LATEST DISCLOSURE

September 30, 2023

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

The financial results for the first nine (9) 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 of ₱144 Million. But in spite of this, the Group was still able to maintain very conservative liquidity and solvency ratios.

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

The Philippine Gross Domestic Product (GDP) posted a growth of 5.9% in the third quarter of 2023, which was an improvement from the GDP growth of rate of 4.3% in the second quarter of 2023. The main contributors to the third quarter 2023 growth were: wholesale and retail trade; repair of motor vehicles and motorcycles (5.0%); financial and insurance activities (9.5%); and construction (14.0%). Major economic sectors, namely agriculture, forestry (0.9%); fishing (5.5%); and services (6.8%), all posted positive growths in the third quarter of 2023.

The National Government (NG) debt which stood at a record high of ₱14.35 trillion as of end-August 2023 went down to ₱14.27 trillion, or by 0.6%, in September 2023. Of the total NG debt stock, 68%, was sourced domestically, while 32% came from external borrowings.

Given the decrease in the country’s debt stock relative to the size of the economy as measured by GDP, the Philippines’ debt-to-gross domestic product ratio (debt-to-GDP ratio) subsided as of endSeptember 2023, data released by the Bureau of the Treasury (BTr) on Thursday showed.

As of the third quarter of the year, the country’s debt-to-GDP ratio stood at 60.2%, down from 61% as of end-June 2023. This is also an improvement from the 63.6% debt-to-GDP ratio seen as of the third quarter of 2022 and the 60.9% seen for the entire 2022.

The debt-to-GDP ratio measures the amount of the National Government’s outstanding debt proportionate to the value of the economy during a specific period. A lower debt-to-GDP ratio indicates that the country can pay off its debt without having adverse impacts on the economy.

“With the latest development, the National Government’s end of year debt ratio is likely to be lower than the 2023 Medium Term Fiscal Framework (MTFF) target of 61.4%,” the BTr said. “Moreover, the debt-to-GDP ratio is on pace to fall below 60% earlier than the 2025 MTFF commitment,” it said.

Finance Secretary Diokno said that the government’s MTFF aims to bring down the debt-to-GDP ratio to less than 60% by 2025 then further down to 51.1% 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.

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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