Aquino to abolish 10 gov’t officesPalace says move will save P304M a year
To cut costs, President Benigno Aquino III is moving to abolish 10 agencies that contributed to a bloated bureaucracy under the watch of his predecessor, former President and now Pampanga Rep. Gloria Macapagal-Arroyo.
The abolition of the agencies, including the Presidential Anti-Graft Commission (PAGC) and the Presidential Anti-Smuggling Group (PASG), would save the government some P304.62 million a year, Executive Secretary Paquito Ochoa Jr. said Thursday.
“We are abolishing 10 of the 17 locally funded projects, which are no longer relevant or which are duplicative of the functions of the other projects,” he said in a budget hearing of the House appropriations committee.
Priority programs
The amount would then go to priority programs and projects of the Office of the President in 2011, he added.
The other agencies sought to be abolished are the Mindanao Development Council, the Office of the North Luzon Quadrangle Area, the Office of External Affairs, the Minerals Development
Council, the Luzon Urban Beltway Super Region, the Bicol River Basin Watershed Management Project, the Office of the Presidential Adviser on Global Warming and Climate Change, and the Office of the Presidential Adviser on New Government Centers.
Ochoa did not say what will happen to the personnel of the agencies that would be abolished.
The OP is retaining the Office of the Presidential Adviser on Peace Process, Presidential Anti-Organized Crime Commission, Presidential Visiting Forces Agreement Commission, Commission on Information and Communications Technology, Edsa People Power Commission, Commission on Maritime Affairs, Philippine Truth Commission, and Presidential Communications Development and Strategic Planning Office.
BSP explains intervention
THE PHILIPPINE central bank is acting in the foreign exchange market to reduce the peso’s volatility but is allowing fundamentals to move the currency, a central bank official said yesterday.
The peso hit a two-year high against the dollar last Wednesday and is up more than 5% this year, supported by strong portfolio inflows and remittances from overseas workers.
“We continue to make our presence felt in the market to make sure we reduce volatilities and ensure the fundamental movements of the peso,” Deputy Governor Diwa C. Guinigundo told Reuters.
The peso softened to around P44 per dollar from an opening of P43.88 per dollar after the comments, with traders wary of intervention not only from Manila but other countries in Southeast Asia as currency gains put pressure on exporters.
Anaemic growth and heavy debt burdens across the West and Japan are encouraging an influx of capital inflows to emerging markets as global investors search for better yields.
On Wednesday, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. said interest rate differentials between the United States and emerging markets that have boosted risk appetite and capital flows could complicate monetary policy.
Separately, Mr. Guinigundo told television channel ANC in an interview late Wednesday the peso’s rise was helping to mitigate inflation pressures.
“That is not good news for exporters and OFW (overseas Filipino worker) families, but to a large extent and to the extent that we still import oil and other raw materials, that could help both exporters and Filipino overseas abroad keep up with those increases in exchange rate.”
The central bank has forecast average inflation of 4% this year and 3.25% next year, within the government’s targets.
Mr. Guinigundo said the central bank, which will meet on Oct. 7 to review policy, saw no urgent need to adjust policy rates as inflation was under control.
“The central bank sees no compelling reason to adjust rates at this point given the favorable outlook for inflation.”
The rate has been at a record low of 4% since July 2009. The Philippines is one of the few Asian countries not to have raised interest rates since the end of the global financial crisis.
Mr. Guinigundo said in the television interview that rates could be kept steady as long as inflation stayed within target of 3 to 5% for 2011 and 2012.
“Of course at this point, all available information to us would indicate inflation would just be about 4%, so that means we can afford to keep our policy rates steady for for next two years,” he said.
U.S. Stocks Rise as Technology Rally Overshadows Jobless Claims
U.S. stocks fell, sending the Standard & Poor’s 500 Index to its longest drop in a month, as a deteriorating profit outlook for banks and an increase in jobless claims overshadowed a rally in technology shares.
Goldman Sachs Group Inc. and Citigroup Inc. fell more than 2 percent as Bank of America Corp. cut profit projections and former Federal Reserve Chairman Paul Volcker said the U.S. mortgage market is “absolutely broken.” Real estate companies in the S&P 500 slumped 2.7 percent as a group. Apple Inc. rose for the 17th time in 19 days, briefly passing PetroChina Co. to become the world’s second-largest company by market value.
The S&P 500 fell 0.8 percent to 1,124.83 at 4 p.m. in New York, retreating for a third day, the longest losing streak since Aug. 24. The Dow Jones Industrial Average decreased 76.89 points, or 0.7 percent, to 10,662.42.
Treasuries Climb on Speculation Federal Reserve Will Increase Debt Buying
Treasuries gained, pushing the 10- year note yield below 2.50 percent for the first time in three weeks, on speculation the Federal Reserve may increase purchases of U.S. debt to support the economy.
The 10-year note advanced for a fifth day in its longest winning streak in about a year as initial jobless claims unexpectedly climbed last week. Two-year note yields were within a basis point of the record low two days after the central bank said it’s willing to ease monetary policy further.
“For the next two or three weeks, every single economic statistic will be picked over, and anything showing weakness will lead to market rallies and lower yields,” said Ray Remy, head of fixed income in New York at Daiwa Securities Group Inc., one of the 18 primary dealers that trade directly with the central bank. “Everybody will expect the Fed to step in, step in at any second.”
The benchmark 10-year note yield dropped 1 basis point, or 0.01 percentage point, to 2.56 percent at 5:17 p.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in August 2020 rose 2/32, or 63 cents per $1,000 face amount, to 100 18/32.
The yield touched 2.48 percent, the lowest level since Sept. 1. The 2-year yield slid 2 basis points to 0.42 percent, compared with the record 0.41 percent reached yesterday. The 30- year bond yield fell 2 basis points to 3.73 percent.
Oil Falls as Increase in U.S. Jobless Claims Prompts Concerns About Demand
Oil declined in New York after a U.S. government report showed that initial jobless claims rose for the first time in a month, signaling fuel demand in the world’s largest crude consuming nation may falter.
Futures gave back yesterday’s 0.6 percent gain after the Labor Department reported claims increased by 12,000 to 465,000 in the week ended Sept. 18, as the unemployment rate holds near a 26-year high.
The November contract lost as much as 51 cents, or 0.7 percent, to $74.67 a barrel on the New York Mercantile Exchange, and was at $74.69 at 8:20 a.m. Sydney time. Yesterday, it climbed 47 cents to $75.18. Prices are down 5.8 percent this year.
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
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