Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno presents an overall positive account pertaining to the country’s economic and financial growth. He pinpoints the extensive use of fintech as a way to accelerate financial inclusion in the Philippines and recognises the importance of driving investments that promote sustainable growth.October 16, 2019 | Dr. Benjamin E. Diokno
As recognised by relevant observers here and abroad, the Philippines is among the fastest growing and most resilient economies in the world today. The Philippines is in a very ‘nice’ place right now.
First, economic growth is robust, hitting 6.2% last year and expected by the government to remain in the 6% territory this year before accelerating further over the next three years. Second, inflation is manageable, settling at 0.9% in September — the lowest in over three years. It is projected to remain well within the Bangko Sentral ng Pilipinas’ (BSP) official target range of 2-4% up to 2021. Third, external payments position is comfortable, serving as a solid buffer for the economy against external headwinds. The gross international reserves as of September 2019 stood at $86.2 billion, which is equivalent to seven and a half months of imports and payments for services and primary income.
Fourth, fiscal position is healthy, supporting the government’s ambitious infrastructure development agenda and rising investments in human capital development. The budget deficit is programmed to stay at a comfortable 3.2% of gross domestic product (GDP) up to 2022. Government debt, which stood at 43.7% of GDP as of end-June 2019, is seen to continue its downward trend as growth of the economy outpaces the increase in the debt stock.
Fifth, the banking sector is sound and stable, helping fuel growth of the economy through credit and other financial services. Capitalisation is more than sufficient, with the capital adequacy ratio of universal and commercial banks staying at 15.9% in June 2019. This is higher than the BSP’s minimum regulatory requirement of 10% and the internationally prescribed floor of 8%.
Exposure to bad debts is minimal, with the non-performing loans (NPL) ratio staying at a mere 1.7% in August 2019. Total assets of the banking sector continue to grow, rising by 9% to $338 billion (PHP 17.4 ...
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