LATEST DISCLOSURE

March 31, 2023

Management's Discussion and Analysis of Financial Condition or Results of Operation

The financial results for the first three months of 2023 of Philippine Realty and Holdings Corporation (interchangeably referred to by its PSE trading symbol “RLT” or “Parent Company” or as the “RLT Group” or “Group”) reflected a consolidated net loss after tax of ₱30.7 Million. But in spite of this, the Group was able to maintain healthy and very conservative liquidity and solvency ratios.

The Philippine economy continues to encounter headwinds in attaining economic recovery.

The National Government (NG) debt stood at a fresh record high of ₱13.9 Trillion as of end-March this year, higher than the ₱13.8 Trillion in February, and ₱13.7 Trillion in January. Of the total debt stock, 68.7%, was sourced domestically, while 31.3% came from external borrowings.

Meanwhile, the Philippine economy as measured by Gross Domestic Product (GDP) – the total value of goods and services produced in a specific period - grew slower at 6.4% in the first three months of 2023 as elevated inflation, which stood at 8.3% in the same period, dampened consumer spending. This is also the Philippine economy’s slowest GDP growth since the country graduated from the pandemic-induced recession in the second quarter of 2021 when it booked a growth rate of 12%.

However, in spite of the increase in the NG’s debt and slower GDP growth as presented above, records show that the amount of the country’s debt relative to the size of the economy shrunk as of the first quarter of 2023. The debt-to-GDP ratio represents the amount of the government’s debt stock relative to the size of the economy.

For the January to March 2023 period, the Philippines' debt-to-GDP ratio stood at 61%, down from 63.5% in the first quarter of 2022.

Finance Secretary Diokno said that the government’s Medium-Term Fiscal Framework (MTFF) aims to bring down the debt-to-GDP ratio to less than 60% by 2025 then further down to 51.1 percent in 2028, and reduce the budget deficit to 3.0% of GDP by 2028. “The MTFF is our blueprint to reduce fiscal deficit, promote fiscal sustainability and enable robust economic growth,” he added.

The Finance Secretary also said that the budget deficit-to-GDP ratio stood at 4.84% in the first quarter of 2023, down from 6.41% in the first quarter of 2022.

Overall inflation in the Philippines slowed further to 7.6% in March 2023 from 8.6% in February 2023 and from a 14-year high of 8.7% in January. The inflation rate in March 2022 was lower at 4.0%. The average inflation for the first quarter of 2023 stood at 8.3%, still well above the Bangko Sentral ng Pilipinas’ (BSP) 2 to 4% target range and 6% full-year forecast. Since May 2022, the BSP has raised rates by 425 basis points to combat inflation. This brought the key policy rate to a near 16-year high of 6.25%.

NEDA secretary Balisacan said that “High inflation remains a challenge, and the BSP’s move to raise its key policy rates to anchor inflation expectations and ensure price stability, may dampen future growth. But the improvement in the business climate can counter this unintended effect,” he added. The NEDA secretary also said that expectations that inflation will return to the 2 to 4% target band by the end of the year could rebuild consumer and business confidence, which would boost spending and investments.

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