ECONOMIC NEWS

Jan-May 2003 Fiscal Deficit

The five-month budget deficit totaled only P75.4 billion as against the P87.4 billion ceiling for the period. For May alone, the actual deficit of P9.9 billion was only half of the P20 billion programmed for the month. This development sustains the government drive to put its fiscal program in order and augurs well for the campaign to upgrade the macroeconomic policy framework. It also improves chances of a possible credit rating upgrade in the months to come. This is likewise seen to contribute further to the improved sentiment in the equities market and the further easing of interest rates and fiscal policy.
 

May 2003 Inflation Rate at 2.7%

Consumer prices rose by 2.7% in May 2003 versus the 2.8% registered in
April. This brings the January to May average inflation rate to 2.8%,
lower than the government's revised target of 3.0% to 3.5%, and just about
in line with BPI-AMTG's revised target of 2.7%. The lower inflation figure
gives the monetary authorities more leeway to lower domestic interest
rates. This is also one main reason for the bullish stock market activity.

March 2003 exports rise 8.6 %, more than expected

Philippine export growth picked up for a second month in March, with
overseas sales rising at their fastest pace this year, as shipments to
Japan, the nation's second-biggest foreign market, recovered. Exports grew
8.6% from a year earlier to $3.1 billion. That's more than February's 3.7%
increase. Rising exports may help President Gloria Arroyo's administration
meet its forecast of expanding the economy as much as 5.2% this year. The
Manila-based Asian Development Bank last week cut its economic growth
forecast for the Philippines to 4 %. Electronics, which make up more than a
third of all exports, grew 0.1% to $2 billion. Sales to the U.S. fell for
a sixth month, declining 8.9% to $651 million. Sales to Japan rose 11% to
$479 million. The two countries are the Philippines' biggest trading
partners, making up more than a third of all overseas sales. (Bloomberg
?05/05/2003) -Exports

April 2003 consumer prices rise 2.8%, less than expected

Philippine inflation unexpectedly slowed for a second month in April as
food and drink prices, which account for the majority of the nation's
consumer price index, rose at their slowest pace in three months. Consumer
prices rose 2.8% from a year earlier. That lags March's 2.9 % gain. Prices
of food, beverage and tobacco rose 1.8% from a year earlier and fuel, light
and water prices rose 5%. Costs of services rose 6.5%. From a month
earlier, consumer prices rose 0.1%, the same pace of increase as in March.
(Bloomberg ?05/05/2003) -Inflation

Government may scrap two months of bond sales

National Treasurer Sergio Edeza said the government won't sell P20 billion
bonds with maturities of more than a year in November and December should
its sale of P60 billion of retail bonds succeed in June. The government
each week sells about P3.5 billion of bonds with maturities of more than a
year, mostly two- and seven-year securities. The Philippines had planned
to sell P20 billion of bonds to retail investors, after selling more than
P100 billion worth since 2001. The retail bonds have denominations of as
low as P5,000 and buyers can purchase a maximum of P2 million. (Bloomberg
?05/05/2003) -Bonds

Government 's April 2003 Customs Revenue exceeds target

The Philippine customs bureau beat its April revenue target by a 10th as it
stepped up the collection of taxes and duties from importers. The bureau
collected P8.9 billion, compared with its target of P8.1 billion. The
customs bureau, which brings in about a fifth of the government's income,
aims to collect P100 billion this year. In the first four months of 2003,
collections totaled P35.7 billion, 16% more than its target for the period.
Rising collections will help the government narrow a budget deficit that
reached a record P211 billion last year. President Gloria Arroyo's
administration is forecasting a P202 billion shortfall this year. Standard
& Poor's last month cut by one level the nation's debt rating to BB, two
levels below the lowest investment grade, because of rising government debt
and a widening budget deficit. (Bloomberg ?05/05/2003) ?National Income

CORPORATE NEWS

First Holdings borrows $35 million, backed by power unit stake

First Philippine Holdings Corp. said it borrowed $35 million to pay debt
due this month. First Holdings said an international unit borrowed the
money from foreign company, which has the option to swap the loan for a
3.5% stake in First Generation Holdings Corp., the company that owns the
group's power plants. (Bloomberg ?05/05/2003)-FPH

Meralco gets 3-Month loan extension

Meralco was given a three-month extension by creditors to pay $350 million
of loans, The extension is part of a plan prepared by Meralco to reorganize
debts so it can meet a P28 billion court-ordered refund to customers.
Meralco, which allegedly overcharged customers since 1994, said earlier the
court's order could push it into bankruptcy. The company has about P74
billion of debt. (Bloomberg ?05/05/2003) -MER


San Miguel's 2003Q1 profit rises 21% to P1.34 billion

San Miguel Corp. had a 21% increase in first-quarter profit. Net income
rose to P1.34 billion from P1.11 billion a year ago. San Miguel's operating
profit at its soft-drink and bottled-water units surged 77% in the first
quarter because an improved distribution system boosted sales of Coca-Cola
and Viva mineral water. San Miguel didn't provide specific numbers. The
company said operating profit from its soft-drink business alone almost
quintupled, aided partly by savings from a reorganization implemented last
year. (Bloomberg ?05/05/2003) -SMC