Loan growth in the Philippines is likely to regain its momentum as it will be supported by the government’s investment in infrastructure and sustained consumer demand, Fitch Ratings said.
“We expect a pick-up in government infrastructure spending to spur broader investment activity, amid sustained consumer demand,” the credit ratings agency forecasted in a report titled “Fitch Ratings 2020 Outlook: Asia-Pacific Emerging Market Banks” released on Wednesday.
Earlier, the country’s economic managers expressed their optimism that the government will hit its spending target for this year.
According to Finance Secretary Carlos Dominguez 3rd, the Department of Public Works and Highways is optimistic that it can deliver its P725-billion disbursement target for the full year of 2019.
He reported the Public Works department has, so far, disbursed 69 percent of its total commitment this year, totaling P503.4 billion.
“Secretary Mark Villar assured that the remaining P221.6 billion target disbursements for the last two months of this year is attainable,” Dominguez added.
Meanwhile, the Department of Transportation’s actual disbursements reached P46.82 billion for the period January to November 28, he added.
The Finance chief noted that the Transportation department expects to disburse an additional P30.85 billion in the last month of the year to fulfill 94 percent of its commitment of P82.39 billion for 2019.
That said, Fitch pointed out: “This should bode well for loan growth, especially after several rounds of policy easing in recent months that partly reversed earlier tightening measures.”
Latest Bangko Sentral ng Pilipinas (BSP) data show that growth in bank lending continues to lose momentum amid acceleration in money supply. Growth slowed to 7.5 percent in October from 9 percent a month ago.
BSP Governor Benjamin Diokno, in a recent interview, said the decelerating growth of bank lending is one of the reasons behind the monetary policy easing of the central bank this year.
The Bangko Sentral’s policy-making Monetary Board has so far implemented a combined 75-basis-point interest rate cut in May, August and September. This brought overnight borrowing, lending and deposit rates to 4 percent, 4.50 percent and 3.50 percent, respectively.
