HOME  ABOUT THE BANK  MONETARY POLICY  BANKING SUPERVISION  PAYMENTS & SETTLEMENTS  STATISTICS  FEEDBACK CORNER
   BSP NOTES & COINS  MONETARY OPERATIONS  LOANS-CREDIT & ASSET MGT  PUBLICATIONS & RESEARCH  REGULATIONS  PROCUREMENT

Feedback Corner

Publications and Research

Media Releases

RP Continues to Enjoy Low Lending Rate

04.15.2003

The Philippines continues to enjoy a low-interest rate environment, with real interest rate levels in line with those of the rest of the Asian region. This supports expectations by authorities of stronger domestic economic activity. Estimates by the BSP show that the Philippines’ real lending rate (i.e., lending rate adjusted for inflation) of 6.88 percent compared favorably against a sampling of rates for countries in the region. The country’s real lending was lower than Indonesia’s prime lending rate of 10.48 percent, India’s 7.69 percent, and Hong Kong’s 7.09 percent.

Country

Real Lending Rate */

Indonesia
India
Hong Kong
Philippines
Taiwan
Malaysia
Singapore
Thailand
South Korea
Japan

10.48
7.69
7.09 
 6.88
5.66
4.98
4.94
4.60
2.69
1.85

 *As of 10 April 2003 

The country also recorded one of the lowest spreads between lending rates and benchmark Treasury bill rates. The spread of the Philippine banks’ lending rate over the benchmark T-bill rate as of the period 3-9 April 2003 stood at 264 basis points. The Philippines’ spread ranked the second lowest among the Asian countries surveyed after South Korea.

Country

Spread of Prime Lending Rate over Benchmark Rate */

Taiwan
Singapore
Thailand
Indonesia
Malaysia
Hong Kong
Philippines
South Korea

5.90
4.64
4.50
4.33
3.65
3.63
2.64
2.29

* As of 10 April 2003

 
The low-interest rate environment reflects the ample liquidity conditions in line with the BSP’s growth-supportive monetary stance. This implies relatively lower cost of capital for business, which should augur well for economic activity in the near term. Together with the benign outlook for inflation, the present level of real interest rates is expected to continue and provide a supportive macroeconomic environment that would encourage stronger domestic consumption and investment activity over the coming months. Such a prospect bodes well for the government’s GDP growth targets of 4.2-5.2 percent for 2003 and 4.9-5.8 percent for 2004.

RSS Subscribe for updates

Archives