Good morning. It is with great pleasure that I welcome all of you to the 2019 Awards Ceremony and Appreciation Lunch for BSP Stakeholders in Region VI.
For the past 16 years, the BSP has been recognizing the invaluable contributions of its partners in central banking.
I am pleased with the growth in the number and scope of awards given as this reflects the dynamic support and cooperation you all have extended to the BSP’s various initiatives and advocacies.
I cannot overemphasize the value of your steadfast support as the BSP continues to navigate the country’s economic landscape.
By working as a team, we have entered this year from a position of strength and with renewed optimism. Based on the country’s economic performance, the Gross Domestic Product (GDP) grew by 6.2 percent year-on-year in 2018 and remained firm at 5.5 percent in the first semester of 2019.
On the production side, economic growth was propelled mainly by the robust performance of the services sectors. Broad-based expansion in household consumption and government spending reinforced growth on the demand side. Meanwhile, January to August 2019 inflation readings have averaged 3.0 percent, well within the government target range of 2 to 4 percent. Last August, inflation fell to 1.7 percent.
The external position of the Philippines is reflective of an economy driven by solid macroeconomic fundamentals and firm growth prospects.
The country’s balance of payments (BOP) position for the first seven months of the year posted a surplus of US$5 billion, a turnaround from the US$3.7 billion BOP deficit recorded in the same period last year.
The surplus may be attributed partly to remittance inflows from overseas Filipinos during the first six months of the year, and net inflows of foreign direct investments during the first five months of the year.
Sustained inflows of foreign exchange are expected to continue to support the peso.
In the first six months of the year, net inflows of foreign direct investments (FDI) reached US$3.6 billion. Meanwhile, foreign portfolio investments (FPI) reversed to net inflows of US$5.3 billion in the first semester of 2019, from US$708 million net outflows in the same period last year.
Personal remittances for January to June 2019 totaled US$16.3 billion. This is higher by 2.9 percent than the US$15.8 billion level recorded in the same period last year. This was achieved despite increasing global efforts to de-risk banks and tighten regulations of money transfer operations.
The country’s hefty gross international reserves (GIR) continue to serve as an ample external liquidity buffer.
At this level, the GIR can cover up to 7.5 months’ worth of imports of goods and payments of services and primary income. The rule of thrum is that a GIR level that can cover 3 months worth of imports of goods and payments is sufficient.
The country’s external debt remained at a manageable level as it stood at US$81.3 billion as of end-June 2019. This level is higher than the end-March 2019 level of US$80.4 billion.
External debt as a proportion to the country’s GDP increased to 24 percent in the first semester of 2019. Despite this moderate uptick, external debt-to-GDP, which is the right metric, has remained below 25 percent since 2016.
Our financial system remains sound and continues to effectively intermediate funds to productive sectors, thus promoting economic growth.
In the first semester of 2019, banks’ balance sheets exhibited steady growth in both assets and deposits.
Asset quality remained stable while capital adequacy ratios stayed well-above international standards. Banks maintained dominance in the financial sector, with universal and commercial banks (U/KBs) accounting for about 91 percent of banks’ total resources.
From this position of strength, the BSP remains committed to continually uphold the highest standard of excellence in crafting policies to achieve our mandates of maintaining price stability, promoting a strong financial system, and fostering a safe and efficient payments and settlement system.
We are able to do this because of our credibility which is supported by engagement with its stakeholders.
Indeed, we can say that credibility is a major part of the institutional capital of the BSP as the country’s central bank. By establishing and maintaining consistent engagement with our partners, the BSP is able to capture the sentiment of its stakeholders, which helps us formulate and calibrate effective monetary policies.
You may not know this, but your support has become more important in our various initiatives and advocacies directed toward the fulfillment of our mandates.
For instance, in July 2017, the BSP launched the BSP E-Survey Portal that features an online questionnaire, database, and an application for data maintenance and consolidation system. In 2018, the portal’s registered users increased to 1,706 from the 860 registered users in 2017. Currently, as of end-June of this year, the number of registered users rose to 2019.
That’s how the important the information support you provide us to aid in our policy formulation.
The BSP has, likewise, responded to the wider use of digital payment by pioneering the National Retail Payment System (NRPS), a policy and regulatory framework to establish a safe, efficient and reliable retail payment system in the Philippines.
With this initiative, digital payments have become more accessible to every Filipino. We cannot stress enough how you have taken a pivotal role in helping the financial sector develop in this age of fast-paced technological advancement and integration.
Today, as we celebrate our rewarding partnership, we must also reflect on the motivations behind it. This year’s theme, “One Team One Goal: Resilient Partnership Towards Inclusive Economic Growth,” highlights the fact that the BSP cannot do it alone. Only your support can the BSP continuously craft policies that are appropriate for the nation.
Ladies and gentlemen, by working as a team, we will be more than ready to face the challenges head on and deliver on our common goal of achieving sustainable and inclusive economic growth and development in the Philippines.
Thank you and congratulations to all our outstanding partners!