In a review of the economy for an extension of the International Monetary Fund (IMF) program until October this year, Government representatives and an IMF five-man team settled for a compromise agreement revising macroeconomic targets. Inflation was reduced from 6-6.5% to 5.2-5.7%, budget surplus from 13 billion pesos to 7.1 billion pesos, and government expenditures from 470.4 billion pesos to 453.1 billion pesos.

A seasonal increase in prices triggered an accelerated inflation rate in June to 4.8% from 4.2% in the previous month. In Metro Manila, the inflation rate rose to 6.9% from 5.9% and in outside Metro Manila to 4.1% from 3.6% in May. The higher inflation rate was attributed to the increase in tuition fees and prices of school supplies. Government is confident that despite the climb, its full-year target rate would be within reach.

The Philippines' strong economic performance continued to outgrow its foreign debt service burden. External debt service ratio improved from 15.8% in 1995 to 12.2% in 1996. It is expected that this will further be improved to 11% in 1997. In absolute number however, total foreign exchange liabilities stood at US$41.87 billion in 1996 compared to US$37.78 billion the year before. The increase in foreign debt stock was attributed to short- and long-term credits to finance infrastructure and transportation projects.

The balance of trade during the first four months of the year, while still at a deficit level, posted a 5.9% decline settling at US$3.75 billion from US$3.99 billion a year ago. During the period, imports were valued at US$11.34 billion and export earnings totaled US$7.59 billion. The resulting total trade went up by 15.8% to US$18.93 billion from US$16.34 billion in the comparable period last year.

The floating of the Thai Baht prompted the Bangko Sentral ng Pilipinas to protect the peso by increasing its overnight borrowing rate to 24%. As of 4 July 1997, the foreign exchange rate stood at Php26.40:US$1.

During the first six months of the year, investments registered with the Philippine Economic Zone Authority soared to 96.14 billion pesos, over 500% more than the 15.7 billion pesos recorded in the same period last year. A breakdown of this amount indicates: 58% for 16 new economic zones, 32% for 53 newly-approved export enterprises, and 10% for expansion projects of 25 existing locators and developers.

Projects approved by the BOI recorded investments totaling 177.38 billion pesos during the first five months of the year. Energy related projects accounted for bulk of these investments with 67.71 billion pesos followed by infrastructure and industrial projects amounting to 51.44 billion pesos.

As of the first five months of the year, net portfolio investments increased by 127% to US$573 million compared to US$252 during the same period last year. Inflows were foreign currency denominated investments earned by residents and non-residents from stock markets abroad, and withdrawals of foreign investments abroad by Filipinos.

The DTI is inclined to granting the request of the petrochemical sector for higher tariffs on intermediate petrochemical products. As soon as downstream plants start commercial operations, tariffs will be raised to 20% from the current 10% to make local manufactures competitive with their Asian counterparts.

The BOI is proposing a bill covering tax and fiscal perks given to projects registered with the agency. Apart from CTRP incentives such as net operating loss carry-over, accelerated depreciation and double deduction on research and development training expenses, the BOI bill will involve the granting of income tax holiday, capital equipment incentives, and grants for research and training.

Infrastructure spending during the first quarter of the year was placed at 32.5 billion pesos, an increase of 27% compared with last year. Of this amount, the national government invested 21.5 billion pesos on roads, bridges and other projects. On the other hand, corporate investments reached 11 billion pesos, bulk of which went to the energy sector.

A group of foreign banks has approved a US$465 million loan to finance the groundwork on the EDSA - Metro Rail Transit. Loan negotiations were delayed due to government's failure in relocating over 3,500 squatter families at the north triangle property.

The Metropolitan Waterworks and Sewerage System is scheduled to hand down its operations to the Ayala-owned Manila Water Company and Lopez-owned Maynilad Water Services, Inc. on August 1, 1997. Interconnection and pricing matters are expected to be resolved before the turnover.

President Ramos approved the construction of a Pesos 100 million flyover at the Mactan side of the second Mandaue-Mactan bridge. The flyover will span 300 meters from the second bridge that will provide a two-lane left-turning passageway for vehicles bound for the Mactan-Cebu International Airport and Mactan Export Processing Zone. Officials, however, were apprehensive that the construction might force the closure of the airport road for five months from Cebu-bound traffic.

The proposal linking Mactan island with mainland Cebu by a Light Rail Transit system is part of the long term transport masterplan for Cebu. The Mactan island is included in the plan but the Carcar to Danao City line will be prioritized.

The real estate industry in Cebu remains upbeat as indicated by the entry of new players, according to the Cebu Realtors Board (Cereb). Pryce Properties Inc., a member of the Pryce Group of Companies, has acquired a lot at the Cebu Business Park for a planned office condominium. The Active Group has started work on a champoinship golf course complex in the southwestern town of Barili. The group, which counts among its projects a golf course in Laguna, is also planning to put up a residential condominium within the city to complement its golf course project. Aside from these new players, Cebu developers are also bent on pursuing planned projects in the province.

Dominant carrier Philippine Long Distance Telephone Co. (PLDT) will start operating its nationwide fiber optic transmission system next month with the opening of the networkÆs Manila-Cebu segment. PLDTÆs US$187 million transmission system will link key cities nationwide through submarine and inland fiber optic cables. The project, called the Domestic Fiber Optic Network (DFON), will have the capacity to carry more than 90,000 simultaneous calls for both voice and data communication. The Manila-Cebu segment is the priority portion because it has one of the heaviest call traffic figures.

A group of Singaporean investors are interested in putting up a super ferry terminal in the city. The ferry terminal will reportedly be the first of its kind in the country when finished and will operate fastcraft vessels moving 50 to 100 knots, a lot faster than the ocean liners plying the Philippine seas today.