SENATE President Sherwin Gatchalian called on the government to make available urgent financing assistance, including soft loans, to micro, small and medium enterprises (MSMEs) and the agriculture sector as the economy faces mounting risks of slower growth.
In a statement, Gatchalian said the Bangko Sentral ng Pilipinas’ (BSP) recent 50-basis-point interest rate hike could make borrowing more expensive and further restrict access to credit at a time when businesses need support to stay afloat.
“Economic growth is already slowing, and now interest rates have gone up. We do not want more Filipinos to lose their jobs and the unemployment rate to rise further,” he said.
The Monetary Board raised the BSP’s target reverse repurchase rate to 5.5 percent on Oct. 22, its fourth consecutive rate increase this year and its first 50-basis-point hike since February 2023.
The overnight deposit and lending facility rates were also raised to 5 percent and 6 percent, respectively.
The central bank said it decided on a larger rate adjustment to address broadening price pressures and rising inflation risks. It warned that inflation could accelerate further in the coming months and remain elevated through 2027, with higher global oil prices, transportation fare increases and the potential effects of El Niño on agricultural production and food prices contributing to the outlook.
The BSP also raised its 2027 inflation forecast to 6 percent from its previous projection of 5.4 percent, while keeping its 2026 forecast at 6.1 percent.
It said the rate adjustment was intended to contain the wider effects of price increases and keep inflation expectations anchored.
Gatchalian said the government should be ready to offer concessional loans to MSMEs and agricultural producers to help them manage higher financing costs, sustain operations and avoid layoffs.
MSMEs account for the vast majority of businesses in the Philippines and provide a significant share of employment, making access to affordable credit important to business continuity and livelihood protection.
Farmers, meanwhile, need financing for seeds, fertilizer, fuel and other production expenses, particularly as climate-related risks and volatile oil prices threaten agricultural output and incomes.
While the BSP’s rate increases are aimed at curbing inflation, higher policy rates can also translate into more expensive borrowing for businesses and consumers, depending on how banks adjust their lending rates.
Gatchalian also cited other downside risks, including elevated inflation driven by rising petroleum prices amid continuing tensions in the Middle East, the threat of an extreme El Niño, and weak investor confidence amid corruption issues in government.
“These challenges are piling up at a time when our economy is already facing difficulties. We must ensure that businesses, particularly MSMEs and those in the agriculture sector, have access to the financing they need,” he said.
Higher fuel prices could increase transportation, production and logistics costs, while prolonged dry conditions could affect farm output and drive up agricultural production expenses. Together with tighter credit conditions, these pressures could weigh on business activity, household purchasing power and employment.
Gatchalian said timely government assistance would be crucial in helping businesses weather the economic headwinds and preventing further job losses.
“We cannot afford to abandon the private sector, especially at a time when economic growth is slowing. The government must take the lead in providing support,” he added. CATHERINE VALENTE
