Monday, April 23, 2012

A Reminder to be Prudent

Recently, Social Security System (SSS) has announced what seems to be like good news; it has lowered interest rates to reach out more to people who badly need some loans to get by. Furthermore, it has increased its housing loan limits to cater to more Filipinos.

To read the actual figures regarding the new SSS policy, you can check out this link.

While Filipino citizens can more or less breathe a sigh of relief over the benevolence of SSS, there is still a pressing need for everyone to be prudent with their financial decisions. I must emphasize that most of the responsibility falls on SSS, the benefactor. Since it relaxed its policies, it must expect a sudden rise in the number of individuals borrowing from SSS. More importantly, it must be careful with managing its reserve ratio to avoid lending too much, and to withstand external blows should they arise (people refusing to pay debts or delaying them). The last thing Philippines needs is a bubble in the financial sector.

Meanwhile, Filipinos shouldn't indiscriminately borrow from SSS, just because SSS has the bigger responsibility. Filipinos struggling through life via loans should abstain from needless buying and focus on securing financial stability and repaying their loans. Banking is a delicate system, which requires prudence from both parties. 

There is a growing doubt in me that the Philippines might not be prepared for more accessible loaning policies. There was no increase in the number of paper money; there was only a chance to borrow more. Filipinos should know the difference between the two before recklessly spending money, but I sincerely doubt they would even give it much thought; still I am prepared to give the benefit of the doubt. Needless to say, there are expectations that SSS has included the Filipino psyche in their calculations.

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