Benign inflation gives BSP room to cut

Below target June inflation gives the Bangko Sentral ng Pilipinas (BSP) room to continue its easing cycle this year, but unexpected price shocks and the US Federal Reserve’s rate path could affect this outlook.

Finance Secretary and Monetary Board member Ralph G. Recto said in a statement on Friday that the lower-than-expected June inflation print “provides more room for the BSP to further cut policy interest rates to help us further boost the spending power of Filipinos, drive in more investments, and grow the economy, especially amid rising global uncertainties.”

“With the outlook for inflation remaining favorable and recent guidance from the BSP leaning dovish, another rate cut in the coming months is possible,” Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said in a note.

Inflation picked up to 1.4% in June from 1.3% in May, the Philippine Statistics Authority reported on Friday.

Still, this was slower than the 3.7% clip in June last year and was within the central bank’s 1.1% to 1.9% forecast for the month. This was also just below the 1.5% median estimate in a BusinessWorld poll of 17 analysts.

June marked the fourth straight month that inflation settled below the BSP’s 2-4% annual target.

For the first six months, headline inflation averaged 1.8%, slightly higher than the central bank’s baseline forecast of 1.6%.

BSP Governor Eli M. Remolona, Jr. said on Thursday that the central bank has room for two more rate cuts this year amid moderating inflation and weak economic growth.

The Monetary Board on June 19 delivered a second straight 25-basis-point (bp) cut to bring the policy rate to 5.25%. It has now lowered benchmark interest rates by a cumulative 125 bps since it started its easing cycle in August last year.

Its remaining policy meetings this year are scheduled for Aug. 28, Oct. 9, and Dec. 11.

Mr. Neri said the consumer price index is expected to stay below 2% in July and August amid easing rice prices.

Rice inflation contracted for the sixth straight month to 14.3% in June, the biggest drop since 1995. National Statistician Claire Dennis S. Mapa earlier said he expects rice prices will likely be negative until the end of the year.

“However, favorable base effects may start to fade by September, with inflation likely to return to 3% by November. This outlook excludes any supply shocks from the upcoming typhoon season. Inflation could be higher if a strong typhoon hits the agriculture sector,” Mr. Neri said.

Ten to 14 tropical cyclones are expected to enter the Philippine area of responsibility this year, according to the Philippine Atmospheric, Geophysical and Astronomical Services Administration.

Mr. Neri said the “biggest risk” to the further monetary easing by the BSP is uncertainty over the US Federal Reserve’s own rate cut cycle.

“It is still uncertain whether the Federal Reserve will cut rates this year, and US inflation data in the next two months will be crucial in determining the likelihood of a Fed cut in September,” he said.

“There’s a risk that tariffs have not been fully passed on to consumers as many US companies imported heavily before April to cushion the impact. If inflation in the US picks up, the Fed may delay the rate cuts, which could weaken the peso and limit the BSP’s room to maneuver.”

President Donald J. Trump has demanded immediate rate cuts, but Fed officials have said that with inflation risks rising there is no need to ease policy unless the job market begins to weaken in a significant way, Reuters reported.

New inflation data will be released in about two weeks, and Fed Chair Jerome H. Powell has said that if inflation does rise due to tariffs, it will likely begin happening this summer.

The Fed last month left its benchmark overnight interest rate in the 4.25%-4.5% range, where it has been since December. The decision has drawn fury from Mr. Trump, who feels that recent weak inflation means the central bank should be sharply reducing its policy rate. He has asked Mr. Powell to resign.

Mr. Powell, who has said he intends to serve out a term as chair that ends on May 15, on Tuesday last week reiterated the central bank’s plans to “wait and learn more” about how much tariffs push up on inflation before lowering rates again.

Rate futures show traders are back on board with that vision, with financial market bets pointing to a September start to rate cuts and a total of just two quarter-point reductions by yearend, not the three rate cuts that they had earlier favored.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said they expect two more 25-bp cuts from the BSP before the year ends.

“Our 1.8% full-year average forecast for this remains appropriate, with risks tilted to the downside, and we expect to see this average rate rising to a still-modest 2.6% next year, comfortably within the BSP’s 2-to-4% target range,” he said in note.

For its part, Citigroup, Inc. said inflation is expected to remain below the central bank’s target until the first quarter of 2026 amid slowing external and domestic demand.

It said it expects the Monetary Board to deliver 25-bp cuts at its August and October reviews. It also sees another 25-bp reduction at the policy-setting body’s first meeting in 2026, which will likely be held in February.

Citigroup sees headline inflation averaging 1.7% this year.

“Our forecasted trajectory reflects easing year-on-year disinflation in food on rice prices, largely as base effects kick in from the second half of 2025, even as prices rise sequentially,” it said.

“We also expect steady or slightly higher inflation in services such as recreation and education. This, however, could be offset by increased disinflation from utilities and fuel prices, especially after the recent pullback in oil prices. Risks may be tilted to the downside, especially if food inflation continues to fall sequentially.”

Mr. Neri likewise said that inflation will stay manageable as long as Brent crude’s price stays below $85 per barrel.

“The recent ceasefire in the Middle East has led to a decline in oil prices, easing the impact on inflation,” he said. — Aubrey Rose A. Inosante with Reuters

Gov’t debt service bill climbs in May — BTr

The national government’s (NG) debt service bill climbed in May as it ramped up both principal and interest payments, data from the Bureau of the Treasury (BTr) showed.

Debt payments went up by 16.04% to PHP 80.05 billion in May from PHP 68.98 billion in the same month last year, latest Treasury data showed.

Month on month, however, the government’s debt service bill slumped by 71.5% from PHP 280.9 billion in April.

The bulk or 87.39% of debt payments in May was made up of interest payments, BTr data showed.

Interest payments stood at PHP 69.95 billion that month, rising by 14.5% from the PHP 61.1 billion recorded in the same month in 2024.

Broken down, interest paid for domestic debt went up by 13.54% to PHP 52.31 billion in May from PHP 46.07 billion in the same month last year.

Of this total, PHP 32.82 billion went to paying interest for fixed-rate Treasury bonds (T-bonds), PHP 16.87 billion for retail Treasury bonds (RTBs), and PHP 2.62 billion for Treasury bills (T-bills).

Meanwhile, interest payments for foreign borrowings increased by 17.42% to PHP 17.64 billion in May from PHP 15.03 billion a year prior.

On the other hand, amortization payments jumped by 28.04% year on year to PHP 10.09 billion in May from PHP 7.88 billion.

This came even as the government did not make any principal payments for domestic debt in May compared to the PHP 85 billion it spent in the same month a year ago.

Meanwhile, amortization paid on foreign debt increased by 29.43% to PHP 10.09 billion from PHP 7.8 billion in the same month in 2024.

“NG debt servicing increased year on year for the month of May 2025 partly due to higher matured government securities versus a year ago,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

He added that still-elevated rates likely contributed to the higher interest payments that month.

“The maturity of T-bills, which saw high demand in the previous months, were the primary drivers for this month’s debt payments,” Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., added.

The government has seen strong demand for its T-bill offerings in recent months as lingering uncertainty and global market volatility has caused investors to prefer short-term debt instruments.

First five months

Meanwhile, from January to May, the NG debt service bill stood at PHP 702.97 billion, slumping 42.22% from PHP 1.22 trillion in the same period last year.

Amortization payments stood at PHP 345.57 billion in the first five months, a 61.39% decline from PHP 895.13 billion in the comparable year-ago period.

This made up 50.84% of the five-month tally.

Broken down, principal payments on domestic debt sharply dropped by 77.43% to PHP 170.4 billion in the period from PHP 754.86 billion a year earlier.

In contrast, amortization for foreign borrowings climbed by 24.88% year on year to PHP 175.16 billion in the January-to-May period from PHP 140.27 billion.

Meanwhile, the government’s interest payments rose by 11.14% to PHP 357.4 billion in the period from PHP 321.59 billion a year ago.

Interest payments on domestic went down by 12.95% to PHP 261.34 billion in the first five months from PHP 231.38 billion previously. This was composed of PHP 178.94 billion in interest payments for fixed-rate T-bonds, PHP 60.08 billion for RTBs, PHP 18.7 billion for T-bills, and PHP 3.63 billion for other instruments.

Meanwhile, interest paid for external debt went up by 6.48% year on year to PHP 96.06 billion in the first five months from PHP 90.21 billion.

Mr. Ricafort said principal payments could increase in the coming months amid large maturities of T-bonds and RTBs, especially in August and September.

Still, the Bangko Sentral ng Pilipinas’ cumulative cuts since August 2024 worth 125 basis points and the relative strength of the peso against a struggling dollar could help reduce debt servicing costs, he said.

“We may continue to see higher debt payments as Philippine securities are becoming more attractive driven by better macroeconomic conditions and better credit rating, as well as government efforts to reduce the country’s debt,” Mr. Erece added.

For this year, the government’s debt service program is set at PHP 2.051 trillion, consisting of PHP 1.203 trillion in principal payments and P848.031 billion in interest payments, based on the 2025 Budget of Expenditures and Sources of Financing.

The NG debt stock hit a fresh high of PHP 16.92 trillion as of end-May. It is projected to hit PHP 17.35 trillion by yearend. — Aubrey Rose A. Inosante

Philippine exports seen uncompetitive after US-Vietnam deal

Exports from the Philippines will have difficulty competing if the US restores its 17% reciprocal tariff rate, particularly after Vietnam was granted a favorable trade deal last week, the Foreign Buyers Association of the Philippines (FOBAP) said.

FOBAP President Robert M. Young said Vietnam struck a deal with the US that lowered its tariff to 20% from the 46% originally announced in early April.

“Presuming we have the 17% tariff … the latest Vietnam-US deal will definitely hinder our chances of competing in a price war,” Mr. Young said via Viber.

“To start with, even prior to Trump’s reciprocal tariff, Vietnam had a 10-15% lower free on board selling price compared to the Philippines,” he added.

He said Vietnam’s pricing advantage is due to its 50% lower wages and modern infrastructure.

“Realistically, there’s no contest between us. However, as FOBAP has been advocating, we, with the government, must seriously exert all efforts to improve in order to remain on the radar of the foreign buyers,” he added.

However, he said if the Philippines retains its current 10% tariff, “it may give some elbow room, but it will still not be easy to beat Vietnam prices.”

“The best scenario, in our opinion, is the relocation of the Vietnamese and other countries’ manufacturers to Philippine soil,” he added.

Last week, US President Donald J. Trump announced that he will impose a “lower-than-promised” 20% tariff on Vietnamese goods.

Under the US-Vietnam deal, transshipped goods through Vietnam will be subject to a 40% tariff, Reuters reported.

Philippine Institute for Development Studies Emeritus Research Fellow Rafaelita M. Aldaba said Vietnam’s new tariff structure “is a significant reduction from the earlier tariff rate of 46% announced in April, reducing Vietnam’s trade exposure risk.”

“However, the full implications of this deal will remain uncertain until the detailed provisions are finalized,” she said via Viber.

“For the Philippines, this development underscores the need for a strategic response. As Vietnam intensifies efforts to upgrade its industrial base and shift toward higher-value exports such as semiconductors, the Philippines must act decisively,” she added.

She said the Philippines must invest in critical infrastructure, negotiate market access, and address sector-specific constraints.

“Strengthening our competitive position in priority industries is crucial to ensuring that the country can capitalize on emerging opportunities in the rapidly evolving global supply chain landscape,” she added.

Philippine Chamber of Commerce and Industry (PCCI) President Enunina V. Mangio cited the need “to revisit our supply chain, technology, and our processes. Because if we can automate to improve our processes and reduce our costs, probably that would minimize the impact of all these things.”

Speaking to reporters on Friday, she added: “All our economic managers are working very hard in addressing the impact of tariffs and the increase of prices. As a matter of fact, right now, I think they are trying to negotiate for a free trade agreement with the US to lessen the impact of the tariff increase.”

“Let us wait and see for the final rate that will be implemented and imposed on us. And if that happens, I think the business sector will be ready. We just have to make our operations very efficient to at least reduce our costs,” she added.

She said the PCCI is also hoping for a review of the cost of logistics, charges, and taxes as another way to mitigate the impact of the tariff.

US tariffs on most trading partners are subject to a 90-day pause since the reciprocal tariffs were first announced in early April. Pending the completion of talks with various trade delegations, the US is charging most imports 10%. — Justine Irish D. Tabile, Reporter

BSP sees room for two more rate cuts

The Bangko Sentral ng Pilipinas (BSP) on Thursday said there is room for two more rate cuts this year as inflation remains benign.

“There’s room [to cut] because inflation is low, and growth is a bit lower also. Except that the cuts cannot really compensate entirely for the slowdown in growth,” BSP Governor Eli M. Remolona, Jr. told reporters.

The BSP last month cut the target reverse repurchase rate by 25 basis points (bps) to 5.25% from 5.5% amid a moderating inflation outlook and weaker-than-expected first-quarter economic growth.

Inflation cooled to an over five-year low of 1.3% in May. This brought the five-month average to 1.9%, slightly below the BSP’s 2-4% target band.

A BusinessWorld poll of 17 analysts yielded a median estimate of 1.5% for June inflation, which is scheduled to be released on Friday (July 4).

Asked if slowing inflation gives the BSP room to cut, Mr. Remolona replied: “Absolutely.”

When asked if this would mean two rate cuts this year, he replied: “It’s possible. We still have meetings in August, October, and December.”

“The slowdown in (first-quarter) growth was due to uncertainty. Big-ticket consumption items and investments were postponed, and exports slowed down,” Mr. Remolona said in mixed English and Filipino.

The Monetary Board’s remaining policy meetings this year are scheduled for Aug. 28, Oct. 9, and Dec. 11.

Mr. Remolona said the central bank will remain data dependent before deciding if more rate cuts are needed to support economic growth.

The Development Budget Coordination Committee (DBCC) cut the gross domestic product (GDP) growth target to 5.5-6.5% for this year from 6-8% previously, due to heightened global uncertainties stemming from the US trade policy shifts and the conflict in the Middle East.

The DBCC also narrowed the GDP growth target range to 6-7% for 2026 to 2028 from 6-8% previously.

Mr. Remolona said the revised DBCC growth targets were more “realistic.”

However, he said the BSP will keep its 2-4% inflation target for now.

The DBCC narrowed its inflation assumption for 2025 to 2-3% from 2-4% previously but retained the 2-4% outlook for 2026 to 2028.

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message that he still expects just one more rate cut this year.

“Nevertheless, the door is now open for a second if conditions warrant it. The revised DBCC targets, the improved inflation outlook, and the global and domestic headwinds (slower global growth, geopolitical tensions, and domestic risks like oil prices and rice tariffs are being closely monitored by the BSP) are some of the factors that may justify a more accommodative stance to support growth,” Mr. Asuncion said.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message the BSP could implement two more rate cuts this year as long as inflation remains in the low 2% range.

Wage hike

Meanwhile, Mr. Remolona said the PHP 50 daily wage increase for minimum wage earners in Metro Manila could have an impact on inflation.

“There could maybe be a little, but we will still analyze it,” he said.

Starting July 18, about 1.2 million workers in the National Capital Region and nearby cities and provinces will get a P50 daily wage increase — the highest pay hike ever granted by the National Wages and Productivity Commission.

The daily pay hike is equivalent to a P1,100 per month increase for a five-day work week or a P1,300 increase for those working six days a week, the Department of Labor and Employment said. — Aaron Michael C. Sy

Finance department eyes tax on online gaming

The Department of Finance (DoF) is proposing a tax on online gaming, as well as studying potential policies to curb unrestricted access to gambling, including digital gambling platforms.

At the same time, the Bangko Sentral ng Pilipinas (BSP) is set to issue a circular that would require banks and e-wallets to protect their users from the growing risks of online gambling.

This comes as some lawmakers have filed measures seeking stricter regulation of online gambling amid reports of growing addiction among Filipinos.

Finance Secretary Ralph G. Recto told BusinessWorld in an e-mail that the department is “cognizant of the concerns of Filipinos regarding online gambling.”

“Given this, we are already studying and will propose an online gaming tax,” he said, without giving details.

“We are also studying other potential policy options to deter unimpeded and practically unrestricted access to gambling, particularly digital gambling platforms.”

Mr. Recto proposed implementing limits on playing time or cash-in to help prevent addiction, as well as displaying clear warnings about the risks of gambling. He also proposed a ban on government officials from participating in all types of gambling, including online gambling.

“However, a careful study must be done by regulatory authorities on the administrative feasibility of implementing these proposals, and other additional requirements that may be imposed to limit the potential harmful effects of gambling,” he said.

Mr. Recto said the DoF supports “strong safeguards” to regulate all forms of gambling in the country.

“In particular, we strongly support restricting access to gambling facilities to those who are at least of legal age. PAGCOR (Philippine Amusement and Gaming Corp.) already prohibits minors and financially vulnerable individuals from entering gaming venues,” he said.

Senator Sherwin T. Gatchalian earlier filed a bill that seeks to implement stricter regulations on online gambling, such as raising the minimum legal gambling age to 21 from 18, to protect young Filipinos from early exposure to online gambling.

Mr. Gatchalian’s bill also seeks to prohibit e-wallets from linking to gambling sites.

It also proposed to hike the minimum cash-in requirement for online gambling platforms to PHP 10,000, while a PHP 5,000 minimum top-up is required to discourage compulsive gamblers.

At the House of Representatives, a bill seeking to stop electronic wallet platforms from promoting gambling apps was also filed.

BSP Circular

In a statement, the BSP said the circular would require BSP-supervised institutions (BSIs), primarily banks and electronic money issuers, to protect users from risks associated with online gambling.

“Protection may come in the form of various limits to gaming access,” it said, adding the draft circular is awaiting feedback from stakeholders.

“The BSP is taking a collaborative approach to crafting the circular, to ensure that the final policy strikes a balance between protecting consumers and preserving access to digital payments for licensed businesses,” it said.

The BSP had previously prohibited BSIs from dealing with unlicensed gambling operators, and ordered e-wallets and other BSIs to remove links to electronic sabong (e-sabong) from their platforms.

“This move by the BSP is a step in the right direction. Requiring banks and e-wallet providers to impose limits and safeguards will help shield vulnerable users, including young people and those in financially precarious situations, from the growing threat of online gambling,” Ronald B. Gustilo, national campaigner for Digital Pinoys said in a Viber message on Thursday.

However, Daesik Han, founder, chair and chief executive officer of Hann Group said stricter restrictions will slow the growth of the Philippine gaming industry.

“As a regulator, it is very reasonable for (the government) to come up with something stricter, like regulation, because there is some kind of negative side (of gambling) in society,” Mr. Han said on Money Talks with Cathy Yang on One News.

The PAGCOR in May reported its gross gaming revenue (GGR) rose by 27.44% to P104.12 billion in the first quarter, with electronic gaming out-earning physical casinos for the first time.

The electronic businesses generated PHP 51.39 billion or 49.36% of GGR in the January-to-March period.

Gaming stocks

Meanwhile, shares of DigiPlus Interactive Corp. and Bloomberry Resorts Corp. continued to slide on Thursday amid concerns over possible legislation to curtail online gaming.

Shares of Tanco-led DigiPlus fell by 13.89% to close at PHP 38.75 apiece, while Razon-led Bloomberry dropped by 6% to close at PHP 4.70 each.

DigiPlus is the company behind sports betting platform ArenaPlus, digital bingo platform BingoPlus, and online gaming platform GameZone.

On the other hand, Bloomberry launched its MegaFUNalo online gaming platform last month to compete against DigiPlus.

“The heightened regulatory risk has sparked a broad sell-off across the gaming sector, with DigiPlus seen as particularly vulnerable to potential restrictions given it is a leading digital gambling operator,” Unicapital Securities, Inc. Research Head Wendy B. Estacio-Cruz said in a Viber message.

“On July 3, DigiPlus’ stock plunged to its 30% daily limit amid a spike in trading volume, more than eight times the norm, following reports that the bill had progressed in Congress. Likewise, Bloomberry fell by 22% since its recent peak,” she added.

Ms. Estacio-Cruz said gaming stocks are projected to decline further amid uncertainties caused by the proposed stricter online gambling rules.

“For now, although the initial sell-off appears to be driven by sentiment, continued downward pressure is likely if regulatory risks intensify or remain unclear,” she said.

COL Financial Group, Inc. First Vice-President April Lynn C. Lee-Tan said in a Viber message that investors might stay on the sidelines until there’s further clarity on the bill’s progress.

“No one knows what the final version will be. The bill is definitely scary for them (gaming companies) because it will make it difficult for the poor to continue playing,” she said.

Meanwhile, DragonFi Securities, Inc. Equity Research Analyst Jarrod Leighton M. Tin said a relief rally is expected as there’s no finality yet regarding the details of the bill.

“While the bill could hurt growth if passed, it remains pending — prompting a strong relief rally. The market now awaits further clarity on whether the bill gets passed or not,” he said in a Viber message.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said the steep decline in gaming stocks is only transitory.

“Our expectation is that any final legislation will promote and enhance responsible online gaming given the significant revenue contribution to the government,” he said in a Viber message. — Aubrey Rose A. Inosante and Revin Mikhael D. Ochave, Reporters

National Government debt jumps to PHP 16.92T

The national Government’s (NG) outstanding debt hit a fresh high of PHP 16.92 trillion at the end of May as new domestic debt issuances were partly offset by the stronger peso, the Bureau of the Treasury (BTr) said on Thursday.

The latest data from the BTr showed that outstanding debt inched up by 0.99% or PHP 166.2 billion to PHP 16.92 trillion from PHP 16.75 trillion at end-April.

Year on year, outstanding debt jumped by 10.24% from PHP 15.35 trillion as of end-May 2024.

The BTr said the “minimal increase” in total debt is mainly due to the net issuances of new domestic securities, “which reflect sustained investor confidence in the Philippine economy.”

“This was partially offset by the valuation effects of a stronger peso, helping reduce the value of external obligations,” it added.

The BTr data used a foreign exchange rate of PHP 55.615 per dollar at end-May, strengthening from PHP 55.933 per dollar at end-April and PHP 58.524 at end-May 2024.

In May, the bulk or 69.6% of the debt stock came from domestic sources, while external obligations made up the rest.

“This reflects the government’s strong bias for domestically sourced financing, which helps mitigate foreign exchange risks and strengthen the local capital market,” the BTr said.

Domestic debt, which was made up of government securities, increased by 1.64% to PHP 11.78 trillion as of end-May from PHP 11.59 trillion as of end-April.

“This increase was mainly due to net issuances totaling PHP 190.87 billion, but it was slightly tempered by the P0.91-billion downward valuation effect of a stronger peso against the US dollar,” it said.

Year on year, domestic borrowings climbed by 12.81% from PHP 10.44 trillion at end-May 2024.

On the other hand, external debt slipped by 0.46% to PHP 5.14 trillion at end-May from PHP 5.16 trillion in the previous month.

The decrease was due to PHP 3.55 billion in net repayments and the strengthening of the peso, which slashed the peso value of foreign debt by PHP 29.35 billion.

“These were partly offset by a PHP 9.14-billion revaluation resulting from third-currency fluctuations against the US dollar,” the BTr said.

Year on year, foreign debt rose by 4.6% from PHP 4.9 trillion at end-May 2024.

External debt securities consisted of PHP 2.26 trillion in US dollar bonds, PHP 239.97 billion in euro bonds, PHP 58.61 billion in Japanese yen bonds, PHP 55.62 billion in Islamic certificates and PHP 54.77 billion in peso global bonds.

Meanwhile, NG-guaranteed obligations inched up by 1.79% to PHP 343.58 billion as of end-May from the end-April level of PHP 337.54 billion.

The BTr attributed the increase to the PHP 6.53-billion net availments of domestic guarantees and the PHP 0.53-billion third-currency revaluation.

“These were partially tempered by the PHP 0.51-billion net repayment of external guarantees and another PHP 0.51-billion reduction from the stronger peso,” it added.

Year on year, guaranteed debt fell by 0.89% from PHP 350.2 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said he expects the debt level to reach new highs in the next few months.

“For the coming months, the outstanding National Government debt could go to new record highs amid new National Government borrowings at the early part of the year and also the need to hedge both local and foreign borrowings of the National Government in view of the Trump factor,” he said.

The Treasury said the debt “remains manageable,” adding that the government is committed to prudent debt management strategy.

Outstanding debt as a share of gross domestic product stood at 62% at the end of the first quarter.

The NG’s outstanding debt is projected to reach PHP 17.35 trillion by end-2025. — Aubrey Rose A. Inosante

Philippine stocks rebound before June inflation report

Philippine stocks climbed on Thursday amid expectations that domestic inflation remained below target last month despite an expected uptick due to the Iran-Israel conflict.

The Philippine Stock Exchange index (PSEi) jumped by 0.77% or 49.93 points to close at 6,468.98, while the broader all shares index climbed by 0.16% or 6.42 points to 3,803.33.

“The local market bounced back this Thursday on optimistic expectations that inflation last June had remained tepid despite certain upside risks, thereby giving the Bangko Sentral ng Pilipinas (BSP) leeway to continue their policy easing,” Philstocks Financial Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

The Philippine Statistics Authority is scheduled to release June inflation data on July 4 (Friday). A BusinessWorld poll of 17 analysts yielded a median estimate of 1.5% for the June consumer price index, faster than 1.3% in May but below the BSP’s 2-4% annual target, as the spike in fuel costs due to the Middle East conflict may have been offset by steady food prices.

“Local shares edged higher ahead of the June inflation report, with sentiment lifted by optimism over a new US-Vietnam trade deal,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The United States will place a lower-than-promised 20% tariff on many Vietnamese exports, Donald J. Trump said on Wednesday, cooling tensions with its tenth-biggest trading partner days before the US president could raise levies on most imports, Reuters reported.

Vietnamese goods would face a 20% tariff and trans-shipments from third countries through Vietnam will face a 40% levy, he said. Vietnam could import US products with a zero percent tariff, he added.

Mr. Trump’s announcement comes just days before a July 9 deadline before he ramps up tariffs on most imports. Under that plan, announced in April, US importers of Vietnamese goods would have had to pay a 46% tariff.

Most sectoral indices closed in the green on Thursday. Holding firms went up by 1.25% or 70.63 points to 5,688.88; financials increased by 0.95% or 21.38 points to 2,268.24; property rose by 0.4% or 9.99 points to 2,464.66; and mining and oil climbed by 0.1% or 9.97 points to 9,523.39.

Meanwhile, services dropped by 0.59% or 12.81 points to 2,142.12 and industrials retreated by 0.33% or 30.72 points to 9,076.59.

“GT Capital Holdings, Inc. continues to lead the index, this day rising by 3.15% to P655. Bloomberry Resorts Corp. was at the tail end, plunging 6% to PHP 4.70,” Mr. Tantiangco said.

Value turnover increased to PHP 10.23 billion on Thursday with 1.77 billion shares traded from the PHP 7.77 billion with 792.46 million issues exchanged on Wednesday.

Decliners outnumbered advancers, 126 versus 84, while 60 names were unchanged.

Net foreign buying surged to PHP 1.11 billion on Thursday from PHP 258.04 million on Wednesday. — R.M.D. Ochave with Reuters

SEC plans to expand investment options, revise REIT rules

The Securities and Exchange Commission (SEC) has announced plans to expand investment options, revise real estate investment trust (REIT) rules, and simplify regulatory transactions to strengthen the Philippine capital market.

To improve market accessibility, the SEC plans to create a roadmap for alternative investment products and derivatives, including options, futures, and a potential commodity futures market, to enhance risk management and offer more investment options, it said in a statement on Thursday.

At the same time, the commission is looking to implement regulatory reforms that will empower local corporations to tap global indices for funding and revise the implementing rules and regulations (IRR) of Republic Act No. 9856, or the REIT Act, to better meet market demands as part of deepening the capital market.

“The SEC also vowed to leverage risk-based audits, enhanced digital monitoring tools, and continuous institutional capacity building to strengthen its oversight over the corporate sector and the capital market, as well as its investor protection capabilities, in line with global best practices,” it said.

On improving ease of doing business, the SEC is considering the imposition of a moratorium on fee increases for a specified period to allow wider access to corporate data.

It will also launch a real-time digital tracking system to reduce client follow-ups and boost transparency.

The SEC recently issued Memorandum Circular No. 6, which lowered the fees and charges for corporate data requests by 50% since July 1 to boost corporate data access.

The corporate regulator said it may also streamline the registration process for small and medium enterprises and open the repurchase market to non-bank financial institutions (NBFIs).

“To improve consumer protection and support the growth of NBFIs, the SEC will intensify its crackdown against illegal lending by reinforcing its supervisory authority to promote and ensure compliance with truth-in-lending disclosure, fair lending standards, and the prohibition of abusive collection practices,” the SEC said.

The planned initiatives were raised during the courtesy visit of SEC officials, led by SEC Chairperson Francisco Ed. Lim, to Finance Secretary Ralph G. Recto on June 23. Mr. Lim shared the SEC’s priorities to improve the country’s capital market and business sector.

“The SEC is ready to work with the Department of Finance, under the leadership of Secretary Recto, to create a conducive environment that will encourage business formation and boost participation in the capital market,” Mr. Lim said.

“The SEC remains steadfast in its commitment to transform the Philippine corporate sector into one of the best in Southeast Asia by fostering an inclusive capital market, capable of strongly contributing to overall economic growth and nation-building,” he added.

Mr. Lim previously said that he is eyeing to reduce backlogs and streamline transaction requirements to ensure the proper implementation of Republic Act No. 11032, or the Ease of Doing Business and Efficient Government Service Delivery Act.

He also committed to efficiently implement Republic Act No. 12214, or the Capital Markets Efficiency Promotion Act, which lowered the tax rate for capital market-related transactions.

Mr. Lim also vowed to strictly enforce the SEC’s newly issued rules on crypto-asset service providers and their operations to ensure market integrity and boost investor protection.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message that the planned reforms are targeted across key mandate areas, which could transform the country’s capital markets.

“Certain proposals are potentially transformative for the capital markets, including the push for alternative investment products and derivatives, the creation of a commodity futures market, and the empowerment of local corporates to tap global indices for funding,” he said.

“We expect the SEC to proactively engage market participants and stakeholders to get the best input for crafting and implementing these reform initiatives,” he added.

Jayniel Carl S. Manuel, Seedbox Securities, Inc. sales and trading department assistant manager, said in a Viber message that the SEC’s planned reforms, if realized, could broaden the market and give more tools for investors.

“These are exciting moves from the SEC. The digital tracking system alone is a game-changer for transparency and efficiency,” he said.

“The planned REIT IRR update and the introduction of derivatives and alternative investments are also great steps and a big plus for portfolio diversification and risk management,” he added.

Mr. Manuel said the planned moratorium on fee increases could help improve the efficiency of the local market.

“In the long run, easier access to corporate data can drive better-informed investment decisions, foster innovation in analytics tools, and ultimately contribute to market efficiency,” he said.

“It’s a step in the right direction, especially as the industry evolves in a more digital and democratized direction,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the new investment options will help meet the changing needs of investors and update the available investment products in the country.

“The introduction of more innovative investment products for more sophisticated investors will help better cater to their requirements and provide more investment alternatives, while having the risk management solutions based on global best practices to further protect and uphold the interest of the investing public,” he said. — Revin Mikhael D. Ochave, Reporter

PEZA investments surge in 1st half

The Philippine Economic Zone Authority (PEZA) saw a 59% increase in approved investment pledges in the first six months of 2025, despite a drop in approvals in June.

In a statement, PEZA said its board approved PHP 72.362 billion worth of investments in the January-to-June period, up 59.1% from the PHP 45.481-billion investment pledges approved in the same period last year.

“This continued surge in investments affirms PEZA’s role as a vital engine for economic growth and job creation for the country,” PEZA Director-General Tereso O. Panga said in a statement on Wednesday.

“The confidence shown by both new and existing investors is a strong signal that our economic zones (ecozones) are thriving and open for business,” he added.

However, the PEZA board only approved PHP 6.022 billion worth of investments in June, down by 30.4% from PHP 8.654 billion in the same month in 2024.

In June, the PEZA board greenlit 31 new and expansion projects that are expected to bring in USD 166.426 million in export revenues and 3,646 jobs.

Fourteen of the approved projects will be undertaken by export-oriented enterprises, while seven projects are in the information technology and business process management (IT-BPM) sector.

Four projects involve domestic market-oriented enterprises, while four projects are in logistics.

Another project involves ecozone development, while one project involves facility development.

The majority of the projects are expected to be located in Region IV-A or Calabarzon, while the rest will be in Central Luzon, the National Capital Region, Davao Region, Central Visayas, Western Visayas and Ilocos Region.

For the January-to-June period, PEZA approved 133 projects that are expected to generate 32,983 jobs and have USD 1.26 billion in export value.

The majority of these projects are in manufacturing, while 39 are IT-BPM projects, 12 are domestic market-oriented enterprises, 10 are facility development projects, while nine are ecozone developments.

There are four utility projects and another four are in logistics.

“South Koreans come in as the biggest investor for the first half of the year, followed by the Americans, Chinese, Dutch and Japanese,” said PEZA.

“In terms of sectoral investments, manufacturing of food and beverage products tops the list, followed by ecozone development and IT-BPM,” it added.

After the investment performance in the first half, Mr. Panga said he is “optimistic” that PEZA will achieve its targets this year.

This year, PEZA is targeting investment approvals to reach at least PHP 235 billion, and a 5% increase in both actual exports and employment.

“The Philippines is surely in a sweet spot to attract foreign direct investments at this time, and surely, Filipinos and the whole country will reap the results of our combined hard work soon,” Mr. Panga said.

PEZA said it is pursuing 50 investment leads, which it hopes will translate in actual investments.

“PEZA likewise welcomed several high-level inbound delegations during the period representing the US, China, Japan, Spain, Germany, Hong Kong, Taiwan, Singapore, Malaysia, the United Arab Emirates, and even domestic exploratory missions within the Philippines,” PEZA said.

It noted interest in electronics manufacturing and semiconductor manufacturing services, advanced manufacturing activities, aviation, automotive and information technology-business process management sectors. — Justine Irish D. Tabile

Philippines still lower middle-income, World Bank says

The Philippines is still classified as a lower middle-income country after just missing the threshold to achieve upper middle-income country (UMIC) status, according to the World Bank.

The World Bank’s latest country income classification showed the Philippines posted a record gross national income (GNI) per capita of USD 4,470. This was higher than its GNI per capita of USD 4,230 in the previous year.

Despite the increase in GNI per capita, the Philippines remains classified by the World Bank as a lower middle-income country — one with a GNI per capita of USD 1,136 to USD 4,495.

The Philippines’ GNI per capita was only USD 26 shy of the World Bank’s lower GNI per capita requirement of USD 4,496-USD 13,935 to become a UMIC. Last year, the GNI per capita requirement for a UMIC was between USD 4,516 and USD 14,005.

The World Bank computes a country’s GNI through the Atlas method, which serves as the basis of its income classifications — low, lower middle, upper middle and high. GNI refers to the total amount of money earned by its residents both inside and outside its borders.

In Southeast Asia, Vietnam overtook the Philippines in terms of GNI per capita with USD 4,490 but remained a lower middle-income country.

Cambodia (USD 2,520), Laos (USD 2,000), and Myanmar (USD 1,220) are also still classified as lower middle-income countries.

Meanwhile, Malaysia (USD 11,670), Thailand (USD 7,120) and Indonesia (USD 4,910) remained as upper middle-income countries.

Singapore (USD 74,750) and Brunei (USD 36,150) are still considered as high-income countries.

Other notable country movements include Costa Rica which is now classified as a high-income country; and Cabo Verde and Samoa, which both moved up to the UMIC category.

The World Bank updates country classifications by income level on July 1 every year, based on the GNI per capita of the previous calendar year.

Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan in April said the country is still on track to meet its target of moving to the upper middle-income category by 2026.

However, World Bank lead economist for Brunei, Malaysia, the Philippines and Thailand Gonzalo J. Varela has said the country’s transition to UMIC status will likely take a bit longer.

“Getting there with an economy that’s growing a little bit slower than we thought about six months ago will take a little bit longer. So, we are thinking that a probable outcome is that it happens around 2027,” Mr. Varela said at a briefing on June 19.

The World Bank expects the Philippines to grow by 5.3% this year, below the government’s recently revised 5.5% to 6.5% target.

Analysts said the Philippines is unlikely to move to the UMIC category by 2027.

“I’m doubtful we could. Much work needs to be done to improve our competitiveness ranking to attract more investments,” Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes told BusinessWorld in a Viber message.

The Philippines inched up a spot to 51^st in the 2025 World Competitiveness Yearbook of the International Institute for Management Development. It remained a laggard in the region, ranking 13^th out of 14 Asia-Pacific economies in the index.

Meanwhile, John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said it is possible for the Philippines to become an upper middle-income country by 2027, but this would “require stronger, more inclusive and sustained economic growth.”

Mr. Rivera said the government would have to ramp up infrastructure rollout and boost productivity in agriculture and manufacturing.

“Falling short of the UMIC threshold despite a lower benchmark highlights how structural challenges and global headwinds continue to weigh on the Philippines’ income trajectory,” Mr. Rivera said.

He also cited slower-than-expected growth, peso depreciation, and inflation pressures as factors that have hurt the country’s per capita GNI. — Aubrey Rose A. Inosante

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