The Monetary Board decided today to continue for another year the implementation of Section 1, Circular No. 363 dated 13 December 2002. Under said circular, the interest rate on peso rediscounting loans shall be 1 percentage point below the 91-day Treasury bill rate during the last auction of the previous month. This is in response to the concern raised by exporters, in a meeting with the BSP Monetary Board and other top officials held on Monday, 13 October 2003, that high production costs, including the cost of credit and labor, have adversely affected the competitiveness of Philippine exports.
In arriving at this decision, the Monetary Board noted that the one-year deferment would not adversely affect the inflation outlook given the generally favorable supply-side factors and the modest pace of economic activity. Beginning 4 October 2004, the rediscounting rate for peso loans shall be based on the applicable Treasury Bill (TB) rate for the preceding week.