THE BANGKO SENTRAL ng Pilipinas (BSP) has opened its door to a more aggressive monetary policy path to curb inflation as persistent shocks stemming from the Middle East conflict continue to feed into consumer prices.

In an exclusive interview on One News鈥� Money Talks with Cathy Yang on Thursday, BSP Governor Eli M. Remolona, Jr. said the Monetary Board is considering a second straight rate hike before its June 18 meeting.

Asked about the likelihood of off-cycle tightening, Mr. Remolona said: 鈥淚 wouldn鈥檛 say likely. We鈥檙e considering it.鈥�

However, the central bank chief noted that they may also wait until the May inflation report comes out on June 5 before delivering the next monetary policy decision.

鈥淭hat鈥檚 very close to the next scheduled policy meeting. So, at this point, it鈥檚 a toss-up whether we do an off-cycle or we just wait for the regular meeting, which is not that far away anyway,鈥� Mr. Remolona said.

Mr. Remolona also acknowledged the emerging stagflation risks, with slowing economic growth and accelerating inflation, but said the BSP is banking on fiscal policy to help the economy recover as it seeks to maximize its monetary policy tools for inflation-targeting.

The BSP reversed its policy path at its April 23 meeting, starting a new tightening cycle as it delivered its first 25-basis-point increase in over two years to bring the key policy rate to 4.5%.

Central bank officials have said that their latest move was aimed at preventing broader second-round effects of inflation, keeping inflation expectations anchored and steering it back to their target as the prolonged Middle East war dimmed the growth outlook.听

However, despite the preemptive rate hike last month, inflation has accelerated faster than expected, raising the risk that the BSP could fall behind the curve, according to Mr. Remolona.

鈥淥rdinarily, a supply shock, you would look through it because it would go away and then you鈥檙e back to where you are. But now this is a big supply shock and it鈥檚 a persistent supply shock,鈥� he said. 鈥淪o, we have to react and we have to react aggressively, I think, in this kind of situation. That鈥檚 why we raised rates early.鈥�

Inflation has breached the BSP鈥檚 2%-4% target and monthly forecasts since the war erupted in late February.

In April, rising costs of food and utilities amid elevated oil prices drove the headline print to an over three-year high of 7.2% from 4.1% in March and 1.4% last year. This was past the BSP鈥檚 5.6%-6.4% estimate for the month.

Asked if they are now behind the curve, Mr. Remolona said: 鈥淭here鈥檚 a risk that we are. It depends on whether the supply shock persists.鈥�

He noted that they fell short of anticipating the rapid impact of the oil supply shock on other items in the consumer basket such as fertilizer and rice, as the cost of those items typically takes time to rise.

Mr. Remolona said the BSP is closely monitoring transport fares, which he said were 鈥渁djusted very quickly,鈥� as well as faster inflation for the bottom 30% of households.

The central bank governor also noted that the slowdown in consumer spending has helped ease inflation but added that they do not want to address increasing price pressures that way.

鈥淭he slowdown in consumer spending helps lower inflation. We don鈥檛 want to lower inflation that way. We want consumer spending to resume and then it鈥檚 our job to keep inflation low,鈥� Mr. Remolona said, adding that they expect consumer spending to recover.

The central bank projects inflation to hover above 5% for most of the year to average 6.3%, faster than its 5.1% forecast before the war. By 2027, it expects inflation to cool down to 4.3%.

The central bank, according to Mr. Remolona, also remains 鈥渁ctive as usual鈥� in the foreign exchange market to smoothen out sharp swings amid recent episodes of the peso plunging to back-to-back historic lows.

The local unit closed at its historic low level of P61.75 against the dollar for two straight trading days this week as lingering market uncertainty from the still-waging war in the Middle East prompted safe-haven demand for the greenback.

However, it gained 15.90 centavos on Thursday to close at P61.581 per dollar from its P61.74 finish on Wednesday.

GROWTH PROJECTIONS for the Philippines are likely to be revised downward again as the prolonged conflict in the Middle East continues to weigh on economic activity, according to Asian Development Bank (ADB) Country Director for the Philippines Andrew Jeffries.

鈥淲hen we did the Asian Development Outlook in very early April, it had several scenarios including more downside scenarios, but the main scenario was based on what I would call an early stabilization scenario,鈥� he told 大象传媒 in an interview.

鈥淪o that was envisioning if this crisis got resolved and things went back to normal within a few months. That obviously has not happened,鈥� he added.

In April, the Philippine-based multilateral lender cut its Philippine gross domestic product (GDP) growth forecast to 4.4% from 5.3% previously projected in December.

The revised forecast falls below the government鈥檚 5-6% GDP growth target for 2026 and matches the country鈥檚 growth pace last year.

For 2027, the ADB expects the Philippine economy to expand by 5.5%, at the low end of the government鈥檚 5.5-6.5% target range.

On April 29, the ADB downgraded its growth outlook and raised inflation forecasts for developing Asia and the Pacific, reflecting the impact of the conflict. The lender now expects the region to grow by 4.7% in 2026 and 4.8% in 2027, lower than its earlier 5.1% forecast for both years.

Meanwhile, regional inflation is projected to accelerate to 5.2% this year and 4.1% next year from the earlier forecasts of 3.6% and 3.4%, respectively.

Mr. Jeffries said inflation in the region could rise as high as 7.4% this year under a severe downside scenario.

鈥淣ow, the Philippines is being disproportionately negatively affected compared to other countries. In the Philippines we just saw 7.2% (inflation) recently, so the Philippines is unfortunately experiencing that kind of much more downside quicker because of the vulnerability,鈥� he said.

鈥淛ust given the new numbers that have come out for the quarter that showed lower figure GDP, I guess we will be anticipating lower projections in July, given current trends,鈥� he added.

The Philippine economy expanded by 2.8% in the first quarter, slower than the previous quarter鈥檚 3% growth, reflecting the lingering effects of last year鈥檚 corruption scandal and soaring oil prices triggered by the Middle East conflict.

Meanwhile, headline inflation accelerated to 7.2% in April, exceeding the Bangko Sentral ng Pilipinas鈥� (BSP) 5.6%-6.4% forecast and 2%-4% target range.

WEAKER PESO
Jesus Felipe, a professor at Carlos L. Tiu School of Economics at the De La Salle University (DLSU), said the continued depreciation of the peso will further strain the economy.

鈥淭he problem is the type of economy that we have is a very weak economy鈥� It is an economy that has problems really sustaining production capacity,鈥� he told Money Talks with Cathy Yang on One News on Thursday.

鈥淚n the end, what is going to happen is that in the short run, at the very least, the current account deficit is going to deteriorate,鈥� he added.

Mr. Felipe said he expects the peso to weaken to P63.5 against the dollar by August.

The peso closed at a record low of P61.75 per dollar on Tuesday, unchanged from Monday鈥檚 finish.

While a weaker peso may benefit exporters, Mr. Felipe said this, coupled with soaring fuel prices, would mean more expensive imports which immediately feeds into inflation and lower real incomes.

He said the Philippines should use the crisis as an opportunity to diversify the economy and increase the value-added component of local manufacturing.

The DLSU May economic report projected Philippine GDP growth at 3.11% in 2026, well below the government鈥檚 5-6% target.

It also projected growth at 3.93% in 2027 and 5.71% in 2028, both below the government鈥檚 targets of 5.5-6.5% and 6-7%, respectively.

鈥淔or the time being, it鈥檚 a question of uncertainty. This is not really a deep crisis. We鈥檙e not into that. It鈥檚 not that growth is negative,鈥� he said.

Mr. Felipe said the uncertainty stems from a combination of peso depreciation and last year鈥檚 corruption scandal.

鈥淓verybody鈥檚 simply waiting to see what happens. So, consumption is really subdued and investment is really subdued… The recovery will start happening in 2028. It鈥檚 very, very important to notice that even with the recovery, we will not reach the targets that the government has been, during this administration, announcing, which is to grow 6.5% to 8%,鈥� he added.

Mr. Felipe said the government should implement reforms aimed at strengthening local firms and improving export competitiveness. He also cited the need for stronger fiscal policy support to improve productivity.

Without structural reforms, the Philippine economy will remain vulnerable to future crises, he added.

鈥淚f the government doesn鈥檛 do anything toward the long term, a couple of decades, even up to 2050, what we will see is what we call鈥� a weak economy that will be shaken by the next crisis, be it domestic or international,鈥� he added.

Separately, Bank of America Global Research said higher oil prices could significantly widen the country鈥檚 current account deficit.

鈥淥il prices around $90-$100 range would translate into roughly 1-1.3% widening of the current account deficit to 4%,鈥� it said.

鈥淲e have previously argued that a sustainable current account deficit for the Philippines is 2-2.5% of GDP which can be financed via foreign direct investment in government funding flows,鈥� it added.

Bank of America (BofA) said a current account deficit nearing 4% would increase reliance on the BSP鈥檚 intervention to limit depreciation pressures on the peso.

It also warned that persistently high oil prices could worsen the country鈥檚 fiscal position as the government rolls out measures to cushion the impact of inflation.

However, BofA said stronger intervention in the foreign exchange market would be difficult to sustain and could raise concerns over the adequacy of foreign exchange reserves.

The bank expects the peso to weaken to P63 per dollar in the second quarter and to P64 per dollar by yearend amid elevated oil prices.

鈥淎n oil price spike remains the key external risk for the Philippines. Domestically, political uncertainty may weigh on public spending, sentiment and growth,鈥� it added.

Under SEC Memorandum Circular No. 17, a broker director may serve a maximum cumulative period of 10 years in the same exchange, whether cumulative or intermittent.

The circular was signed by SEC Chairperson Francisco Ed. Lim on May 21.

鈥淪trong institutions require regular renewal, independent oversight, and broader representation,鈥� Mr. Lim said in a statement on Thursday.

鈥淏y setting reasonable term limits for broker directors, the SEC seeks to strengthen market governance, mitigate potential conflicts of interest, level the playing field among the different categories of directors in exchanges, and align our regulatory framework with internationally recognized standards, while ensuring a fair and orderly transition,鈥� he added.

The SEC said the measure is aligned with principles of the International Organization of Securities Commissions, which promote fair representation in the governance of self-regulatory organizations such as exchanges.

Under the circular, a broker director that has served for five cumulative years will be required to undergo a one-year cooling-off period before becoming eligible for re-election.

The five-year term and 10-year term maximum period is reckoned up to the date of the next annual stockholders鈥� meeting, following the fifth or 10^th cumulative annual election.

A broker director鈥檚 service of more than six months in a year will be counted as one full year for purposes of computing the five-year term and 10-year maximum cumulative service under the circular.

Following the cooling-off period, the re-elected broker director can serve a fresh term of up to five cumulative years.

The SEC circular also provides for a two-year transition period for incumbent broker directors, allowing them to complete their current terms and remain eligible for the next two annual elections.

Covered exchanges that exceed the maximum cumulative term limit for broker directors will be subject to penalties, including a P1-million fine per broker director per year and a P30,000 monthly penalty for each month that the violation continues.

Third or succeeding offense for the same violation will be subject to suspension or revocation of the exchange鈥檚 secondary or primary license.

The new directive would affect several long-serving broker directors at the Philippine Stock Exchange, including Ma. Vivian Yuchengco (28 years), Eddie T. Gobing (25 years), and Wilson L. Sy (12 years).

The SEC鈥檚 term limit proposal had previously drawn opposition from individuals, including Ms. Yuchengco, who argued that it would be 鈥渨rong,鈥� noting that brokers are also shareholders of the PSE.

Certain business groups expressed support for the changes, saying these would promote board renewal and investor confidence, and committed to working with regulators and stakeholders to help develop a fair capital market.

The SEC circular will take effect 15 days after its full publication in the Official Gazette or in at least two newspapers of general circulation. 鈥� Alexandria Grace C. Magno

THE PHILIPPINE financial system鈥檚 total resources rose to P37.45 trillion in the first quarter of 2026 as the sector鈥檚 assets ballooned despite headwinds stemming from the Middle East war, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

As of March, banks and nonbank financial institutions鈥� combined resources grew by 8.61% to P37.45 trillion from P34.481 trillion in the same period last year.

Month on month, it edged up by 1.38% from P36.941 trillion previously.

These include funds and assets such as deposits, capital, and bonds or debt securities, but exclude resources from the central bank.听 听

Banks alone held P31.103 trillion worth of resources during the period, climbing by 9.19% from the P28.485 trillion seen a year earlier.

Broken down, universal and commercial banks鈥� resources rose by 8.41% year on year to P28.871 trillion at end-March from P26.631 trillion previously. This was the bulk of the sector鈥檚 resources in the first quarter.听

Resources of thrift banks also jumped by 25.17% to P1.478 trillion at end-March from P1.181 trillion in the comparable year-ago period, while digital banks had 44.82% more resources at end-March with P188.7 billion from P130.3 billion in the prior year.

Meanwhile, resources held by rural and cooperative banks stood at P565 billion as of end-December last year, 4.01% higher than the P543.2 billion seen in the first quarter of 2025. There were no data for rural and cooperative banks as of end-March this year.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the higher resources as of end-March came as banks and nonbank financial institutions鈥� balance sheets remained sound amid the Middle East conflict, with lending activity and deposit inflows likewise boosting their holdings.听 听

鈥淭he increase underscores the resilience of the domestic financial system, which remains well-positioned to intermediate funds despite external headwinds such as the ongoing Middle East conflict,鈥� he said in a Viber message.听

Separate central bank data showed that lenders鈥� assets hit an all-time high of P30.336 trillion as of end-March, the first full month of the Middle East war. This was up by 9.77% year on year from P27.644 trillion.

Banks鈥� loan growth likewise hit its fastest pace in seven months in March, as lending to businesses and consumers climbed 10.7% to P14.603 trillion from P13.192 trillion a year ago.

Higher investment holdings and continued savings may have helped sustain the sector鈥檚 resource growth despite economic woes during the period, said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies.

鈥�(This) reflects continued expansion in bank lending, deposit growth, and investment holdings, indicating that the financial system remains liquid and broadly resilient despite a more challenging macroeconomic environment,鈥� he noted.

The latest available BSP data also showed nonbanks held P6.347 trillion in resources as of end-2025. This reflects a 7.26% climb from the P5.917-trillion resources logged at end-2024.

Nonbanks include investment houses, finance companies, security dealers, pawnshops, and lending companies.

Institutions such as nonstock savings and loan associations, credit card companies, private insurance firms, the Social Security System, and the Government Service Insurance System are also considered nonbank financial firms.

In the coming months, analysts noted that tighter financial conditions amid lingering economic uncertainties could dampen the growth of the financial sector鈥檚 resources.

鈥淟ooking ahead, while resources are expected to continue expanding, the pace of growth may moderate amid tighter financial conditions, elevated inflation, and softer economic momentum,鈥� Mr. Asuncion said.

鈥淜ey factors to watch include BSP policy direction, liquidity conditions, risk sentiment, and the strength of domestic demand, which will collectively shape the trajectory of financial system resources in the coming months,鈥� he added.

The industry should also strive to maintain healthy asset quality and credit conditions, especially as economic risks continue to weigh on them, according to Mr. Rivera.

In the first four months of the year, the combined value of InstaPay and PESONet transfers amounted to P10.388 trillion, up 45.38% from the P7.145 trillion seen in the year-ago period.

Meanwhile, more users turned cashless as the volume of transactions made through the two payment gateways more than tripled (225.1%) year on year to 2.721 billion as of April from 837.118 million previously.

Broken down, the value of InstaPay transactions jumped by 62.71% to P5.093 trillion from P3.13 trillion a year ago.

This came as the clearing house recorded a surge in the volume of transactions during the period, which soared by 234.95% to 2.68 billion from 799.971 million in the prior year.

On the other hand, transfers done via PESONet stood at a total value of P5.295 trillion at end-April, 31.88% higher than the P4.015 trillion posted in the same period last year.

The volume of PESONet transactions also went up by an annual 12.89% to 41.938 million in the four-month period from 37.148 million previously.

InstaPay and PESONet are automated clearing houses under the central bank鈥檚 National Retail Payment System framework.

InstaPay is a real-time, low-value electronic fund transfer facility for transactions up to P50,000 and is mostly used for remittances and e-commerce.

Meanwhile, PESONet is mainly used for high-value transactions and may be considered as an electronic alternative to paper-based checks.

As of April, there are 94 InstaPay participants, most of which are nonbank electronic money issuers. PESONet has a total of 124 participants, with the bulk being universal and commercial banks.

The BSP wants digital payments to make up 60%-70% of the total volume of retail payments by 2028 in line with the Philippine Development Plan.

In 2024, online payments made up 57.4% of the volume and 59% of the value of the country鈥檚 total monthly retail transactions, according to the BSP鈥檚 2024 Status of Digital Payments in the Philippines report. 鈥� Katherine K. Chan

The currency closed at P61.581 versus the dollar, gaining 15.9 centavos from its P61.74 finish on Wednesday, according to Bankers Association of the Philippines data posted on its website.

The local unit opened Thursday鈥檚 session sharply stronger at P61.50 per dollar. Its intraday best was at P61.45 against the greenback, while its weakest showing was at P61.665.

Dollars traded increased to $1.58 billion from $1.54 billion in the previous session.

鈥淭he peso appreciated after US President [Donald J.] Trump hinted about an impending end to the US-Iran conflict following his favorable remarks on the Iranian authorities in relation to their diplomatic talks,鈥� a trader said in an e-mail.

The currency was also supported by the downward correction in global crude oil prices following Mr. Trump鈥檚 remarks, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Friday, the trader said the peso could continue to strengthen amid market optimism over an eventual resumption of oil trade along the Strait of Hormuz.

The trader sees the peso moving between P61.45 and P61.70 against the dollar on Friday, while Mr. Ricafort expects it to move between P61.45 and P61.65.

The US dollar firmed on Thursday but stayed below a six-week peak as hopes that Washington was nearing a deal with Tehran to end the war in the Middle East capped further rises, Reuters reported.

Mr. Trump on Wednesday said negotiations with Tehran were in the final stages, while also warning of further attacks if Iran does not agree to a deal.

The dollar, often a safe haven for investors, firmed 0.1% against the yen to 楼159.060 after falling for the first time in eight sessions against the yen on Wednesday.

Bank of Japan policy board member Junko Koeda added a measure of support for the yen with hawkish comments on Thursday, saying in a speech that the central bank needs to continue to raise rates with underlying inflation already around a 2% target.

The euro was 0.2% down at $1.160050, after dipping on Wednesday to its weakest level since April 7 at $1.1583 before bouncing back.

The dollar index, which measures the currency against the euro, yen and four other rivals, rose 0.2% to 99.295, down from a peak of 99.472 on Wednesday, the strongest level since April 7.

鈥淭he 鈥榮afe haven鈥� flows reversed because of positive news about the Iran war,鈥� wrote Joseph Capurso, head of FX at Commonwealth Bank of Australia, in a client note.

At the same time, 鈥渨hile the US has domestic political incentives to seek peace, we would not be surprised if President Trump chooses military escalation to gain leverage in negotiations,鈥� he said.

Market focus has been on the potential inflationary impact of higher energy prices as the Strait of Hormuz remains largely closed to shipping.

In a note, Commerzbank FX analysts said many central banks may label the inflation shock as transitory should the Strait open in the next few days, but this would be incorrect as it does not take into account loss of purchasing power.

鈥淐onsequently, currencies are likely to benefit in countries where the central bank is slower to speak of transitory price spikes but may nevertheless tighten monetary policy,鈥� they wrote.

Notes from the Federal Reserve鈥檚 April meeting, published on Wednesday, revealed officials鈥� intensifying concerns about inflation, with a growing number open to the possibility that they may need to raise interest rates.

Elsewhere, the Australian dollar declined following a surprise rise in the unemployment rate to the highest since 2021, which reduced the case for higher interest rates.

Bitcoin softened a fraction to around $77,603.16. 鈥� Aaron Michael C. Sy with Reuters

THE MORATORIUM on approving new economic zones in Metro Manila is restricting the flexibility of IT and business process management (IT-BPM) companies in selecting office locations, Savills Philippines said.

Savills Philippines Chief Operating Officer Cha Carbonell told 大象传媒 via Viber on Thursday that while the Metro Manila office market 鈥渉as a headline vacancy of around 20%鈥� once you apply the filters that creditworthy multinational corporations (MNC) and business process outsourcing (BPO) occupiers require 鈥� PEZA accreditation, green certification, business continuity plan (BCP)-grade specifications 鈥� that figure drops sharply.鈥�

Administrative Order (AO) No. 2018, signed by former President Rodrigo R. Duterte, instructed the Philippine Economic Zone Authority (PEZA) to no longer accept, process, or evaluate applications for new ecozones in Metro Manila to channel investment to areas outside the capital.

Ms. Carbonnell said the policy may no longer be a good fit given the current demand for high-quality, PEZA-compliant spaces.

The core business districts have only 478,000 square meters (sq.m.) of such space available combined, including 119,000 sq.m. in the Ortigas central business district (CBD), 160,000 sq.m. in the Makati CBD, and 199,000 sq.m. in Bonifacio Global City (BGC).

When asked if major locators are migrating to secondary CBDs, or choosing to forgo PEZA incentives to remain in primary districts, Ms. Carbonell said the large occupiers with PEZA registered status, are almost universally not interested in giving up the incentives.

鈥淲hat we are seeing instead is a more structured migration rationale toward secondary districts, driven by鈥� employee accessibility, cost arbitrage (secondary district rents run roughly 20-40% below BGC and Makati), and BCP considerations where companies want to split requirements across multiple hubs,鈥� Ms. Carbonell said.

The supply gap is forecast to worsen in the coming years, with only 711,000 sq.m. of upcoming office stock being PEZA-certified, according to the Colliers first quarter 2026 Property Market Briefing.

Colliers called AO 18 a 鈥渂lunt policy tool鈥� given that Metro Manila is the primary driver of the office sector, accounting for around 70% of IT-BPM transactions in the first quarter.

鈥淣on-PEZA, non-green buildings are already carrying a vacancy rate of approximately 30%, and the trajectory is upward. The structural demand drivers are firmly against this segment: the most creditworthy occupiers will not enter them, and even government office take-up鈥� is unlikely to absorb the volume at risk,鈥� Ms. Carbonell said when asked about the occupancy outlook for non-PEZA office buildings.

In a statement, the DA said it discovered eight projects valued at P94 million in the province, with the officials allegedly falsifying documents to declare the projects complete, facilitating the release of public funds.

The complaints over what the DA described as 鈥済host鈥� projects, filed on Thursday at the Office of the Ombudsman, include corrupt practices, malversation, falsification of public documents, grave misconduct, and serious dishonesty.

The complaints cite violations of Articles 217, 171, and 172 of the Revised Penal Code concerning malversation through falsification of public documents, Section 3(e) of Republic Act 3019 (Anti-Graft and Corrupt Practices Act), and administrative offenses including grave misconduct and serious dishonesty.

The DA is now the lead agency for FMRs after the DPWH was stripped of responsibility for building them in the wake of the infrastructure corruption scandal of 2025.

Validation of the projects was carried out by the DA鈥檚 Internal Audit Service (IAS), which has inspected at least 1,200 FMR projects in Regions III, IV-A, V, IX, X, and XI.

Those charged face potential penalties of imprisonment of up to 40 years, fines, and perpetual disqualification from public office. 鈥� Pierce Oel A. Montalvo

The National Grid Corp. of the Philippines (NGCP) said the yellow alert for the Visayas was in effect between 4 p.m. and 9 p.m. on Thursday.

A yellow alert is issued when supply margins are insufficient to meet the transmission grid鈥檚 contingency requirement.

During the period, available capacity stood at 2,670 megawatts (MW) against peak demand of 2,479 MW.

Remaining on forced outage were 19 power plants, with 14 plants derailed. Overall, 867 MW was unavailable to the grid.

NGCP said the unavailability of large coal-fired power plants in the Visayas and high forecasted power demand triggered the yellow alert.

This year, the grid operator has issued a total of 15 yellow alerts and six red alerts in Luzon and the Visayas.

Mark Anthony Ynoc, former president of Mandaue Chamber of Commerce and Industry, called the consecutive yellow alerts in the Visayas deeply concerning.

鈥淭hese incidents reflect the need for stronger long-term energy planning, more aggressive investment in power generation, and improvements in transmission infrastructure,鈥� Mr. Ynoc said in a statement on Thursday.

鈥淩eliable and affordable power is critical to sustaining economic growth and business confidence in the region,鈥� he added.

Mr. Ynoc said higher power rates and recurring outages affect productivity, increase the cost of consumer goods and disrupt operations.

鈥淭hese challenges ultimately weaken the competitiveness of businesses in Cebu and the Visayas,鈥� he said. 鈥� Sheldeen Joy Talavera

The Philippine Stock Exchange index (PSEi) rose by 0.46% or 27.3 points to close at 5,920.70 on Thursday, while the broader all shares index fell by 0.12% or 4.03 points to end at 3,335.85.

鈥淭he local market ended higher after four straight days of decline as selective bargain hunting emerged among investors. However, market participants still looked to remain engaged in short-term positions amid cautious sentiment. Gains were trimmed in the afternoon session as selling pressure resurfaced, limiting the market鈥檚 upside,鈥� Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

鈥淭he local market rose taking cues from Wall Street鈥檚 rally overnight. US President Donald J. Trump鈥檚 statement saying that the US and Iran are already on the final stages of negotiation sparked hopes that a peace deal would be coming soon,鈥� Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

Iran said on Thursday it was reviewing Washington鈥檚 latest position on ending the war after Mr. Trump suggested he was prepared to wait a few days to 鈥済et the right answers鈥� from Tehran but warned of renewed attacks if it did not agree to a deal, Reuters reported.

Six weeks since a fragile ceasefire came into force, talks to end the war have shown little progress, while soaring oil prices have raised concern over inflation and the impact on the global economy.

Iran submitted its latest offer to the US this week. Tehran鈥檚 descriptions suggest it largely repeats terms Mr. Trump previously rejected, including demands for control of the Strait of Hormuz, compensation for war damage, lifting of sanctions, release of frozen assets and the withdrawal of US troops.

Back home, most sector counters closed higher on Thursday. Services jumped by 1.22% or 36.68 points to 3,027.05; mining and oil increased by 0.56% or 99.86 points to 17,658.63; holding firms went up by 0.41% or 17.99 points to 4,390.3; property climbed by 0.2% or 3.89 points to 1,915.02; and financials rose by 0.2% or 3.51 points to 1,762.14.

Meanwhile, industrials fell by 0.61% or 52.61 points to 8,524.78.

Decliners beat advancers, 99 to 69, while 65 names were unchanged.

鈥淏ank of the Philippine Islands was the day鈥檚 index leader, climbing 2.76% to P89.50. Monde Nissin Corp. was the main index laggard, falling 3.66% to P6.84,鈥� Mr. Tantiangco said.

Value turnover went up to P6.58 billion on Thursday with 1.03 billion shares traded from the P5.67 billion with 1.24 billion issues that changed hands on Wednesday.

Net foreign selling increased to P190.76 million from P115.32 million in the previous session. 鈥� Alexandria Grace C. Magno with Reuters

THE PHILIPPINE government should maximize public-private partnerships (PPP) to help narrow the country鈥檚 infrastructure gap while easing fiscal pressure from rising debt levels, the Asian Development Bank (ADB) said.

Despite the government鈥檚 infrastructure catch-up programs, gaps remain as rapid urbanization and economic growth continue to drive demand, ADB Country Director for the Philippines Andrew Jeffries told 大象传媒 on Wednesday.

鈥淭here is an infrastructure gap in the Philippines鈥� The population of Metro Manila has grown so much over a few decades, so investment in urban transport needs to catch up,鈥� he said.

Mr. Jeffries said both the current administration鈥檚 鈥淏uild Better More鈥� program and the previous administration鈥檚 鈥淏uild Build Build鈥� initiative were aimed at addressing years of underinvestment.

鈥淎s the Philippines grows, population-wise, gross domestic product (GDP)-wise, transport needs to keep growing as well,鈥� he said.

鈥淎nd with what鈥檚 happening now with diesel fuel prices and all, alternatives for public transport become part of that longer-term solution,鈥� he added.

However, Mr. Jeffries said infrastructure catch-up efforts are facing challenges from fiscal pressures and budget constraints.

鈥淭he government is keeping a very close eye on public debt levels, so how to bring the private sector into some of these investments as opposed to just government budget and borrowing, I know, is very important to this government,鈥� he said.

The country鈥檚 debt-to-GDP ratio reached 65.2% in the first quarter, the highest level since 2005. This comes as the National Government鈥檚 outstanding debt climbed by 1.8% to P18.49 trillion as of end-March from P18.16 trillion at the end of February.

Mr. Jeffries said that bringing in private investment ensures that 鈥減ublic debt levels can be maintained or reduced over time as opposed to that being the only funding source.鈥�

鈥淭here is a lot of private infrastructure already in this country. And the key is how to make sure it鈥檚 done well so that the government and the people are getting the best value for money,鈥� he added.

According to the PPP Center, the PPP pipeline as of May 19 consists of 250 projects valued at P3.13 trillion.听 The railway sector accounted for P1.97 trillion of the project pipeline, followed by land transport (P277.26 billion) and property development (P221.46 billion).

TRANSPORT PROJECTS
Meanwhile, Mr. Jeffries said transport projects will continue to account for a significant share of ADB鈥檚 financing portfolio in the Philippines in the near term.

The multilateral lender鈥檚 portfolio of projects under construction and implementation in the Philippines is valued at $12.5 billion.

鈥淥ur transport portfolio exceeds $7 billion, so that鈥檚 obviously a nice large percentage of our overall portfolio in the Philippines,鈥� he said.

鈥淭hat is really because of some extremely large projects we are funding鈥� From a dollar point of view, transport is clearly our largest in our portfolio here in the Philippines,鈥� he added.

These projects include the North-South Commuter Railway, Bataan-Cavite Interlink Bridge, Laguna Lakeshore Road Network Project, and Davao Public Transport Modernization Project.

Asked if ADB is considering additional transport projects, Mr. Jeffries said that 鈥渂ecause they (the projects) are so large and it takes considerable time, we鈥檙e funding those in time-sliced tranches.鈥�

鈥淪o, we have a robust pipeline going forward, just seeing those projects through to completion… We are focusing a lot on implementing what we already have,鈥� he added.

Mr. Jeffries said the government is exploring ways to attract more private investment into the transport sector amid fiscal pressures stemming from the Middle East crisis.

鈥淲ith the fiscal issues with this Middle East crisis and so on, the government is also looking actually at how to bring more private sector investment into this sector,鈥� he said.

鈥淪o, we don鈥檛 have new big projects specifically in our pipeline at this time,鈥� he added.

Mr. Jeffries said transport projects are likely to remain a major part of ADB鈥檚 Philippine portfolio over the next few years as the government prioritizes completing existing projects.

鈥淚 think that proportion will stay more or less the same for the next few years, especially now that the government is very worried about the trade-offs and the fiscal and the public debt levels,鈥� he said.

鈥淭hey want to focus on implementation and reaching completion of what is already ongoing because until they are done and in operation, they are not benefiting the people,鈥� he added.

FINANCING GAP
The infrastructure and investment gap is not unique to the Philippines. In its Asian Transport 2035 Outlook, the Asian Transport Observatory (ATO) said annual investment demand for transport infrastructure in Asia and the Pacific is expected to more than triple over the next decade.

鈥淎nnual investment needs across all transport modes will climb from roughly $800 billion per year during 2000-2025 to approximately $2.6 trillion per year between 2025 and 2035,鈥� the ATO said.

鈥淭hat is equivalent to 2.3% of LMIC (lower- and middle-income countries鈥�) GDP per year,鈥� it added, referring to those in Asia and the Pacific.

However, the ATO said the projection remains conservative as it only reflects current trends and existing project pipelines.

鈥淎ctual needs, accounting for the full cost of the energy transition, the climate adaptation backlog, and the SDG (Sustainable Development Goals) access deficit, are likely to be considerably higher,鈥� it added.

Despite this, the ATO said the region still faces a large financing gap.

鈥淒evelopment banks can do things commercial investors cannot 鈥� blend concessional and market-rate lending, absorb early project risk, and attach technical assistance to pipelines that would otherwise stall at the feasibility stage,鈥� it said.

鈥淏ut there is a limit to what external finance can do. The long-run answer to Asia鈥檚 transport financing gap is stronger revenue systems and public finance reform. We are not just facing an infrastructure gap, but also an investment and governance gap,鈥� it added.

SINGAPORE 鈥� Soaring fuel and fertilizer costs linked to the Middle East conflict, coupled with drier-than-usual conditions, are putting increasing pressure on domestic rice production and threatening the Philippines鈥� food security, according to the International Rice Research Institute (IRRI).

鈥淩ising fuel and fertilizer costs driven by Middle East tensions, along with the emerging threat of El Ni帽o, weigh heavily on agricultural production and rice farmers,鈥� IRRI Director-General Yvonne Pinto told 大象传媒 on the sidelines of the Philanthropy Asia Summit on Tuesday.

鈥淭he prospects for food security in the Philippines in two, three years from now are going to be much worse, unless we support and enable farmers to generate income from the rice they are producing,鈥� she said.

Filipino farmers are now grappling with rising costs and unstable supply of fuel and fertilizer, which are essential to rice production, Ms. Pinto said.

The closure of the Strait of Hormuz has affected global supply of fertilizer and caused prices to spike. The Middle East is a hub for fertilizer production. In particular, the supply of urea from the world鈥檚 largest production facility in Qatar has been stopped due to the conflict.

For instance, the cost of urea, a nitrogen-based fertilizer, is 33% higher today, she noted.

Urea (prilled) prices averaged P2,607.42 per 50-kilogram (kg) bag between May 11 and May 15, significantly higher than the P1,686.03 per 50-kg bag in the same period last year, according to data from the Fertilizer and Pesticide Authority.听

鈥淪o, these geopolitical tensions really escalate the costs,鈥� Ms. Pinto said. 鈥淲hat the government may have to do is provide safety nets to farmers so that they can afford them.鈥�

Before the Iran war, the Philippine Department of Agriculture (DA) projected palay (unmilled rice) output to reach 20.28 million metric tons (MT) this year, under favorable weather conditions. This has been lowered to 19.87 million MT due to the Middle East conflict and the looming El Ni帽o.

Ms. Pinto said the El Ni帽o phenomenon threatens to disrupt the country鈥檚 rice production in the next few months.

The Philippine Atmospheric, Geophysical and Astronomical Services Administration recently warned of the possibility of a moderate to severe dry spell from June until early next year.听 听

The DA also estimated that agricultural output could be slashed by as much as 30% under a 鈥淪uper El Ni帽o鈥� scenario.

In 2024, total damage to agriculture due to El Ni帽o reached P15.3 billion, affecting 333,195 farmers and fisherfolk nationwide.

Ms. Pinto said there is a need to focus on reducing labor costs for rice production through better seed distribution, mechanization, and fertilizer supply.

In the medium and long terms, she called for capacity-building for fertilizer production and nature-based solutions like composting to improve affordability for farmers.

鈥淥ur analysis tells us we only need to raise yields by one ton per hectare,鈥� Ms. Pinto said. 鈥淔rom all of the strategies I mentioned, it is achievable.鈥�

She also emphasized better coordination between national and local governments to ensure farmers benefit from agricultural policies.

The country鈥檚 rice self-sufficiency ratio, which measures the capacity of local production, dropped to 71.7% in 2024, according to the Philippine Statistics Authority. The ratio was the lowest in 37 years, or since the data series began in 1988.

With the Philippines facing another El Ni帽o this year, farmers should have increased access to early warning systems, alternative wetting and drying solutions, and irrigation equipment, Ms. Pinto said.

鈥淭hese shocks are going to continue, so we鈥檝e got to develop architecture that supports farmers to stay in farming to enable the Philippines to be food secure,鈥� Ms. Pinto said.听 听

For the past 65 years, IRRI has worked closely with the Philippine government through science-based innovations to help reduce hunger and poverty through rice. Headquartered in Laguna, the organization promotes sustainable agricultural production, improved nutrition, and stronger livelihoods for farmers.

Sharon O. Monta帽er, ERC鈥檚 director for market operations service, said the extension of the suspension will depend on the status of the GEA-All fund.

鈥淪o next month, we鈥檙e going to assess again if there are (enough) funds. If we see that there鈥檚 still difficulty in the payment of the bills, or electricity rates are quite high compared with previous months, and if there is sufficient balance in the fund to suspend, we can extend the suspension,鈥� she told reporters on the sidelines of the 大象传媒 Economic Forum on May 18.

Earlier this month, the ERC ordered to temporarily halt the collection of GEA-All from May to June to ease the financial burden on consumers amid rising inflation and global economic pressures.

GEA-All is a uniform charge amounting to P0.0371 per kilowatt-hour (kWh) that is passed on to on-grid consumers. It is a separate line item in the bills of consumers that started in January 2026.

The amount collected is used to fund the incentives of new renewable energy (RE) projects being awarded under the green energy auction program (GEAP).

As of May 5, GEA-All Fund maintains a balance of approximately P466.49 million, which is sufficient to cover the projected payment requirements of eligible RE developers during the suspension period, according to the ERC.

鈥淚f the crisis extends again, then, definitely, the commission will look into that (extension of the suspension) as it has always been one of the tools to relieve customers,鈥� Ms. Monta帽er said.

Meanwhile, Ms. Monta帽er said the ERC is not looking to suspend the feed-in tariff allowance (FIT-All). She noted there are no excess funds as the funds are only enough to cover payments to RE developers.

鈥淭here鈥檚 no sufficient buffer for FIT-All. It鈥檚 only enough to pay for the RE developers,鈥� she said.

FIT-All is another RE charge amounting to P0.2011 per kWh that is separate from GEA-All which is being paid by consumers to support emerging RE technologies.

Nic Satur, Jr., chief advocate officer of consumer group Partners for Affordable and Reliable Energy, argued that GEA-All should be permanently removed, as consumers have been shouldering expensive power rates.

鈥淚 believe that GEA-All has no legal basis and it should not be collected from consumers,鈥� Mr. Satur told 大象传媒. 鈥淲e support our move towards clean energy but not at the expense of consumers.鈥�

Mr. Satur said that consumers have suffered 鈥渓ong hours of brownout, expensive electricity rate and poor service鈥� but are continuously burdened by pass-through charges, including GEA-All and FIT-All.

The crisis in the Middle East has pushed global oil prices higher, increasing power generation costs in the Philippines and driving up electricity rates.

To provide relief to consumers, the regulator directed distribution utilities to suspend electricity service disconnections and to implement staggered or deferred payment schemes.

The suspension covers unpaid electricity bills for both residential and nonresidential consumers covering the May-to-July billing periods.

Customers with a monthly consumption not exceeding 200 kWh may defer payment of their bills and settle them on a staggered basis over three months from receipt of the bill. 鈥� Sheldeen Joy Talavera

The currency closed at P61.74 a dollar, gaining a centavo from Tuesday鈥檚 record-low finish of P61.75, according to Bankers Association of the Philippines data posted on its website.

The local unit opened Wednesday鈥檚 session stronger at P61.73 per dollar. It traded within a narrow range as its intraday best was at just P61.67 against the greenback, while its weakest showing was at P61.75.

Dollars traded rose to $1.54 billion from $1.21 billion in the previous session.

The peso rose a tad as the market was on wait-and-see mode about developments in the Middle East, a trader said by phone.

鈥楳arket players traded generally cautiously awaiting FOMC (Federal Open Market Committee) meeting minutes that will be released overnight,鈥� the trader added.

The peso was broadly steady following the downward correction in global crude oil prices, Rizal Commercial Banking Corp, Chief Economist Michael L. Ricafort said in a Viber message.

He added that the central bank may have intervened during the session again to support the currency.

For Thursday, the trader said the peso may stay rangebound between P61.50 and P61.75 amid a lack of leads, while Mr. Ricafort sees it ranging from P61.55 to P61.75.

The US dollar hit a six-week high on Wednesday as investors came to terms with the possible need for higher interest rates to tackle inflation resulting from the Iran war, Reuters reported.

The uncertainty over when the conflict may end has fanned inflation fears and triggered a global bond sell-off, with the yield on the US 30-year Treasury bond hitting its highest level since 2007.

President Donald J. Trump said the United States may need to strike Iran again but suggested Tehran wants a deal to end the war that has all but closed the key Strait of Hormuz, sending energy prices soaring and roiling markets.

The dollar index, which tracks the currency against six peers, rose 0.1% to its highest since April 7 at 99.47. The index is up more than 1.3% in May due to safe-haven demand and markets pricing in chances of the Federal Reserve hiking interest rates by the end of the year.

Brent crude futures were down 1.1% to $110 per barrel, but remained more than 50% higher than in late February before the war began. 鈥� Aaron Michael C. Sy with Reuters

The Philippine Stock Exchange index (PSEi) slipped by 0.05% or 3.4 points to close at 5,893.40, while the broader all shares index fell by 0.22% or 7.67 points to end at 3,339.88.

This was the PSEi鈥檚 lowest finish in nearly three weeks or since it closed at 5,833.64 on April 30.

鈥淭he local market ended flat as investors stayed cautious after President Marcos flagged risks of stagflation amid lingering economic pressures. Concerns over higher oil prices caused by global supply chain disruptions continued to weigh on sentiment, raising worries about sustained inflation and slower growth,鈥� Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

鈥淭he local market鈥檚 sideways movement ended in the negative territory, taking cues from Wall Street鈥檚 overnight decline. This comes following the rise in the US long term treasury yields. Lingering concerns including the elevated global oil prices, weak local currency, and stagflation risks also weighed on investor sentiment,鈥� Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

President Ferdinand R. Marcos, Jr. on Monday said the country could face stagflation due to the prolonged Iran conflict as it slows economic growth and pushes up inflation.

Headline inflation quickened to a near three-year high of 7.2% in April from 4.1% in March due to soaring fuel prices. This was the fastest print since 7.6% in March 2023.

Meanwhile, gross domestic product (GDP) grew by just 2.8% in the first quarter, slowing from the 5.4% expansion in the same quarter last year and the revised 3% GDP growth in the fourth quarter of 2025. The government blamed the slump on the economic fallout from a corruption scandal and the situation in the Middle East.

Sectoral indices closed mixed on Wednesday. Services rose by 0.32% or 9.72 points to 2,990.37; property increased by 0.17% or 3.36 points to 1,911.13; and holding firms went up by 0.09% or 4.05 points to 4,372.31.

Meanwhile, industrials declined by 0.79% or 68.70 points to 8,577.39; financials dropped by 0.56% or 9.99 points to 1,758.63; and mining and oil went down by 0.32% or 58.04 points to 17,558.77.

Decliners outnumbered advancers, 111 to 74, while 59 names were unchanged.

鈥淎yala Land, Inc. was the day鈥檚 top index gainer, climbing 1.76% to P15. ACEN Corp. was the main index laggard, falling 4.62% to P3.10,鈥� Mr. Tantiangco said.

Value turnover went up to P5.67 billion on Wednesday with 1.24 billion shares traded from the P5.36 billion with 1.21 billion issues that changed hands on Tuesday.

鈥淭rading remained subdued as investors held back ahead of clearer policy direction and upcoming economic data,鈥� Mr. Limlingan said.

Net foreign selling decreased to P115.32 million from P680.04 million in the previous session. 鈥� Alexandria Grace C. Magno

In Department Order No. 15 Series of 2026, Agriculture Secretary Francisco P. Tiu Laurel, Jr. requested the Bureau of Customs to collect additional duties on frozen poultry, pork, coffee preparations, and fresh onions when their actual cost, insurance, and freight (CIF) prices breach trigger thresholds.

The measure is authorized under Republic Act No. 8800, which allows the Secretary of Agriculture to impose safeguard duties without investigation when actual import prices drop below trigger prices outlined in the World Trade Organization Agreement on Agriculture.

Additional duties will equal the difference between the actual CIF price at the time of import document lodgment and the corresponding trigger price for each product.

Affected products include frozen chicken parts, with trigger prices ranging from P93.96 to P423.55 per kilogram, various pork products (P79.63 to P305.73), and coffee products (P134.11 to P203.74). The fresh onion trigger price is P74.21 per kilogram.

The order, issued on the strength of findings by the Trade Remedies Office of the Policy Research Service, takes effect immediately and revokes Department Order No. 20 Series of 2024 and Department Order No. 5 Series of 2026. 鈥� Pierce Oel A. Montalvo

鈥淲e would be willing to fund it, if we were asked,鈥� ADB Country Director for the Philippines Andrew Jeffries told 大象传媒 on Wednesday.听

Earlier this month, Transportation Undersecretary for Railways Timothy John R. Batan said the Department of Transportation (DoTr) is still looking for funding for the railway.听

The ADB said it is willing to assist the government to ensure the completion of the Mindanao Railway Project, one of the big-ticket DoTr projects.听

He said, however, that government efforts to rein in debt levels will be a consideration in determining the ADB鈥檚 ultimate involvement.

鈥淕iven our engagement with the government and their concern on maintaining and reducing government debt levels over time, I think they would want to explore as much private funding as they can,鈥� Mr. Jeffries said.听

The ADB is ready to provide official development assistance (ODA) loans, or provide public-private partnership (PPP) advisory services to help bring in investments, he said.听

鈥淭he private sector could even fund some of that project like they did in the Mactan-Cebu Airport and the like. I guess we could also support it without touching ODA or public debt. That is one of the strategic pillars of what ADB is also trying to do region-wide,鈥� Mr. Jeffries said.听

In 2023, the Philippines withdrew its loan request for ODA from China for the Mindanao Railway Project phase 1, and two more railway projects 鈥� the South Long-Haul railway, and the Subic-Clark railway, due to lack of progress towards a financing decision by Beijing.

The first phase of the Mindanao Railway Project is valued at P83 billion. It will run between Tagum, Davao del Norte and Digos City, Davao del Sur. It is expected to carry 122,000 passengers per day and cut travel time between Tagum and Digos from three hours to one.

Mr. Batan has said that the DoTr is exploring the possibility of PPPs structure for the Mindanao Railway Project.听

For now, the DoTr remains uncertain when groundbreaking for the project can begin, as the government is still determining how to fund it.

Mr. Batan added that the DoTr does not expect any progress on the financing front within the year due to the need to update the feasibility study.

Last month, the PPP Center said that the pre-feasibility study for the P100.64-billion phase 3 of the Mindanao Railway Project was completed.听

Phase 3, proposed as a solicited PPP, is a 61鈥慿ilometer passenger and cargo railway linking the industrial and commercial centers of Cagayan de Oro.

The DoTr will move to a comprehensive feasibility study to assess and refine the project鈥檚 technical, financial, and economic viability, the PPP Center said. 鈥� Ashley Erika O. Jose

At a hearing of the Committee on Flagship Programs and Projects, Public Works Senior Undersecretary Emil K. Sadain said that of the 26 ongoing flagship infrastructure projects, eight are targeted for completion by 2028, the year the administration steps down.

The relatively modest budget request for 2027 is well off the over P1 trillion it was granted in the 2025 spending plan and the nearly P530 billion allocation in 2026. In 2025, the department faced intense scrutiny in the wake of the flood control corruption scandal, leading to an overhaul of the DPWH leadership and a review of many of its projects. The department also had the farm-to-market road program taken away from it, with the Department of Agriculture (DA) stepping in to replace it.

Mr. Sadain said overall, 201 infrastructure flagship projects at various stages of implementation are being overseen by 22 agencies, with 76 under the DPWH.

He said five projects are currently awaiting approval by the Economic Development Council, while 12 others are under review by the Investment Coordination Committee.

Rizal Rep. Jose Arturo S. Garcia, Jr. queried whether substantially complete projects can be put to use immediately.

鈥淚f there are projects like highways or buildings that are 50% to 60% complete, you can already use them, right? So they can impact people in some way,鈥� Mr. Garcia said.

Mr. Sadain said some flood control and pumping station projects can be made use of by 2027, while several road projects are substantially complete and have been operating partially. 鈥� Pexcel John Bacon

THE Bangko Sentral ng Pilipinas (BSP) should avoid aggressive policy tightening and keep its stance balanced between controlling inflation and supporting growth, an economist said.

Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., added that the BSP will likely wait for additional economic data before potentially tightening once more next month.

鈥淲hat we need to understand, the reason I say defensive is that they鈥檙e at a crossroads. We want growth to prosper, but we need to also contain inflation, right?鈥� he told the Pandesal Forum at the Kamuning Bakery Cafe in Quezon City on Wednesday. 听

If the BSP were aggressive, it could have delivered an inter-meeting hike earlier this month when inflation exceeded expectations, according to Mr. Ravelas. 听

鈥淏ut probably they鈥檒l wait for June 18 to make those decisions until they look at what鈥檚 happening in the Middle East, probably the impact on the total government revenue, etc., (and) what plans they have to spur growth,鈥� he said. 鈥淎t least by June, there will be a plan (that will flow on to) what the President will say for the State of the Nation Address. So they can all align themselves.鈥�

Inflation has failed to remain within central bank and market projections since the Iran war started, with the highly uncertain environment challenging forecast models.

In April, inflation accelerated to an over three-year high of 7.2%, well above the BSP鈥檚 5.6-6.4% estimate and the 5.5% median forecast returned by a 大象传媒 poll of 17 analysts.

Mr. Ravelas sees the central bank raising the key interest rate by a total of 125 basis points (bps) to 5.75% by year鈥檚 end, projecting inflation to average 7.2% for the year.

The BSP started a new tightening cycle last month, delivering its first 25-bp rate increase in over two years during its April 23 meeting to bring the key policy rate to 4.5%.

Central bank officials said the move was a preemptive measure to curb price pressures and cautioned against spillover effects, with headline inflation projected to settle well above their 2%-4% target until next year.听

BSP Governor Eli M. Remolona, Jr. has left the door open to further modest rate hikes to bring inflation back within the target range in keeping with the bank鈥檚 price stability mandate.

Mr. Ravelas noted that the Philippine economy is showing signs of stagflation 鈥� a combination of slowing growth, stubborn inflation and high unemployment.听

Gross domestic product growth eased to 2.8% in the first quarter from 3% the previous quarter and 5.4% a year earlier.

Mr. Ravelas sees full-year growth settling between 3.8% and 4% in 2026, weakening from the 4.4% in 2025.

However, Mr. Ravelas said the conditions for stagflation may not be met with long-term unemployment remaining low at around 7%.

Meanwhile, Mr. Ravelas said the peso risks plummeting to the P65-to-the-dollar level over the next three years, though the BSP鈥檚 policy tightening could provide the currency some relief.

The peso closed at all-time low of P61.75 to the dollar as lingering market uncertainty from the Middle East meant continuing safe-haven demand for the dollar.

STEADY INFLOWS from remittances and the services sector despite emerging external pressures helped narrow the Philippines鈥� balance of payments (BoP) gap to a three-month low in April, Bangko Sentral ng Pilipinas (BSP) data showed.

Based on central bank data released on Tuesday, the country鈥檚 BoP gap narrowed to $2.124 billion last month from the $2.637-billion deficit in March and $2.558-billion shortfall in April last year.

This was the narrowest deficit recorded since the $373 million seen in January. It also marked the sixth consecutive month that the country鈥檚 BoP position settled at a shortfall.

In the four months to April, the Philippines鈥� BoP deficit widened to $7.411 billion from $5.516 billion in the same period a year ago.

BoP refers to the country鈥檚 economic transactions with other nations. A deficit shows that the country spent more than it received, while a surplus indicates more funds entered the country.

Stable dollar inflows from remittances and business process outsourcing, slightly better capital flows and softer import bill may have helped narrow the country鈥檚 BoP deficit in April, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said via Viber.

However, Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the wider four-month deficit was likely due to lingering external pressures considering the country鈥檚 large trade gap.

鈥淭he narrower BoP deficit in April reflects some normalization after earlier outflows, but the wider year-to-date gap highlights persistent external pressures, particularly from the country鈥檚 large trade deficit amid strong import demand and softer exports,鈥� he said in a Viber message.

鈥淲hile remittances and services continue to provide support, these have not been enough to offset the current account shortfall, with capital flows remaining sensitive to global conditions,鈥� Mr. Asuncion added.

Separate BSP data showed remittances from Filipinos abroad rose by 2.3% year on year to $2.874 billion in March, the highest in two months.

Latest available data showed the country鈥檚 trade-in-goods deficit widened to a six-month high of $4.512 billion in March from $4.015 billion in February and $4.509 billion a year ago.

DOLLAR RESERVES
Meanwhile, revised BSP data showed the Philippines鈥� dollar reserves fell to its lowest level in over a year, which analysts said was likely due to the central bank鈥檚 recent intervention in the foreign exchange market.

As of end-April, the country had $104.328 billion in gross international reserves (GIR), slightly higher than the $104.128 billion earlier reported.

However, it was still a 2.16% decline from the $106.636-billion foreign reserves in March and a 0.93% dip from the $105.308 billion in April 2025.

The end-April tally was the lowest GIR level in 15 months or since the $103.271 billion logged in January last year.

鈥淭he decline in GIR indicates that the BSP may have used part of its reserves to smooth peso volatility and meet external obligations,鈥� John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.

The central bank earlier said it remains present in the foreign exchange market to prevent sharp swings that could stoke inflation as the Middle East war continues to weigh on the currency.

On Tuesday, the peso closed at P61.75 against the dollar, unchanged from its record-low finish on Monday, Bankers Association of the Philippines data showed.

Still, according to the BSP, the country鈥檚 latest GIR level 鈥減rovides a robust external liquidity buffer.鈥�

The end-April reserves translated to 6.9 months鈥� worth of imports of goods and payments of services and primary income, exceeding the three-month standard.

It can also cover about 3.8 times the country鈥檚 short-term external debt based on residual maturity.

GIR comprises foreign-denominated securities, foreign exchange, and other assets such as gold. It enables a country to finance imports and foreign debts, maintain the stability of its currency, and safeguard itself against global economic disruptions.

For Mr. Ravelas, the country鈥檚 BoP position will likely remain in a deficit in the coming months considering the economy鈥檚 heavy reliance on imports.

鈥淭he key message here is not elimination, but manageability 鈥� our external position remains 鈥榙eficit but resilient,鈥� supported by strong fundamentals like remittances, services exports, and adequate reserves,鈥� he added. 鈥淪o, going forward, it鈥檚 about watching global conditions and capital flows closely, while ensuring we sustain these stable sources of FX (foreign exchange).鈥�

SM Investments Corp. Group Economist Robert Dan J. Roces likewise projects a continued deficit in the near term as 鈥渉igh oil prices, elevated global uncertainty, and a still-strong dollar continue to pressure the trade balance and keep demand for dollars firm.鈥�

However, the deficit may be 鈥渟maller and more manageable鈥� as the country continues to hold ample GIR and due to steady flows from remittances and services exports, he added.

鈥淭he BoP may stay in deficit in the near term, though a smaller and more manageable one,鈥� Mr. Roces said. 鈥淭he good news is that the country still has ample buffers through GIR, steady remittances, and recurring inflows from services exports, which help prevent external pressures from becoming destabilizing.鈥�

The central bank expects the country鈥檚 BoP position to end at a $7.8-billion deficit or -1.5% of its gross domestic product (GDP) this year, wider than the $5.661-billion gap or -1.2% of GDP in 2025.

It also projects the GIR level to reach $111 billion by yearend, higher than the $110.8 billion recorded last year.

THE PHILIPPINE PESO will likely remain the weakest Asian currency despite further monetary policy tightening by the central bank as the economy remains vulnerable to volatile global oil prices amid the ongoing Middle East war, analysts said.

This as the peso on Tuesday closed at the record-low level of P61.75 versus the greenback, the same finish logged on Monday, Bankers Association of the Philippines data showed.

In a report published late on Monday, ING Think economists noted that the impact of oil price swings on the local unit could offset the expected support of additional policy rate hikes by the Bangko Sentral ng Pilipinas (BSP). (See related story)

鈥淲e continue to expect a frontloaded but measured tightening cycle, worth 75 bps (basis points) in 2026,鈥� said ING Regional Head of Research for Asia Pacific Deepali Bhargava, Senior Economist for South Korea and Japan Min Joo Kang, and Chief Economist for Greater China Lynn Song.

鈥淲hile this could provide some near-term support to the PHP (Philippine peso), the currency鈥檚 trajectory will remain closely tied to oil price dynamics,鈥� they added.

A separate report from MUFG Bank, Ltd. on Tuesday showed that the peso suffered the sharpest depreciation among currencies in emerging markets in Asia since the Middle East war erupted on Feb. 28.

Based on the report penned by MUFG Senior Currency Analyst Michael Wan, the local unit declined by 6.6% against the dollar from Feb. 28 to May 18.

This was followed by the Indian rupee, which went down by 5.6%, Indonesian rupiah (5%), Thai baht (4.8%), South Korean won (4%), Malaysian ringgit (2.1%), Japanese yen (1.8%), Singapore dollar (1.1%), Vietnamese dong (1.1%), and Taiwan dollar (1%).

The peso has traded around the P60- to P61-a-dollar handle for about a month or since late April, even plunging to back-to-back historic lows versus the greenback.

This came even after markets anticipated some relief for the peso following the BSP鈥檚 move to lift the benchmark borrowing cost during its April 23 meeting.

The key interest rate now stands at 4.5% after the Monetary Board delivered its first 25-bp hike last month as it sought to temper second-round price effects and keep inflation expectations anchored amid rising risks from the energy crisis.

ING analysts said the BSP may deliver its second-straight hike at its June 18 review as inflation risks prove more urgent than growth concerns.

鈥淭he latest data points suggest inflation risks are now outweighing growth concerns,鈥� they said. 鈥淚n this context, we do not see the weak GDP (gross domestic product) print deterring Bangko Sentral ng Pilipinas from hiking in June.鈥�

Inflation breached the central bank鈥檚 2%-4% target and market projections for the second month in a row as soaring oil prices spilled over to other key commodities.

In April, high food and utility prices amid still elevated energy costs led the headline print to accelerate to an over three-year high of 7.2%.

On the other hand, the economy faltered in the first quarter, with growth easing to 2.8% from 3% in the previous quarter and 5.4% a year ago as oil shocks added to the lingering effects of last year鈥檚 flood control mess.

For ING analysts, however, the economy could remain under pressure amid growing political uncertainty surrounding Vice-President Sara Duterte-Carpio鈥檚 impeachment.

鈥淗igher political uncertainty with the impeachment of the vice-president can further push out reforms and growth recovery,鈥� Ms. Bhargava, Ms. Kang, and Mr. Song said.

Meanwhile, Metropolitan Bank and Trust Co. (Metrobank) also sees further BSP tightening as still elevated oil prices and uncertainties over Iran and the US鈥� peace talks are expected to stoke inflation in the coming months.

鈥淢etrobank still sees elevated risk and volatility in the near term while a peace deal has not been struck,鈥� it said in a note on Monday. 鈥淥il prices are poised to stay high, as global supply remains constricted due to the war鈥檚 impact on Middle East oil facilities. Consequently, domestic inflation is expected to quicken in the coming months.鈥�

However, it noted that increased demand for the US dollar will continue to drag the peso, with global dollar flows, not domestic factors, likely driving foreign exchange movements.

Still, the peso鈥檚 depreciation may be capped at P62 against the dollar, according to the bank.

鈥淯SD/PHP strategy remains range-bound with a slight USD-positive bias, as strong dollar fundamentals and steady corporate demand continue to support the pair, particularly on dips,鈥� Metrobank said.

鈥淗owever, the upside remains capped near the P61.75-P62.00 resistance zone due to strong supply and positioning. The pair is likely to remain driven by external USD flows rather than domestic catalysts, reinforcing a tactical trading approach,鈥� it added.

On the other hand, ING said global oil prices potentially averaging around $100 per barrel in the quarter will continue to weigh on the country鈥檚 current account deficit.

The BSP earlier said the Philippines may see a wider current account gap of $20.3 billion or -4% of GDP this year as the Middle East war could strain the country鈥檚 external position.

In 2025, the country had a current account deficit of $16.291 billion or -3.3% of GDP.

鈥淲e were able to keep food prices stable, but supplies are feeling the pinch,鈥� Mr. Marcos said during a roundtable discussion with Japanese media in Malaca帽ang on Monday. A video and transcript were provided to Palace reporters.

Mr. Marcos said some producers and suppliers had sought government permission to increase the prices of 鈥渘on-critical鈥� food products.

The Philippines, which relies heavily on imported fuel, has been hit hard by the ongoing Iran conflict. This has prompted the government to declare a year-long energy emergency amid threats to oil supply and rising inflation.

鈥淭o the economy, the concern that we have is the concern about stagflation鈥� so this is what we have been trying to control,鈥� Mr. Marcos said.

Stagflation refers to a period of weak economic growth combined with persistently high inflation.

Some analysts have earlier flagged stagflation risks after inflation quickened to a near three-year high of 7.2% in April from 4.1% in March due to soaring gas prices. This was the fastest headline print since the 7.6% seen in March 2023, and also well-above the central bank鈥檚 5.6%-6.4% estimate for the month.听 听

In the first quarter, gross domestic product (GDP) grew by 2.8%, slowing from the 5.4% expansion in the same quarter last year and the revised 3% GDP growth in the fourth quarter of 2025.

The President said the government will make efforts to slow down rising food costs. Last week, he imposed a P50 price cap on rice.

Mr. Marcos added that public spending has been accelerated to support growth, following earlier delays in budget execution this year.

鈥淧ublic spending has been accelerated so that the GDP (gross domestic product) growth is still being assisted. We had a delay in public spending in the beginning of this year, basically in the first quarter,鈥� he added, according to a separate statement from his office.

Mr. Marcos remains optimistic that public spending will fuel economic growth within the next quarter and next year.

鈥淟uckily, I suppose, or at least we are still continuing to see marked interest in investment in the Philippines,鈥� he said.

鈥淧erhaps this is because of the policies that we adopted, the incentives that we have put out for investors. So, slowly, we can see the way through this, where we will recover through this.鈥�

Mr. Marcos said spending is increasingly being directed toward 鈥渄irect spending鈥� to ensure that assistance is felt more immediately by households, including subsidies and transport-related fuel discounts.

He also said the government is seeking ways to encourage investment and support for micro, small and medium enterprises.

鈥淟et us keep the economic machine running… Let us continue to invest,鈥� he said. 鈥淲e have a total economic mandate that, as much as possible, let us find that money wherever and in other places, such as in the government鈥檚 operating expenses.鈥�

Meanwhile, the Philippines is already in a 鈥渟tagflationary episode,鈥� according to Leonardo A. Lanzona, Jr., an economics professor at the Ateneo de Manila University.

鈥淔or a high-growth economy like the Philippines, sub-4% GDP expansion already constitutes stagflationary conditions 鈥� the Philippines is experiencing a combination of slowing, very weak/stagnant GDP growth and high and rising inflation, placing the Bangko Sentral ng Pilipinas (BSP) in an unenviable position,鈥� he said via Facebook Messenger.

Whether this stagflationary episode is sustained would depend on 鈥渨hether the oil shock proves durable (high probability) and whether fiscal catch-up (in infrastructure) materializes (uncertain, given the Department of Public Works and Highways鈥� track record),鈥� Mr. Lanzona said.

He noted that downgraded growth forecasts by several firms could put Philippine economic growth on track for its weakest performance in 18 years outside of the pandemic period.

鈥淭he Marcos signal on food price relief for nonessential items is almost certainly a political pressure valve, not a structural fix 鈥� and risks entrenching expectations that the government will accommodate rather than absorb the shock,鈥� he said. 鈥� C.M.A. Hufana

THE IMPEACHMENT proceedings against Vice-President Sara Duterte-Carpio have raised the possibility of further instability and political violence in the country, according to an assessment by a unit of Fitch Solutions.

鈥淧ublic impeachment hearings against VP Sara Duterte have sharply increased Social Polarization and Government Risks by intensifying the Marcos-Duterte power struggle, with the potential for further instability and political violence if she is removed from contention for the 2028 presidency,鈥� GeoQuant said in a report released on Tuesday.

The Senate on Monday convened as an impeachment court for the trial of Ms. Duterte who faces charges of corruption, misuse of public funds, betrayal of public trust, and an alleged plot to assassinate President Ferdinand R. Marcos, Jr.

Ms. Duterte鈥檚 trial is expected to start by the first week of June.

GeoQuant noted that social polarization risk and government risk began to increase when the House Committee on Justice began hearings on the impeachment complaint against Ms. Duterte on March 25.

鈥淭he case pits two of the country鈥檚 most powerful political families against one another, Marcos and Duterte, who ran as a team in the 2022 general elections but have fallen out over differing constituency and policy agendas,鈥� it said.

鈥淲ith Marcos鈥� tenure up in May 2028, Duterte is his likely successor, but impeachment would prohibit her from running. Marcos claims not to be behind the investigation, but his allies control the House of Representatives and her removal from the field of potential candidates would allow Marcos to find an ally as successor.鈥�

If convicted, Ms. Duterte would be barred from running for public office.

鈥淓xpect both Government and Social Polarization Risks to continue to rise as long as the process continues, with the potential for political violence rising [if] Duterte is sidelined,鈥� GeoQuant said.

Hansley A. Juliano, a political science lecturer at the Ateneo de Manila University, said political polarization ratings typically rise when rival political camps become sharply divided, and businesses begin seeing risks to operational continuity.

鈥淚t鈥檚 bad for business because usually, shifts in regimes or non-peaceful transitions mean business continuity is compromised or insurances/preparations kick in, which impact operational costs,鈥� he said via Facebook Messenger, adding that firms often face higher insurance and contingency costs during periods of instability.

Mr. Juliano noted the recent turmoil in the Senate likely contributed to concerns flagged by GeoQuant, pointing to leadership upheavals and controversy surrounding efforts to shield Senator Ronald 鈥淏ato鈥� M. dela Rosa from accountability.

Mr. Juliano said the unfolding events bear similarities to the political tensions that preceded the impeachment trial of former President Joseph Ejercito Estrada and the subsequent EDSA Dos and Tres (EDSA II and III) protests.

鈥淲hether it ends the same, we have yet to see,鈥� he said. 鈥淏ut it looks unstable nonetheless.鈥�

POLITICAL CIRCUS
Meanwhile, businesses are hoping for an end to the political turmoil hounding the Senate, saying stability is needed to help firms thrive and support faster economic growth, according to Association of Southeast Asian Nations (ASEAN) Business Advisory Council Chairman Jose Ma. 鈥淛oey鈥� A. Concepcion III.

鈥淭he Philippines has to continue to get its GDP (gross domestic product) going higher,鈥� he told 大象传媒 on the sidelines of the 大象传媒 Economic Forum on Monday.

鈥淔or that to happen, the business sector must be doing well. Hopefully our legislators will support this and that the circus happening there will end,鈥� he added.

Mr. Concepcion said that as the Philippines is the chair of the ASEAN this year, there is a responsibility to present the country favorably to foreign investors.

鈥淲e have to be able to present a more pleasant picture to our foreign investors. It is very important because Philippines hosting the ASEAN only happens once every 10 to 12 years,鈥� he said.

鈥淪o, we are putting every effort, especially from the private sector, to ensure that many investors, business owners from all over the world, will come to the Philippines,鈥� he added.

Mr. Concepcion said the goal is to show that the Philippines is open for business.

鈥淲e need Congress and our legislators to bring things back to normal from their point,鈥� he said. 鈥淲e hope they will be able to really help create an open economy.鈥�

鈥淚f you look at very successful countries in ASEAN, they are very focused and they are always straight to the point,鈥� he added.

Aside from political uncertainty, Mr. Concepcion said businesses are also dealing with the impact of the Middle East conflict.

鈥淏ut let us remain optimistic. One good sign is that it comes when we are the host of ASEAN and when all the leaders come here, the rest of the world will see what the Philippines is all about,鈥� he added.

The currency ended at its record low of P61.75, unchanged from Monday鈥檚 finish, according to Bankers Association of the Philippines data posted on its website.

The local unit opened Tuesday鈥檚 session stronger at P61.60 per dollar. Its intraday best was at P61.55 against the greenback, while its low was its closing value of P61.75.

Dollars traded rose to $1.21 billion from $1.001 billion in the previous session.

The peso was steady as it was supported by possible intervention from the Bangko Sentral ng Pilipinas (BSP), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The BSP has said that it intervenes in the foreign exchange market to prevent sharp swings but does not have a target level for the currency.

鈥淭he peso closed unchanged amid lingering uncertainty over a potential US-Iran deal,鈥� a trader said in a Viber message.

For Wednesday, the trader said the peso could recover against the greenback on potential profit taking.

The trader sees the local unit moving between 61.50 and 61.75 per dollar on Wednesday, while Mr. Ricafort expects it to range from P61.60 to P61.80. 鈥� A.M.C. Sy

鈥淭he government鈥� is facing maybe less revenue this year because of the slowdown in the economy, and they are also facing issues helping the most vulnerable people because of the crisis and all,鈥� ADB Country Director Andrew Jeffries told reporters last week.

鈥淎nd so, the government needs to really think about and prioritize what it is going to borrow for this year,鈥� he added. 鈥淎nd again, that process has not been finalized yet.鈥�

He added that the Philippines and the ADB have been discussing a counter-cyclical support facility aimed at helping developing countries like the Philippines weather the impact of the Middle East conflict.

鈥淲e鈥檝e shared details and we鈥檝e had back and forth, but there has not yet been a formal request for one. But they are considering it amongst a lot of options, because, as you know, the impact here is pretty high,鈥� he added.

He said the impact of the conflict is being felt through higher oil prices, rising inflation, and slower economic growth.

鈥淭here鈥檚 obviously a high impact here, as expected, the only question is how long this will last, and nobody really knows that. But鈥e鈥檙e certainly willing to support,鈥� he said.

The Philippine economy grew 2.8% in the first quarter, dragged down by the lingering effects of last year鈥檚 corruption scandal.

Meanwhile, headline inflation accelerated to 7.2% in April, exceeding the Bangko Sentral ng Pilipinas鈥� (BSP) 5.6%-6.4% forecast for the month. It also marked the second straight month that inflation breached the BSP鈥檚 2%-4% target range.

UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said he expects a recalibration in borrowing rather than a slowdown.

鈥淲hile weaker growth could dampen revenue collection and force the government to be more deliberate in prioritizing projects, the same external shock is also increasing fiscal pressures,鈥� he said via Viber.

鈥淎s a result, financing needs are unlikely to ease meaningfully. Instead of a sharp pullback, we expect borrowing to remain broadly steady, but with a greater focus on essential, high-impact spending and more flexible financing instruments such as policy-based loans,鈥� he added.

The Bureau of the Treasury reported that the National Government鈥檚 gross borrowings amounted to P1 trillion in the first quarter.

This represents 37.4% of the P2.68-trillion gross borrowing program for the year according to the Budget of Expenditures and Sources of Financing 2026. 鈥� Justine Irish D. Tabile

鈥淭he Philippines鈥� role is to strengthen the foundations of its domestic energy system while (advocate for) a more integrated, resilient, and investment-ready ASEAN energy system,鈥� Angelo Kairos T. dela Cruz, executive director of the Institute for Climate and Sustainable Cities, said at the 大象传媒 Economic Forum on Monday.

As this year鈥檚 ASEAN chairman, the Philippines is expected to push for stronger regional cooperation on energy security and supply resilience as the Iran war roils global energy markets.

鈥淎s a net energy importing region, ASEAN continues to be exposed to fossil-fuel volatility, making energy security and economic resilience central to policy priorities among its members,鈥� Mr. dela Cruz said.

He said the region is moving towards more diversified and decentralized energy systems, with growing renewable energy deployment across various national markets.

Mr. dela Cruz said transitioning to renewable energy is becoming 鈥渋ncreasingly urgent.鈥�

鈥淭he conversation is now shifting. The question is no longer whether the Philippines is ready for renewable energy investments, but how these investments can be structured to deliver impact across national infrastructure, local communities, and end-user systems,鈥� he said.

Jonathan Back, group chief finance officer and chief strategy officer of renewable energy developer ACEN Corp., said the Philippines is not alone in facing challenges arising from the Middle East crisis.

鈥淭his is absolutely not unique for the Philippines. I think across the world, every government and regulator is asking how to become more energy independent, how do we become resilient?鈥�

Currently, ACEN has about 7 gigawatts of attributable renewable energy capacity, including operational, under-construction, and committed projects. The company operates in the Philippines, Australia, Vietnam, India, Indonesia, Laos, and the US.

Mr. Back said the Philippines has an advanced energy market structure despite its archipelagic challenges.

Mr. Back said increasing the share of renewable energy in the power mix could be complemented by building energy storage systems to enhance integration and help stabilize the grid.

鈥淲e think that is the key way to really boost that 35% by 2030 and 50% by 2040, to make it even faster,鈥� he said, referring to the government targets for the share of renewables in the power mix.

Sharon Ocampo-Monta帽er, director of market operations service at the Energy Regulatory Commission, said the Iran war continues to expose weaknesses in global energy supply chains.

鈥淔or a country like ours, highly dependent on imported fuel, these disruptions translate directly into rising costs and uncertainty for households and businesses,鈥� she said.

鈥淏ut while these challenges are real and immediate, they do not define us. What defines us is how we respond,鈥� she added.

Ms. Ocampo-Monta帽er said the regulator has taken steps to stabilize the system and protect consumers, by ensuring the continued operation of the spot market and easing cost pressures through the suspension of certain charges.

鈥淯nder its ASEAN leadership, the Philippines is actively advancing initiatives to move towards a more interconnected and resilient regional energy system,鈥� she said.

鈥淔or an archipelagic country like us, this presents challenges but it also opens up opportunities for greater cooperation, improved system reliability and access to more competitive energy resources,鈥� she added. 鈥� Sheldeen Joy Talavera

In the Southeast Asia鈥檚 Green Economy Report 2026, the Philippines was assessed to beg unlikely on track to deliver its national climate targets, in the absence of LT-LEDS, which are voluntary plans created by signatories to the Paris Agreement to transition to net-zero.

Net zero refers to the reduction of greenhouse gas emissions to as close as zero while also offsetting any remaining greenhouse gases in the atmosphere.

鈥淧ublish LT-LEDS with a net-zero target to unlock DFI (development finance institutions) and institutional capital currently flowing to peers with clearer long-term frameworks,鈥� the report concluded.

Bain & Co. and Standard Chartered also noted that the Philippine green capital expenditure in 2025 was only 40-45% of the required green investment to meet its 2030 decarbonization targets.

To better integrate renewable energy and support the growing needs of high-energy industries like data centers, the Luzon inter-island transmission and distribution backbone should be the focus, as this is where renewable energy integration constraints are most in need of investment.

Meanwhile, the report found that the Philippines shows promise in fiscal and regulatory incentives by having value-added tax zero rating for renewable energy projects and reduced import tariffs for electric vehicles.

The Philippines should promote fleet electrification to support demand for electric vehicles (EVs) and encourage investment in assembly operations, according to the report.

Bain & Co. and Standard Chartered said Southeast Asia stands to deliver approximately $540 billion in green investment through 2030, but a little over half could be realized due to system bottlenecks.

鈥淩ealizing the full potential of green capital deployment in Southeast Asia hinges on the development of a robust power grid, but grid investment has lagged demand growth,鈥� they said.

Further investments in power, grid, and EV capex could unlock an additional $80 billion by 2030, a 25% increase over projections.

鈥淭he opportunity for Southeast Asia鈥檚 green economy is substantial, but capturing it requires synchronizing policy, infrastructure and finance at speed,鈥� according to Chow Wan Thonh, head of Coverage, Singapore and ASEAN for Standard Chartered. 鈥� Sheldeen Joy Talavera

鈥淲e hope that as we settle our obligation with the private concessionaire, we will see more improvements in their services, including structural upgrades, digitalization, and the reliability of the rail line,鈥� Acting Transportation Secretary Giovanni Z. Lopez said in a statement on Tuesday.

Mr. Lopez said the credit line agreement with LANDBANK will enable the DoTr to fulfill its financial obligations with the LRMC to ensure continued services.

In February, the Light Rail Transit Authority (LRTA) said it is processing a loan with LANDBANK to settle the government鈥檚 P4-billion obligation to the LRMC.

The government, through the LRTA, has already paid P926 million to LRMC, the LRTA has said.

Of the more than P900 million already paid, about P499 million went to structural rehabilitation, P409 million to light rail vehicle (LRV) shortfall payments, and about P22 million for right-of-way acquisition settlements.

The LRTA has said that of the P4 billion claimed by LRMC, about P3 billion was the result of delays in the approval of fare adjustments.

Metro Pacific Investments Corp. (MPIC) has announced plans to divest from LRMC due to mounting losses, which were mainly attributed to the government鈥檚 delayed payments.

LRMC assumed operations and maintenance of LRT-1 in September 2015 under a P65 billion, 32-year concession agreement with the LRTA and DoTr.

Under the agreement, the operator may seek a fare adjustment every two years. In April 2025, the DoTr approved LRMC鈥檚 petition for fare adjustments, though the new fare matrix remains below the company鈥檚 requested rates, resulting in a deficit of P2.17 billion.

MPIC holds a 35.8% stake in LRMC through its unit, Metro Pacific Light Rail Corp., while Sumitomo Corp. owns 19.2% and Macquarie Investments Holdings (Philippines) Pte. Ltd.10%. LRMC is a joint venture company of MPIC, AC Infrastructure Holdings Corp. (a unit of Ayala Corp.), Sumitomo, and Macquarie Investments Holdings. 鈥� Ashley Erika O. Jose

The Philippine Stock Exchange index (PSEi) dropped by 0.75% or 44.72 points to close at 5,896.80, while the broader all shares index fell by 0.19% or 6.58 points to end at 3,347.55.

This was the PSEi鈥檚 worst finish in over two weeks or since it closed at 5,833.64 on April 30.

鈥淓levated global oil prices, with Brent crude testing the $110-per-barrel level, and the peso鈥檚 weak position, testing record lows, weighed on the local bourse,鈥� Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

鈥淭he local bourse ended below 5,900 level as trading activity remained thin amid persistent uncertainty over economic conditions, elevated oil prices, and the maintained depreciation of the local currency. Investor sentiment stayed cautious, with market participants largely adopting a wait-and-see stance due to concerns over inflationary pressures and their impact on the broader economy,鈥� Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. 鈥淎s a result, subdued participation kept overall market volume muted throughout the session.鈥�

Oil prices fell on Tuesday, with global benchmark Brent crude dropping 1.5%, after US President Donald J. Trump said he had paused a planned attack on Iran to allow for negotiations to end the war in the Middle East, Reuters reported.

Mr. Trump posted on social media on Monday that he was holding off a military attack on Iran scheduled for Tuesday while efforts to reach a deal continued, adding that the US was ready to resume attacking if a deal is not reached.

Brent futures for July were down $1.73 or 1.5% at $110.37 a barrel at 0825 GMT, while US West Texas Intermediate crude for June delivery, which expires on Tuesday, slipped 63 cents or 0.6% to $108.03. The more active July contract fell 82 cents or 0.8% to $103.56. In the previous session, the benchmarks hit their highest 鈥媗evels since May 5 and April 30.

Meanwhile, the peso closed unchanged at its record low of P61.75 per dollar on Tuesday, data from the Bankers Association of the Philippines showed.

All sectoral indices closed in the red. Property slid by 1.33% or 25.73 points to 1,907.77; industrials sank by 0.91% or 79.60 points to 8,646.09; financials dropped by 0.62% or 11.10 points to 1,768.62; services fell by 0.51% or 15.54 points to 2,980.65; holding firms retreated by 0.41% or 18.38 points to 4,368.26; and mining and oil slipped by 0.07% or 12.52 points to 17,616.81.

Decliners outnumbered advancers, 107 to 63, while 74 names were unchanged.

Value turnover rose to P5.36 billion on Tuesday with 1.21 billion shares traded from the P4.05 billion with 572.41 million issues that changed hands on Monday.

Net foreign selling increased to P680.04 million from P225.76 million in the previous session. 鈥� Alexandria Grace C. Magno with Reuters

THE PHILIPPINES lost about P141 billion in government revenue to illicit tobacco trade in 2024 and 2025, with illegal vape products emerging as a major source of tax leakages, according to a report by the EU-ASEAN Business Council (EU-ABC) and Euromonitor International Ltd.

The Philippines posted the third-highest revenue loss among six Southeast Asian countries covered by the study, after Indonesia and Malaysia, according to the report released on Monday.

Philippine government revenue losses reached about $2.46 billion during the two-year period, composed of about $2.06 billion from illicit cigarettes and $400 million from illegal e-vapor products.

鈥淭he continued rise in illicit tobacco trade in ASEAN (Association of Southeast Asian Nations) and the broader Asia-Pacific region signals displacement of the legitimate market, while amplifying challenges for regulation, enforcement and diminishing fiscal contribution,鈥� the council said in the 43-page report.

The study covered the Philippines, Indonesia, Malaysia, Singapore, Thailand and Vietnam, collectively referred to as ASEAN-6. It assessed the scale of illicit trade involving cigarettes and e-vapors, including contraband, counterfeit, illicit whites, untaxed products and unbranded tobacco.

Among the countries surveyed, the Philippines posted the highest revenue loss tied to illicit e-vapes. It also had the highest incidence of illegal vape products among markets where e-vapors are legal.

The report estimated that 85.6% of e-vapes sold in the Philippines last year were illicit products.

Meanwhile, illicit cigarettes accounted for 25.3% of the local market, significantly higher than the ASEAN-6 average of 16.1%.

Across Southeast Asia, governments were estimated to have lost a combined $13.07 billion in revenues in 2024 and 2025 due to illicit tobacco trade.

The report expects the illicit tobacco market in ASEAN-6 to expand further, with illicit trade incidence expected to rise to 27.8% by 2028 from 23.6% in 2025.

Researchers warned that the growth of illicit tobacco trade could weaken government revenues, hurt legitimate businesses and increase risks to consumers.

This affects government revenues and social welfare programs, drives down the profitability of legal businesses, supports illicit activities in the markets and poses health risks to consumers, EU-ABC said.

EU-ABC Executive Director Chris Humphrey said illicit tobacco trade diverts money away from the formal economy and reduces the region鈥檚 attractiveness to investors.

鈥淗ere in the Philippines, the National Calamity Fund could easily be funded if we could stop the illicit trade in tobacco and [collect the proper taxes] from it,鈥� he separately told a news briefing

He added that the problem extends beyond the tobacco industry because widespread illicit trade creates unfair competition and discourages investment across sectors.

鈥淚t diminishes the region鈥檚 attractiveness for investments not just in tobacco, [but]鈥� in other sectors as well,鈥� he said.

鈥楪OOD ENFORCEMENT鈥�
Firdaus Muhamad, head of consulting for the Asia-Pacific region at Euromonitor, said rising tobacco taxes, affordability pressures and widening price gaps between legal and illicit products continue to fuel demand for illegal products.

鈥淭he common trap in this story that we鈥檙e telling is affordability pressures,鈥� he told the briefing. 鈥淎nnual tax increases and the legal-illicit price gap create room for some illicit products to compete.鈥�

He added that illicit operators could still raise prices while remaining cheaper than legal products, allowing illegal sellers to preserve or even expand profit margins.

The EU-ABC estimated illicit tobacco operators in the Philippines earned about $2.2 billion from illegal trade in 2024 and 2025.

To address the problem, Mr. Humphrey called for stronger regional coordination, especially among ASEAN countries with porous land borders.

He said governments should strengthen cooperation on Customs enforcement and improve digital track-and-trace systems to better monitor tobacco products across borders.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said stronger enforcement remains the most effective way to combat illicit trade.

鈥淭he key measure is good enforcement,鈥� he said by telephone, noting that the Bureau of Internal Revenue, Bureau of Customs and local governments should continue intensifying anti-smuggling operations.

The report also noted that outright bans on e-cigarettes and vape products have not eliminated illicit trade in countries where such restrictions are imposed.

Mr. Sta. Ana noted that while bans could reduce legal sales, they could also expand underground markets if enforcement remains weak.