Philippines’ Duterte signs bills to ease inflation, boost central bank powers

MANILA • Philippine President Rodrigo Duterte signed into law last Friday key economic measures that are seen to help lower rice prices, strengthen the central bank and bolster state revenues.

Duterte signed a bill that would remove caps on rice imports and boost supply of the staple grain, according to Executive Secretary Salvador Medialdea.

The measure is expected to help cool inflation, which in 2018 accelerated to the fastest pace in nine years and triggered one of the most aggressive monetary tightening responses in Asia.

The president approved amendments to the central bank charter that would expand its powers, restore the institution’s ability to issue debt to give it greater flexibility in monetary operations, and pave the way for the injection of additional government capital.

The new law gives the central bank “an enhanced legal and regulatory framework in providing a steadying hand to the financial system”, governor Nestor Espenilla said in a statement on Saturday, adding that the amended charter is “timely and attuned to a fast-evolving market landscape”.

Duterte also agreed to a partial tax amnesty. The measures will take effect 15 days from their publication in newspapers.

Duterte’s economic officials expect the rice law to shave about one percentage point off annual inflation. A shortage of the grain coupled with elevated global oil prices and higher taxes boosted the inflation rate to 6.7% in September and October. Consumer price gains have eased since then.

Of the almost three dozen bills awaiting Duterte’s signature, six measures were acted upon last Friday, according to Medialdea.

Here are some of the highlights:

• New Central Bank Act removes money supply and credit levels as basis for determining monetary policy, widens the coverage of institutions under its supervision to include money service and credit- granting businesses and payment systems operators to allow it to address potential risks, the central bank said in a statement on Saturday.

• New central bank charter will boost its capitalisation to 200 billion pesos (RM15.5 billion) from 50 billion pesos, and expand its regulatory powers. 

• Social Security System — the fund that provides benefits to private workers — will increase the monthly contributions of its members to 12% from 11% after the approval of its new charter, the Philippine Daily Inquirer reported. The new law also expands the coverage of overseas Filipino workers.

• Duterte approved the estate and delinquent tax amnesty but vetoed the general amnesty, said Finance Secretary Carlos Dominguez.

• A law that will give discounted rates for political advertisements was also signed by Duterte.

• Duterte vetoed Congress’ proposal to provide a trust fund for coconut farmers. — Bloomberg