last month the central bank was prepared to act to manage volatility in financial markets, even as he reiterated that authorities will let market forces determine the exchange rate.

The peso has gained 1.26 percent against the US dollar so far this year, making it Asia's third best performing currency after the rupee and yen. -- With Reuters

source: www.abs-cbnnews.com

Sandigan OKs transfer of Marcos paintings to National Museum

MANILA - The Sandiganbayan First Division has ordered the transfer of 15 paintings seized from former First Lady Imelda Marcos from the Bangko Sentral ng Pilipinas to the National Museum.

The BSP earlier manifested before the court that it does not have the capacity to maintain the paintings, which were brought to its custody after the Sandiganbayan seized them from the Marcoses.

The National Museum told the court that it has the "technical, curatorial and organizational expertise" for the proper care and management of the paintings.

Among the paintings are three versions of Michelangelo's Madonna and Child. The BSP said it cannot vouch for the authenticity of the paintings.

source: www.abs-cbnnews.com

PH banks to unify ATM networks

MANILA, Philippines - The Bangko Sentral ng Pilipinas said banks have agreed to unify their ATM networks for efficiency and lower cost.

This means consumers may soon see lower ATM fees.

BSP Governor Amando Tetangco said the Bankers Association of the Philippines, Bancnet and Megalink will formalize the consolidation of the two ATM networks next week.

Consumers are currently charged P10-P15 when they withdraw from other banks' ATM units.

Other fees are also applied for balance inquiry and other services.

Latest BSP data showed the number of ATMs rose 11 percent to over 15,187 by end September last year. - ANC

source: www.abs-cbnnews.com

How you can order BSP's Pope Francis commemorative coins

MANILA – The visit of Pope Francis to the Philippines is a historic one, and Bangko Sentral ng Pilipinas (BSP) will be releasing limited edition coins to commemorate the momentous event.

The BSP will be releasing P50 coins and P500 coins by the last week of January 2015.

The P50-coin will be sold for P100 whole the P500-coin will be sold for P1,000 to cover production, packaging and other costs.

Limited edition P1,000- silver and P10,000-gold Papal commemorative coins will also be available in May 2015.

The P1,000-coin will be sold for P3,500 while the P10,000-coin will be sold for P25,000.

The coins are not available over the counter, and can be availed through order forms issued by the BSP.



Those who wish to reserve can download reservation forms for the P50 and P500-coins here, and for the P1,000 and P10,000-coins here.

The accomplished forms should then be submitted to papalcoins@bsp.gov.ph before the end of June 2015.

Those who sent forms will then receive a confirmation e-mail with the date when you can pay for and pick up the coins at the BSP.

The BSP said the coins are minted under a licensing agreement with the Vatican.

Significant events in the country’s history are commemorated by the BSP through the minting of coins, medals or overprints on Philippine banknotes.

Commemorative coins were also issued for the 1970 visit of Pope Paul VI, and for the 1981 and 1995 papal visits of Pope John Paul II.

Pope Francis visited the Philippines from January 15 to 19. He made a quick trip to Tacloban in January 18 to celebrate Mass and meet survivors of Typhoon Yolanda.

source: www.abs-cbnnews.com

End-Nov forex reserves lowest since June 2012

MANILA – Gross international reserves (GIR) fell to $78.984 billion in November, the lowest since June 2012 when reserves were at $76.130 billion, according to the Bangko Sentral ng Pilipinas (BSP).

November’s GIR, which indicates the country’s ability to pay for imports of goods and services and to service foreign debt, was also down from the revised $79.409 billion recorded in October.

“The decrease in reserves was due mainly to the net foreign exchange operations of the BSP, payments for maturing foreign exchange obligations of the national government, and revaluation adjustments in the BSP’s gold holdings and foreign currency-denominated reserves,” the central bank said.

The BSP expects end-2014 foreign reserves to reach $85.3 billion, revised from an earlier forecast of $88 billion. Foreign reserves at end-2013 stood at $83.2 billion.

The central bank expects cash remittances from Filipinos overseas to rise 5 percent this year after a 6.4 percent growth in 2013 when they hit a record $22.97 billion.

Data released on Nov. 27 showed the Philippine economy slowed to its weakest pace in more than five years in the third quarter, hurt by a decline in public spending and farm output and signaling a longer-than-expected pause in the central bank's tightening cycle. -- With Reuters

source: www.abs-cbnnews.com

Using your credit card this holiday season? Read this first

MANILA -- A representative from the Bangko Sentral ng Pilipinas (BSP) explained several things that a credit card holder should know before using it to shop this holiday season.

In an interview on radio DZMM, Atty. Prudence Angelita Kasala, deputy director of the Financial Consumer Protection Department of the BSP, explained that there is an existing "one price tag policy" for all merchants.

Under this policy, merchants should display a single price for items, regardless of the mode of payment the consumer will use.

This policy prevents merchants from discriminating consumers who use cash, and those who use their credit cards.

However, Kasala admitted that not all merchants follow this policy.

"Actually, bawal 'yan. Ang ginagawa kasi nila, kasi dapat pareho lang ang presyo, sasabihin nila kapag cash, discount 'yan. Dapat hindi pinapayagan 'yun eh, pero 'yung kliyente, siguro nga dahil may discount, hindi na sila umaalama," she added.

She also explained that merchants should not pass on the charges to the card holders.

According to Kasala, there are 8 million credit card accounts in the country for 2014. The number has increased from 7.4 million accounts last year.

When asked whether this is a good sign, Kasala explained that there are conflicting views when it comes to household credit.

"May iba't ibang pananaw diyan ano, kasi sinasabi nila na household credit as a percentage of the GDP is indicative also of economic growth," Kasala said, adding that compared to other Asian countries, the Philippines has the lowest percentage of consumer debt in its gross domestic product (GDP).

Kasala also explained that it is not bad to have debts, as long as one has the capability to pay, is aware of when to pay, and knows how much to pay.

"Convenient siya at meron kang parang interest free period, kasi kung binabayaran mo siya everytime na nag-due date siya nang buo, wala kang interes na babayaran. So kunyari, depende sa cycle, billing cycle mo, pwede kang makakuha ng as long as 51 days na interest free, so malaking tulong yan sa'yo sa pagmamanage ng finances," Kasala said.

The BSP has also prohibited banks from issuing pre-approved credit cards, adding that banks should first determine if an applicant is capable of paying debts before issuing a credit card.

"Bago ka mabigyan ng credit card, aalamin muna ng credit card issuer na meron kang kakayahan magbayad," Kasala said.

Kasala explained that there is no provision in the Constitution that can send debtors to jail.

"Hindi ka pwedeng ikulong kasi wala naman sa Constitution natin, walang pagkakulong dahil sa hindi pagbabayad ng utang."

However, someone who does not pay his or her credit card debts can still be sent to jail, if they are proven guilty of violating Republic Act 8484, or the Access Devices Act.

"Kapag hindi ka nagbabayad ng utang sa credit card, tapos nagpalit ka ng address, pwede kang makulong kasi may intention to defraud ka," Kasala added.

Once proven guilty, one will have to pay a fine of P10,000, and will be imprisoned for six to 12 years.

To avoid too much credit card debt, Kasala said one should not use the credit limit as basis of how much one should spend.

"Hindi mo dapat ginagamit na batayan 'yung credit limit sa ginagastos mo, kasi ang credit limit, di hamak na mas mataas sa kinikita mo," she added.

source: www.abs-cbnnews.com

BSP prepares relief to banks affected by typhoon

MANILA – The Bangko Sentral ng Pilipinas (BSP) will issue regulatory relief measures for banks affected by super typhoon “Yolanda.”

BSP deputy governor Nestor Espenilla Jr. said the central bank is preparing the set of relief measures, but will have to wait for official data from government.

"For sure, we will come up with a standard package that we normally give but we are also studying what additional measures we can extend," he said.

Espenilla said the standard package that will be extended to the affected banks will include the exclusion of existing loans from the computation of past due ratios, provided that these are restructured, and the non-imposition of penalties on legal reserves deficiencies.

The BSP will also waive penalties for delays in the submission of supervisory reports, and banks will be allowed to give affected officers and employees financial assistance.

Espenilla noted that power outages and communication problems will have to be addressed in the affected region.

"The key challenge is the restoration of power and communications because the usual problem is how people can access their money through ATMs," he said.

The BSP provides banks affected by natural calamities with relief measures help ease their financial burden and to extend assistance to their clients.

Earlier this year, the central bank granted relief measures to banks affected by typhoons, floods caused by “habagat,” and the recent earthquake in Central Visayas.

source: www.abs-cbnnews.com

BSP keeps rates on hold

The Philippine central bank kept its benchmark interest rate unchanged at a record low on Thursday, saying the economy needed less support with strong domestic demand seen extending into next year, but it saw risks from strong capital inflows.

The rate decision was in line with a Reuters poll in which 12 of 13 economists had predicted the Bangko Sentral ng Pilipinas would keep the overnight borrowing rate  at 3.5 percent.

"The Monetary Board's decision is based on its assessment that current monetary settings remain appropriate, as the cumulative 100-basis-point reduction in policy rates (earlier) in 2012 continues to work its way through the economy," Governor Amando Tetangco told a media briefing.

The Philippines' economy, like many of its Southeast Asian neighbours, has remained largely resilient in the face of the global slowdown as strong domestic demand and government spending largely offset the impact of weaker exports.

Highlighting its view that price pressures will remain moderate despite robust economic growth, the central bank trimmed its forecast for average inflation in 2012 to 3.2 percent from 3.3 percent. It also lowered its 2013 inflation forecast to 3.1 percent from 3.9 percent and its 2014 forecast to 2.9 percent from 3.1 percent.

It set an inflation target of 2-4 percent for 2015-2016.

Economists have contrasting views on where interest rates are headed in the later part of 2013, with some not ruling out further cuts if the global economic outlook deteriorates, and others predicting as much as 50 basis points in hikes to guard against demand-pull inflationary pressures.

Some analysts are concerned the central bank could be underestimating price pressures.

"The marked downward revision in next year's inflation estimates might be downplaying risks, in light of firm domestic demand, commodity price shocks and utility price adjustments," said Radhika Rao, economist at Forecast PTE in Singapore.


RESILIENT SOUTHEAST ASIA

Philippine gross domestic product (GDP) expanded by a faster-than-expected 7.1 percent in the third quarter from a year earlier, making it likely it will surpass the official 5 percent to 6 percent growth target for the full year.

Despite strong domestic consumption, inflation has remained under control so far, helped in part by a strong peso . The average annual inflation rate in the 11 months to November was near the bottom of the central bank's 3 percent to 5 percent target band for the year.

That has allowed the central bank to cut interest rates by a total of 100 basis points this year to boost domestic demand to make up for the weakness in exports as global demand sputters.

The peso has risen about 7 percent against the U.S. dollar this year to become Asia's second-best performing currency as foreign investors attracted by its growth story snap up Philippine assets such as stocks and bonds.

Strong capital flows have fuelled a 33 percent jump in the benchmark share index  this year, but are a worry for policymakers given their potentially destabilising impact.

"We see the threat of capital flows," Diwa Guinigundo, deputy governor of the Bangko Sentral ng Pilipinas told reporters, adding that non-monetary tools, like macroprudential measures, may be more effective in managing such risks rather than monetary policy.

The country is targeting faster growth of 6 percent to 7 percent in 2013, banking on further increases in domestic consumption and higher government spending.

The central bank said it expects imports to grow by 12 percent next year against 7 percent this year, supporting domestic expansion, which would cut the country's balance of payments surplus.

The government has set aside a record of more than 400 billion pesos ($9.8 billion) for infrastructure projects and capital outlays under next year's 2.01 trillion pesos budget.

source: abs-cbnnews.com

BSP sees Philippines weathering Greece's euro zone exit

MANILA - The Philippines can weather the storm arising from Greece's looming exit from the euro zone, the Bangko Sentral ng Pilipinas said on Thursday.

“I think we’ll be able to absorb any shock that can arise from that because we have sources of resilience we have described in the past,” BSP Governor Amando M. Tetangco Jr. said.

“From the standpoint of the Philippines, the euro zone can be likened to a pain in your shoulders. It’s there and you can feel it but it doesn’t cripple you,” Tetangco said.

“There will be hiccups here and there but the core economies like Germany should still do well,” he said.

The BSP chief said the euro zone accounts for 16 percent of overseas Filipino worker remittances each year, and for 12 percent of Philippine export receipts.

“Our banks continue to be stable and continue to perform well in terms of asset growth, profitability and credit quality,” Tetangco said, citing the 2.34 percent default rate of local banks' total loan portfolio.

The euro zone is teetering on the brink of recession, as Greece, Spain and Italy grapple with debt.

Earlier, the World Bank said a one percent reduction in the gross domestic product of the euro zone would result in a 0.4 percent cut in the Philippine GDP.

source: interaksyon.com

Bangko Sentral on the lookout for “real estate bubbles”–Finance Dept.

Banks exposed to the real estate sector is under the watchful eyes of the Bangko Sentral ng Pilipinas, according to Finance Secretary Cesar Purisima, a member of the BSP’s policy-making Monetary Board.

The BSP is “closely monitoring” the banks, Purisima assured. “Right now, we believe it is still within manageable levels.

“As of end-December 2011, the combined exposure to the real estate sector of universal and commercial banks (U/KBs) and thrift banks (TBs) breached the half trillion mark and reached the highest level at P518.6 billion,” the BSP earlier said.

The exposure expanded by 6.8 percent from the third quarter of last year, when the level was at P485.6 billion, but compared to end-2010 figures, the expansion was 19.6 percent from P433.6 billion.

“Additional exposure during the quarter came exclusively from real estate loans, which grew by 7.2 percent to P505.9 billion. By industry, a significant portion of the exposure was held by U/KBs at 76.7 percent (P397.6 billion) share while the remaining 23.3 percent (P121.0 billion) was accounted for by the thrift banks,” the BSP added.

In an Asian Development Bank (ADB) forum–“How Can Asia Respond to Global Economic Crisis and Transformation”–Columbia University economist Jeffrey Sachs said short-term management of the real estate sector would be a challenge.

“It is a delicate balance between creating bubbles which is a tendency to turn on the liquidity, when there is a slowdown,” said Sachs.

“Asia needs to make sure that its own banks are not creating their own bubbles… Banks are very important but they run away given any leeway at all. They are gambling with other people’s money, paying the short-term benefits, leaving the long-term losses,” he also said.

Even the advanced economies of Japan, Europe and the United States had difficulties in spotting bubbles and addressing them, said ADB president Haruhiko Kuroda.

“I felt that a lot of lessons can be learned from the experiences of the United States, Euro zone and Japan. Those economies have attained significant development. Still, they made many mistakes,” Kuroda said during the forum.

Professor Takatoshi Ito of the University of Tokyo said the Asia Pacific region must identify the possible sectors that are vulnerable to a bubble.

“We must avoid the bubble to avoid economic shocks,” he said, citing that such event can lead to a catastrophe.

To avoid such fiscal crisis and its following repercussions, the professor said the economies should be “resilient to natural disasters and domestic shocks.”

A country that would not be able to contain its domestic shocks may have a negative spill over across the region, he said. —VS, GMA News

source: gmanetwork.com

Bangko Sentral mulls raising microfinance loan ceiling

The ceiling on microfinance loans — at P150,000 since 2003 — could soon be raised to give entrepreneurs better access to credit, the Bangko Sentral ng Pilipinas (BSP) said on Friday.

"Although monitoring of microfinance loan is quite strict, a microfinance loan does not require collateral. [Increasing the ceiling] will have an advantage to low-income earners who want to engage in business," BSP Deputy Gov. Nestor Espenilla explained.

Last year, P13 billion in microfinance loans were issued to about 2.3 million borrowers. The size of the average loan per microentrepreneur was lower at P5,650.

“Beyond the wholesale and high-end retail markets, the growth of microfinance and non-traditional delivery channels is something we are most proud of. The banking system is much more inclusive today with almost 980,000 [979,353] microfinance borrowers at a portfolio of P7.3 billion covering over 200 [202] banking institutions,” BSP Gov. Amando Tetangco Jr. said in a recent convention.

The BSP issued Circular No. 409, series of 2003 to set the ceiling, while a series of other circulars diversified the type of microfinance loans to include housing, agriculture, and microinsurance purposes.

In particular, BSP Circular 678 widened the scope of microfinance by allowing qualified loans up to P150,000 for home improvement and up to P300,000 for lot acquisition and house construction.

Another issuance, Circular No. 680, allowed authorized banks to offer micro-agri loans to small farmers. —ELR/VS, GMA News

Source: gmanetwork.com