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The Department of Trade and Industry (DTI) said on Monday that it is open to lowering tariffs on US goods in response to US President Donald J. Trump’s imposition of a 17% reciprocal tariff on Philippine goods.

“We are really going to do that… Actually, we, the economic team, are going to meet soon,” Trade Secretary Ma. Cristina A. Roque told reporters on Monday.

She said the Philippines is “definitely” looking at reducing the tariffs on US products but noted that the economic team will discuss the extent of what the Philippines can offer.

Ms. Roque’s statement came after US and Vietnam leaders agreed to discuss a “deal to remove tariffs” after a “very productive phone call” on April 4, Reuters reported.

Ms. Roque said the Philippine government is also looking at a collective response with other Association of Southeast Asian Nations (ASEAN) member-countries to address the higher US tariffs.

Malaysia’s Prime Minister Anwar Ibrahim on Sunday called for a united ASEAN response to the US tariffs. He said Malaysia, as ASEAN chair, is ready to lead efforts to “ensure ASEAN’s collective voice is heard clearly and firmly on the international stage.”

The US slapped ASEAN countries with some of the highest tariffs, which will take effect on April 9. Cambodia is facing a 49% tariff, followed by Laos (48%), Vietnam (46%), Myanmar (45%), Thailand (37%), Indonesia (32%), Malaysia (24%), and Brunei (24%).

Compared with its regional neighbors, the Philippines’ tariffs are among the lowest, only second to Singapore, which was imposed a baseline rate of 10%.

Malacañang on Monday said the government is taking action to reverse the effects of the 17% reciprocal tariff, but declined to give details.

“I am aware that actions will be taken that will be beneficial for our country,” Palace Spokesperson Clarissa A. Castro told a news briefing.

In 2024, the Philippines imported $8.17 billion worth of commodities from the US, and exported $12.14 billion worth of goods to the US, data from the statistics agency showed. This brought the trade surplus to $3.97 billion last year.

The US is a major source of agricultural imports, representing approximately 20% of total Philippine imports.

Earlier, the DTI said it targets to engage the US in a discussion in pursuit of a mutually beneficial trade.

In particular, Ms. Roque said that she plans to facilitate enhanced market access for key US export interests, including automobiles, dairy products, frozen meat, and soybeans, within the framework of a bilateral free trade agreement.

‘Catious’

Meanwhile, Philippine manufacturing firms are likely to be more cautious amid uncertainty arising from Mr. Trump’s tariff policies, an electronics firm executive said.

“Maybe after today, we’ll be more cautious moving forward this second and third quarter… There’s a lot of wait-and-see attitude amongst manufacturing and companies on the impact of the global tariff,” EMS Group Chairman and Chief Executive Officer Ferdinand “Perry” A. Ferrer told BusinessWorld during a phone call on April 3.

EMS Group is a complete electronic, semiconductor and medical subcontracting group that offers technology and manufacturing solutions.

Mr. Ferrer said many local firms, as well as global companies, put expansion plans on hold in anticipation of the tariff announcement.

“The ripple effect is on the supply chain, which affects the Philippines,” he said.

Mr. Ferrer said the relatively lower tariff rate on the Philippines compared with its neighboring countries puts it in a “good position” to secure future investments.

“Moving forward, we can see, we will do some campaigning in our partner countries, from Taiwan, Japan, of course the United States and some European Union countries, on how to bring in the much-needed foreign direct investments (FDIs) in services in manufacturing,” he said.

Earl Lawrence S. Qua, president of the Electronics Industry Association of the Philippines, said the government should try to work with the US to lower the tariffs.

“We need to make sure we do not escalate further and try to negotiate with the US to bring down tariffs. At the moment we need to wait and see how the tariffs will be implemented,” Mr. Qua said.

However, Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said that while the 17% tariff “would seem to be small,” the impact would still be greater compared with other countries since the US is the Philippines’ top export destination.

“To assume that other countries will choose to come in the Philippines because of the lower tariffs is as irrational as these tariffs imposed by Trump,” Mr. Lanzona said.

In 2024, the US was the top destination for Philippine exports, accounting for 17% of the total.

Council

Meanwhile, the Philippine Economic Zone Authority (PEZA) said that it is crucial that the Philippine government establish an Economic Security Council amid the new US tariff measures.

“The proposal to establish an Economic Security Council is crucial given the global business risks posed by US tariffs, as well as the geostrategic considerations that the Philippines must now take into account in these still uncharted waters,” said PEZA Director-General Tereso O. Panga in a Facebook post.

“In PEZA, we believe we must craft a concrete roadmap to move forward together — seizing opportunities while mitigating the impact of tariffs on global trade involving the Philippines,” he added.

The Management Association of the Philippines (MAP) earlier recommended the formation of an Economic Security Council under the Office of the President to address the impact of the US tariffs.

According to the MAP, the council should be composed of the DTI, the Department of Foreign Affairs, the National Security Council, the Department of Finance, the National Economic and Development Authority, PEZA, the Anti-Red Tape Authority, the Department of Labor and Employment, and appropriate private sector and industry representatives.

Mr. Panga said that the first step should be to secure reduced tariff lines for key economic zone (ecozone) exports to the US.

Key ecozone exports to the US include EMS-SMS (electronics manufacturing services and semiconductor manufacturing services), machinery, transport equipment, automotive parts, and select agricultural products, including coconut. — Justine Irish D. Tabile, Reporter with Aubrey Rose A. Insosante and J.V.D.Ordoñez

Major Southeast Asian economies may need to ramp up purchases from the United States, as they seek relief from steep US tariffs, a DBS Bank report said.

In a report released on Monday, the Singapore-based bank said six Association of Southeast Asian Nations (ASEAN) member-countries are facing the steepest tariffs imposed by the US.

“The method behind the flurry of tariff measures announced by the US on April 2 is simple — the more a nation is reliant on US markets, the more tariffs they face,” DBS said.

“From there it should follow that the only way a country can see tariff relief in the future is by buying more from or selling less to the US,” it added.

ASEAN-6, which is comprised of Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, is facing potential 27.5% increase in US tariffs on average.

“The region might seek to step up purchases from the US, for instance agricultural inputs, machinery, aircraft, energy and defense, to balance the trade gaps,” DBS said.

The US began implementing a baseline tariff of 10% on imports from most countries on April 5. A higher reciprocal tariff on individual countries will be implemented starting April 9.

The Philippines faces a 17% tariff on its exports to the US.

However, compared with its regional neighbors, the Philippines’ tariffs are among the lowest, only second to Singapore, which faces a baseline rate of 10%. Vietnam bears the steepest tariff at 46%, followed by Thailand (37%), Indonesia (32%), and Malaysia (24%).

ASEAN-6 should strike up agreements to mitigate the impacts of these tighter duties, it said.

“Regional governments are likely to initiate bilateral discussions and seek concessions with the US administration as the scale and scope of reciprocal action become clearer,” it said.

“A broad range of conciliatory options include diplomatic and other economic steps — bilateral trade agreement or critical minerals agreement,” it added.

Even prior to the tariff proposals, the Philippines has been seeking to secure a bilateral free trade agreement (FTA) with the United States. Among ASEAN-6, only Singapore has an FTA with the US.

However, DBS cited the lack of reliability of the United States when it comes to upholding agreements it makes.

“Such gestures may still fall short of providing meaningful relief. The playbook for most Asian economies ought to be to combine remaining open to the US while pushing for greater integration with the rest of the world.”

For the Philippines, DBS said electronic exports are likely to be the most impacted, as they form the bulk of the country’s exports.

In 2024, the Philippines exported USD 12.14 billion worth of commodities to the US. Of the total, over half or 53% or USD 6.43 billion were electronic products, including semiconductors.

However, the US exempted semiconductors from the new tariffs.

DBS also cited the potential impact on apparel, footwear and textile products.

“The country aims to push for higher farm exports to the US, seeking to displace countries in the region which have higher rates,” DBS added.

However, DBS said a reduction in tariffs for US goods in the absence of an FTA may be difficult.

“A unilateral reduction in tariffs to accommodate US demands (without an FTA) might be challenging given the need to level the playing field with all the countries under the most-favored nation (MFN) terms,” DBS added.

Asia outlook

For the overall Asia region, DBS flagged the potential spillovers from these tariffs, which could weigh on growth and inflation.

“If tariffs stay the way they are for the rest of the year, core personal consumption expenditure (PCE) inflation could readily exceed 3.5%, while household income and consumption will be dented, especially for those at the low end of the income spectrum.”

It also cited the possible downside of 50-100 basis points (bps) to real GDP growth.

“There is another, more adversarial, scenario. If trade war intensifies with additional tariffs and retaliations, and financial market correction worsens, US recession risks will rise considerably.”

“This will especially be the case if the US ratchets up secondary tariffs (penalty on nations for buying goods from countries under US sanctions) and China/EU take aim at the US services exports.”

With this, DBS said there is a 45% probability of “below-trend growth and above-trend inflation” in Asia.

It also flagged the 35% probability to a US recession scenario, which would “drag down the outlook of Asia’s exports-dependent economies.”

“The Fed will face pressure to cut interest rates even if inflation remains well over its target. Global financial stability could also be at stake,” it added. — L.M.J.C. Jocson

The Bangko Sentral ng Pilipinas (BSP) is expected to cut rates this week as low inflation and the US’ tariff policy will give it more than enough room to resume its rate-cutting cycle, analysts said.

A BusinessWorld poll conducted last week showed that all 17 analysts surveyed expect the Monetary Board to reduce the target reverse repurchase rate by 25 basis points (bps) at its policy meeting on April 10.

If realized, this would bring the benchmark rate to 5.5% from the current 5.75%.

The central bank kept interest rates steady in February as it waited to see how global trade uncertainties would unfold. It slashed borrowing costs by a total of 75 bps in 2024.

“The door to continue the easing cycle has now swung even wider, with domestic conditions becoming even more appropriate for a rate cut,” HSBC economist for ASEAN Aris D. Dacanay said.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said there is a “90% chance” the Monetary Board will cut rates by 25 bps on Thursday.

“We think a gradual cut will be conducted given below-than-expected March inflation and need to underpin economic growth amid higher global tariffs,” Security Bank Corp. Vice-President and Research Division Head Angelo B. Taningco said.

Philippine National Bank economist Alvin Joseph A. Arogo said further easing will be justified by “low inflation, higher probabilities of Fed rate cut, and relatively better reciprocal tariff compared to other Asian countries.”

“We think that there is room for the ‘baby-step’ rate cut amid global trade uncertainties. One major reason is the continued deflation narrative, with inflation steady within the government’s inflation target of 2-4%,” Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said.

Slowing inflation

The March inflation print is one of the key indicators that will prompt the central bank to cut rates this week, analysts said.

March inflation slowed to 1.8% in March from 2.1% in February, its slowest rate in nearly five years.

Inflation averaged 2.2% in the first quarter, well within the central bank’s 2-4% target.

“I’m expecting the (Monetary) Board to resume easing (this week), with a 25-bp rate cut to the target reverse repo rate,” Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said.

He said the recent inflation prints “indicate strongly that the BSP still has ample room to further cut rates nominally while still keeping to its endgame of pursuing a ‘less-restrictive’ policy.”

Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said the data so far “points to the need and scope for easing.”

“Inflation is at the lower end of target, risk-adjusted inflation forecasts point to target consistent inflation this year and next while growth is projected to miss target for a third year in a row,” he added.

Citi Economist for the Philippines Nalin Chutchotitham said the below-2% inflation “cements the case for an April policy rate cut.”

“While creeping higher from April, we see inflation staying firmly in the lower half of BSP’s target range for the rest of 2025, and cut our 2025 inflation forecast to 2.2%,” she said.

The BSP’s baseline forecasts for inflation are at 3.5% for 2025 to 2026. Accounting for risks, inflation could reach 3.7% in 2026.

“With inflation much lower than the BSP’s risk-adjusted inflation forecast, we expect the central bank to tweak its inflation forecast downwards next week,” Mr. Dacanay said.

“And with inflation down, the real policy rate has widened enough for the BSP to cut even without the Fed doing the same. All is well,” he added.

Trump tariffs

Meanwhile, analysts said the central bank will be able to now price in the tariff impact and lower interest rates accordingly.

“An interest rate cut would provide additional support for the Philippine economy amid risks from higher US tariffs,” Chinabank Research said.

“Lower borrowing costs, which is a boon for investments, could help temper the impact of potentially weaker external demand and maintain the economy’s upward growth trajectory.”

ING Regional Head of Research for Asia-Pacific Deepali Bhargava said the “global growth uncertainty” stemming from the US tariffs has strengthened the expectation of a rate cut.

Last week, the Philippines was not spared by US President Donald J. Trump announced a barrage of tariffs on all its trading partners. He imposed a 17% reciprocal tariff on all Philippine goods exported to the US, which will take effect on April 9.

While this was higher than the 10% baseline tariff imposed on most countries, the US tariff on the Philippines was the second lowest in Southeast Asia after Singapore (10%).

However, Chinabank Research noted that the Philippines is more insulated from tariffs than its regional peers due to its strong domestic demand and the relatively lower tariff.

“Moreover, a less restrictive monetary policy could help temper the adverse effects of an escalating global trade war on the Philippine economy,” it added.

The stabilizing currency will also allow the BSP to cut rates further, analysts said.

“The peso appreciated further versus the US dollar as of March, at PHP 57 levels, the strongest for the peso in more than five months, could further improve import prices and overall inflation, thereby could also support further monetary easing going forward,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

The peso closed at PHP 57.21 against the greenback at end-March, strengthening by 78.5 centavos from the PHP 57.995 at end-February.

“An inflation print that remains within their target range and a broadly stable peso will give BSP the confidence to proceed with a rate cut, even as the US Fed held interest rates steady in March,” Moody’s Analytics economist Sarah Tan said.

The US central bank last month held its benchmark overnight rate steady in the 4.25%-4.5% range amid expectations of rising prices ahead of Mr. Trump’s tariff proposal.

“We maintain our view that the 100-bp resulting interest rate differential with the Fed remains a comfortable level that is unlikely to trigger significant capital outflows and a sharp depreciation of the peso that could fan inflationary pressures,” Chinabank Research added.

Further cuts?

Analysts said the central bank is most likely to continue on its easing path for the rest of the year.

“Nevertheless, the latest print should give the Monetary Board enough comfort to restart its easing cycle next week; we expect a 25-bp cut this month, followed by 75 bp worth of additional easing by yearend,” Mr. Chanco said.

After April, Ms. Chuchotitham said she expects the BSP to deliver rate cuts in August and December in increments of 25 bps.

“Restarting the easing cycle will provide much needed support to domestic demand, more so with the reserve requirement ratio cut to 5% last week, making the BSP’s monetary transmission more efficient,” Mr. Dacanay said.

“Credit demand in the economy remains tepid, while consumption is still muted since high interest rates have brought demand for big-ticket purchases down.”

Latest data from the BSP showed bank lending growth slowed to 12.2% in February from 12.8% in January.

“Lowering the policy rate will also support the domestic economy at a time when uncertainties cloud the outlook for its external-facing sectors,” Ms. Tan said.

Oikonomia Advisory & Research, Inc. economist Reinielle Matt M. Erece said the BSP should focus on supporting growth next.

“Since inflation is already hovering within the central bank’s inflation targets, it’s time to target another area, economic growth,” he said.

“The disappointing growth last quarter shows the need for policy measures such as monetary policy easing to boost consumer demand and business activity.”

On the other hand, Chinabank Research noted that the central bank will likely remain cautious as it assesses the impact of global policies on the domestic economy.

The Philippine Economic Zone Authority (PEZA) will seek reduced US tariffs on key economic zone exports, which will likely be impacted by the 17% reciprocal tariff that will take effect on April 9.

“Guided by the Department of Trade and Industry (DTI) strategy, we hope to achieve reduced tariffs on our key exports to the US such as EMS-SMS (electronics manufacturing services and semiconductor manufacturing services), automotive parts, and select agricultural products under a bilateral FTA (free trade agreement) framework,” PEZA Director-General Tereso O. Panga told BusinessWorld.

“This is by focusing on negotiations on preferential tariff agreements that will allow the Philippines and the US to pursue mutually beneficial trade,” he added.

The Trump administration on Saturday began collecting the initial 10% baseline tariff on all imports from most countries. The higher reciprocal tariff rates of 11% to 50% on countries including the Philippines, Cambodia, Vietnam and Thailand, will take effect on April 9.

“As they account for our biggest exports to the US and are the major generators of quality jobs in the country, the government may lobby for a reduced sectoral tariff for our exports of EMS-SMS products,” Mr. Panga said.

He noted EMS-SMS products account for 44.5% of export sales to the US.

The PEZA chief said this is a proposal worth considering by the US, as a big number of EMS-SMS are American companies that provide critical support to major clients in the US.

“As a sign of goodwill, the government may also offer to reduce the current duties on critical goods and services that we import from the US, following the true spirit of reciprocal tariff,” Mr. Panga added.

PEZA also warned the IT-BPM (information technology and business process management) sector, which makes up for 28.5% of export sales, may see spillover effects from the tariffs.

“IT-BPM services are generally not directly covered by US tariffs, as tariffs typically apply to physical goods rather than services,” said Mr. Panga. “However, the IT-BPM industry in the Philippines, which is a major exporter of these services, is still affected by the possibility of US protectionism and the potential impact on its client base,” he added.

Last week, DTI said that as the new tariffs will make exports to the US more expensive, it is important for the US to improve access to rapidly growing economies, including the Philippines.

“In this regard, the Philippines aims to actively engage the US in a discussion to facilitate enhanced market access for its key export interests, such as automobiles, dairy products, frozen meat, and soybeans, within the framework of a bilateral FTA,” Trade Secretary Ma. Cristina A. Roque said.

Sought for comment, Ateneo School of Government Dean and Economics Professor Philip Arnold P. Tuaño said the government should continue to push for increased market access of Philippine exports in the US.

Even as the country pursues a bilateral FTA with the US, Mr. Tuaño said the Philippine government should also engage in trade talks with other countries.

“These are especially in terms of utilizing the provisions of trade provisions in our bilateral and regional trade agreements, and at the same time, intensifying the capacity of our exporters, especially small and medium enterprises, to be able to engage these foreign markets,” he said in an e-mail.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that pursuing an FTA is the next step for the Philippines.

“Since the US is biggest export market of the Philippines at 17% share, a Philippine FTA with the US is the next step, as the Philippines already has various FTAs with ASEAN (Association of Southeast Asian Nations), China, Japan, South Korea, India, Australia,” he said.

“So, the FTA with the US and with EU (European Union) would be the next possible steps,” he added.

Globalization a thing of the past?

However, Foreign Buyers Association of the Philippines President Robert M. Young said that an FTA may not come in the near term.

“Trump’s mindset and main agenda are to bring back all possible manufacturing activities and businesses to the US and fundraise through tariff restructuring, so it seems that an FTA will not fit in,” he said in a Viber message.

“Globalization is set to be a thing of the past for now for Trump,” he added.

Mr. Young said that it is urgent for the Philippines to start working on making the country more competitive by reducing the cost of doing business.

“There is no point to be wishful now. Urgency is needed to start reworking on how to be competitive by lowering power, labor, and logistics costs and improving efficiency and productivity, among others,” he said.

“Then, we can face any other Trumps to come,” he added.

Meanwhile, government officials said that the reciprocal tariffs could serve as an impetus for businesses in countries facing higher US tariffs to look at the Philippines as an investment destination.

Special Assistant to the President for Investment and Economic Affairs Frederick D. Go said that it would be “music to (his) ears” if businesses in Asian countries that have higher tariffs would set up manufacturing facilities in the Philippines.

“That is exactly why we put in all these incentives in the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy  Act to attract them to come to the Philippines,” he told reporters on Thursday.

“And now, they have an added reason. Apart from the fiscal incentives that we provide them, there are lower tariffs in the Philippines than in their home countries,” he added.

Among Southeast Asian countries, the US imposed the highest tariff on Cambodia at 49%, followed by Laos (48%), Vietnam (46%), Myanmar (45%), Thailand (37%), Indonesia (32%), Malaysia (24%) and Brunei (24%).

Singapore was slapped with the baseline tariff of 10%, which took effect on April 5.

“PEZA sees this as an opportunity to attract greater investment — particularly from companies based in countries imposed higher tariffs by the US — seeking to reduce export costs by relocating operations to the Philippines,” Mr. Panga said.

Amid the evolving global trade environment, he said that PEZA continues to promote the Philippines under the China +1 +1 strategy.

“This encourages businesses to maintain operations in China while diversifying their supply chains by expanding into the Philippines,” he said.

Mr. Panga also noted that even before the imposition of the 17% tariff on Philippine exports to the US, PEZA had already registered relocating companies from China, Taiwan, and Vietnam.

“These companies are mostly into electronics, electric vehicles, automotive, solar cells or panels, and agri products, with the US as their primary export market,” he said.

Apart from businesses’ diversification strategy, he also sees the country’s participation in the Regional Comprehensive Economic Partnership, intra-ASEAN trade, and the impending renewal of the European Union Generalized Scheme of Preferences to also help in attracting investments.

“It is a must that we move up the value chain with our traditional strengths in electronics, automotive, and agri products and prepare our workforce for advanced manufacturing,” Mr. Panga said.

“We can also focus on boosting production for export of high-demand goods to the US, such as consumer goods, machinery, electrical goods, and textiles — which products are manufactured mainly in Vietnam and Cambodia,” he added.

Mr. Panga said the goal is to persuade the export producers to consider the Philippines as a cost-effective alternative location as they maintain their market access to the US while taking advantage of the ASEAN FTA.

“As such, it is imperative that the government accelerate the logistics infrastructure development and digital transformation so we can position the Philippines as a global manufacturing and regional supply-chain hub and, ultimately, as the preferred investment destination in the region,” he added.

As of end-2024, PEZA hosts 310 registered business enterprises accounting for PHP 406.73 billion or 13.25% of PEZA’s total investments.

These also account for USD 8.24 billion in exports and 338,582 jobs as of the end of last year. – Justine Irish D. Tabile, Reporter

The national government’s (NG) gross borrowings plunged by 48.82% in February as domestic issuances declined, the Bureau of the Treasury (BTr) reported.

Data from the BTr showed that total gross borrowings slumped to PHP 339.55 billion in February from PHP 663.42 billion in the same month a year ago.

Month on month, gross borrowings went up by 59.31% from PHP 213.14 billion in January.

Domestic debt dropped by 78.62% to PHP 140.8 billion in February from PHP 658.68 billion in February 2024.

The domestic borrowings in February 2024 included the proceeds from the record-high PHP 584.86 billion raised from retail Treasury bonds.

Domestic debt in February this year was made up of PHP 130 billion in fixed-rate Treasury bonds and P10.8 billion in Treasury bills.

Meanwhile, external debt accounted for the bulk or 58.53% of total gross borrowings.

Gross external borrowings ballooned to PHP 198.75 billion in February from PHP 4.74 billion in the previous year, as the government issued global bonds. Last year’s external borrowings were only composed of new project loans.

This consisted of P191.97 billion in global bonds and PHP 6.79 billion in project loans.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the decline in domestic borrowings was offset by the global bond issuance which raised USD 3.3 billion or P192 billion in late January but settled in February.

The government raised USD 3.3 billion from the issuance of dollar and euro-denominated sustainability bonds. This included USD 1.25 billion from 10-year US bonds, USD 1 billion from 25-year US bonds and one billion euros from 25-year euro bonds.

In the January-to-February period, the NG’s gross debt fell by 36.22% to PHP 552.69 billion from PHP 866.57 billion in the same period last year.

Domestic debt accounted for the bulk or 53.01% of total gross borrowings in the first two months.

However, gross domestic borrowings slumped by 63.38% to PHP 293 billion from PHP 800.19 billion in the same period.

This was composed of PHP 270 billion in fixed-rate Treasury bonds and PHP 23 billion in Treasury bills.

As of end-February, gross external debt surged to PHP 259.69 billion from PHP 66.39 billion a year ago.

These consisted of PHP 191.97 billion in global bonds, PHP 56.29 billion in program loans and PHP 11.44 billion in project loans.

Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said the decline in gross borrowings signaled an improvement in the government’s fiscal space, showing “that they do not need to borrow as much to finance their spending for this month.”

Mr. Erece said gross borrowings increased month on month after NG’s issuance of global bonds.

For the following months, Mr. Ricafort said lower interest rates from the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) would provide “better leeway” for the NG to “hedge its borrowing to finance the budget deficit and in refinancing maturing debt.”

The BSP will meet to review policy on April 10.

The Monetary Board on Feb. 13, unexpectedly kept benchmark rates unchanged at 5.75% amid global trade uncertainty.

“Lower interest rates and stronger peso recently (best in six months) would help reduce financing costs,” he said.

The peso on April 3, closed at a near six-month high of PHP 57.095 per dollar, up 12 centavos from March 27’s finish of PHP 57.215. – Aubrey Rose A. Inosante, Reporter

INFRASTRUCTURE SPENDING slumped by nearly 20% in December, but still exceeded the full-year program, the Department of Budget and Management (DBM) said.

Latest data from the DBM showed that spending on infrastructure and other capital outlays fell by 19.8% or PHP 36.3 billion to PHP 146.7 billion in December 2024 from PHp 183 billion in the same month in 2023.

“This was attributed to the combined impact of the base effects of high capital disbursements in 2023, as well as the ongoing processing and release of cash allocations for payments of completed and ongoing capital outlay projects of various departments/agencies during the latter part of 2024,” the DBM said.

For the full-year, expenditures on infrastructure and other capital outlays jumped by 10.1% to PHP 1.33 trillion from PHP 1.2 trillion in 2023. This also exceeded the PHP 1.24-trillion program by 6.7%.

The DBM attributed the faster infrastructure spending to the implementation of the Department of Public Works and Highways’ (DPWH) banner infrastructure projects as well as defense modernization projects of the Department of National Defense.

DBM data showed overall infrastructure disbursements rose by 8.9% to P1.545 trillion in 2024 from PHP 1.42 trillion in 2023. It exceeded the PHP 1.473-trillion program for 2024 by 4.9%.

“This was equivalent to 5.8% of GDP, well within the 5-6% target for 2024 and sustaining the 5.8% outturn in 2023,” the department said.

Infrastructure disbursements also include infrastructure components of subsidy and equity to government-owned and -controlled corporations and transfers to local government units.

“This was credited mainly to the accelerated infrastructure spending of the DPWH for its accelerated implementation of construction activities, particularly from carry-over or previous years’ projects, progress billings from completed ongoing infrastructure projects, as well as the direct payments made by development partners for foreign-assisted rail projects of the Department of Transportation,” the DBM said.

Oikonomia Advisory and Research, Inc. Economist Reinielle Matt M. Erece said the P122.2-billion increase in infrastructure and capital outlays in 2024 was partly driven by defense modernization programs of the government.

“This can be in response to the heightened geopolitical tensions felt by a lot of countries,” he said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said faster infrastructure spending last year can be partly attributed to preparations for the May elections.

“(This is) part of the preparations for the midterm elections, as basis for accomplishments that are consideration for the voters to choose some candidates based on their completed projects and programs,” he said.

Mr. Ricafort said the government likely expedited infrastructure projects in the first three months of 2025 ahead of the election ban.

The Commission on Elections’ ban on public works spending began on March 28 and will run for 45 days. The midterm elections are scheduled for May 12.

Mr. Erece said he expects slower infrastructure spending as the government “reviewed and removed some of the unprogrammed appropriations and other expenses that the administration felt were unneeded, at least in the short term.” — Aubrey Rose A. Inosante