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Saturday, April 09, 2005
Palace pushes energy saving measures
* Inflation may reach seven percent this year, according to Bangko Sentral official
MALACAÑANG Friday said the raising of interest rates and implementation of energy saving measures are part of government's campaign to put the country's fiscal house in order.
Press secretary and presidential spokesman Ignacio Bunye said the increase in interest rates and implementation of energy saving measures go hand in hand with the drive to improve tax collection and go after tax cheats and evaders.
"We need these measures to stabilize the economy and shield it from the impact of continuous oil price hikes in the world market," Bunye said.
The Bangko Sentral ng Pilipinas (BSP) Thursday raised overnight borrowing rates by 25 basis points, the first in five years, as prices continue to escalate.
The adjustment brought the overnight borrowing rate to seven percent from 6.75 percent and the lending rate to 9.25 percent from nine percent.
BSP Deputy Governor Amando Tetangco Jr. has said the BSP raised policy rates as a preemptive step against inflation expectations that have been veering away from target.
"A measured increase can help prevent rising inflationary expectations from becoming widespread and entrenched, and prevent ongoing shocks from generating second-round effects," he said.
Tetangco said inflation for the whole year may hit seven percent or higher, topping the nominal target of five to six percent.
The inflation rate in March already reached 8.5 percent and it is expected to worsen considering that the expanded value-added tax (VAT) bill has not yet been passed by Congress and that oil prices are expected to rise even further.
Tetangco also said the adjustment also serves as a "preemptive move" to further increases in US target funds rate. The US Federal Reserve has given signs it will continue to tighten the rate as inflationary pressures build up. (JMR)
(April 9, 2005 issue)
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