BANGKO Sentral ng Pilipinas (BSP) has loosened its girdle. It now allows the banking system to lend to micro, small and medium enterprises (MSME) as an alternative compliance to its reserve requirements. This has the possibility of encouraging MSMEs to obtain increased lending from our banks. Much depends, of course, on MSMEs and banks engaging in more dialogue so as to identify advantageous lending opportunities. There is also the possibility of MSMEs depending less on “5-6” operators.
Will the dialogue between MSMEs and the banks happen? I hope so. Will bank staff be encouraged to work with small organizations? Or will the gulf presently existing between banks and small businesses remain? There is the possibility of a seismic shift in the banking sector since BSP explains that P195.9 billion is available for these new loans.
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Inflation is a perennial challenge. According to the Philippine Statistics Authority (PSA), meat inflation declined to 11.9 percent from 15.6 percent as pork imports reduced the supply shortage caused by the African swine fever (ASF) outbreak. Any reduction is welcome, but double-digit inflation is not easy to accept.
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Lockdowns and other measures which reduce our mobility are irksome. But there can be advantages, sometimes unforeseen.
Specifically, if there are constraints on our movements, this can reduce our expenditure. For those who are fortunate enough not to incur a similar loss of income, there can be opportunities resulting from the consequential increase in liquidity. Pag-IBIG is receiving record high applications for home loans, perhaps from those who find that they can handle the increased indebtedness. Consequently, the agency released a record high P65.48 billion from January to September 2021. This is an astonishing 80 percent increase over the P36.43 billion lent in the same period in 2020.
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To keep the economy from suffering during the pandemic, the government has incurred a significant increase in indebtedness. A useful statistic with which to monitor our economic condition is the debt-to-GDP ratio. Pre-pandemic, this ratio was around 40 percent but has now risen to 63.1 percent. This is historically high but is necessary if we are to avoid the jobless rate from also rising excessively.
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The recent 26th Conference of the Parties (COP26) in Glasgow, Scotland has identified some areas that need to be implemented if global warming is to be kept within necessary limits. The pressure on all countries to reduce their coal consumption is now deemed necessary.
Finance Secretary Carlos Dominguez who headed the Philippine delegation to the Conference has explained Philippine plans to transition to renewable energy. The next step is to solicit funds from various sources which could facilitate our move to renewables (solar, wind, hydro).
We hope the fund-raising will be successful./PN
