erpd (economic review and policy dialogue) matrix report ......strictly confidential 2017/svl/pld/02...

Strictly Confidential

2017/SVL/PLD/02

ERPD (Economic Review and Policy Dialogue) Matrix

Report to the ASEAN+3 Deputies

The ASEAN+3 Macroeconomic Research Office (AMRO)

April 2017

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Acknowledgements

1. This document contains information with respect to the Arrangement Request for the CMIM Precautionary Line (CMIM-PL) pursuant to Article 7 of the CMIM Agreement.

2. This material was produced by the ASEAN+3 Macroeconomic Research Office (AMRO) solely for the use of the parties to the Agreement Establishing AMRO (AMRO Agreement). No part of this material may be reproduced in any form for publication or disclosed to third parties unless so permitted under the AMRO Agreement. As some data in this document are provided by member authorities in strict confidence, quotation or replication to the public is prohibited.

3. The data in this document have been confirmed by respective ASEAN+3 Authorities as of 24 March, 2017.

4. By making any designation of or reference to a particular territory or geographical area, or by using the term “member” or “country” in this Report, AMRO does not intend to make any judgements as to the legal or other status of any territory or area.

5. AMRO wishes to thank all ASEAN+3 authorities for the provision of data in this report.

Disclaimer: The findings, interpretations, and conclusion expressed in this Report represent the views of the ASEAN+3 Macroeconomic Research Office (AMRO) and are not necessarily those of its members. Neither AMRO nor its members shall be held responsible for any consequence arising from the use of the information contained therein.

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Table of Contents

The First Set of Indicators of ERPD Matrix ................................................................................. 4

1. Brunei Darussalam.............................................................................................................. 5

2. Cambodia ......................................................................................................................... 11

3. China ................................................................................................................................ 17

4. Hong Kong, China ............................................................................................................. 24

5. Indonesia ......................................................................................................................... 30

6. Japan ............................................................................................................................... 37

7. Korea ............................................................................................................................... 43

8. Lao PDR ............................................................................................................................ 49

9. Malaysia ........................................................................................................................... 55

10. Myanmar ......................................................................................................................... 61

11. The Philippines ................................................................................................................. 68

12. Singapore ......................................................................................................................... 74

13. Thailand ........................................................................................................................... 80

14. Vietnam ........................................................................................................................... 87

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The First Set of Indicators of ERPD (Economic Review and Policy Dialogue) Matrix (Endorsed at the AFCDM+3 meeting in Nay Pyi Taw, Myanmar, April 2014)

1. External Position and Market Access

(1) Gross External Debt ( % of GDP)

(2) Gross Short-term External Debt (% of Foreign Reserves)

(3) Current Account Balance (% of GDP)

(4) Foreign Reserves (in months of imports)

2. Fiscal Policy

(1) Revenue (% of GDP)

(2) Expenditure (% of GDP)

(3) Primary Balance (% of GDP)

(4) Overall Balance (% of GDP)

(5) Central Government Debt (% of GDP)

3. Monetary Policy

(1) Monetary Policy Framework and Recent Policy Responses

(2) Headline Inflation (%, year-on-year)

(3) Core Inflation (%, year-on-year, optional)

(4) Money Growth (%, year-on-year)

(5) Credit Growth (%, year-on-year)

4. Financial Sector Soundness and Supervision

(1) Regulatory Capital to Risk-weighted Assets (%)

(2) Non-Performing Loans (NPL) to Capital (%)

(3) Non-Performing Loans (NPL) to Total Gross Loans (%)

(4) Return on Assets (ROA, %)

(5) Loan to Deposit Ratio (LTD, %)

(6) Residential Real Estate Loans to Total Banking System Loans (%, optional)

5. Data Adequacy

(1) Primary Evaluation Based on ERPD Matrices

(2) Secondary Evaluation Based on AMRO Economic Reports

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BRUNEI DARUSSALAM

TABLE 1: EXTERNAL POSITION AND MARKET ACCESS

Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Gross External Debt (% of GDP) 1/ 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 N/A N/A N/A

Gross Short-term External Debt (% of Foreign Reserves) 2/

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 N/A N/A N/A

Current Account Balance (% of GDP) 3/ 47.8 48.1 35.7 36.5 34.8 29.8 20.9 27.8 N/A N/A N/A N/A

Foreign Reserves (in months of imports) 4/ 3.6 3.6 6.5 6.8 8.2 10.8 11.3 12.1 13.0 N/A N/A N/A

Notes:

1/ Gross External Debt = current liabilities owed to non-residents by residents of the economy = external debt of

general government + monetary authority + banks + other sectors. (nb: not including contingent liabilities).

2/ Gross Short-Term External Debt = external debt with (original) maturity of one year or less.

3/ Current Account Balance = net exports of goods and services + net primary income + net secondary income

(net current transfers).

4/ Foreign Reserves = months of import cover of foreign reserves = foreign reserves / monthly import value (12-

month average).

Sources: National authorities.

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TABLE 2: FISCAL POLICY

Indicators FY07/08 FY08/09 FY09/10 FY10/11 FY11/12 FY12/13 FY13/14 FY14/15 FY15/16

Revenue (% of GDP) 1/ 52.0 60.3 39.4 51.9 60.6 55.5 45.4 34.5 N/A

Expenditure (% of GDP) 2/ 31.2 31.6 40.9 35.9 33.6 35.3 37.0 35.5 N/A

Overall Balance (% of GDP) 3/ 20.8 28.6 -1.5 15.9 26.9 20.2 8.4 -1.0 N/A

Primary Balance (% of GDP) 4/ N/A N/A N/A N/A N/A N/A N/A N/A N/A

Central Government Debt (% of GDP) 5/ 0.39 1.06 0.74 0.37 1.85 1.89 3.90 2.92 N/A

Notes: Fiscal year starts with April and ends in March in the following year.

1/ Revenue = Tax + Non-Tax Revenue.

2/ Expenditure = Current Expenditure + Capital Expenditure.

3/ Overall Balance = Revenue – Expenditure.

4/ Primary Balance = Overall Balance + Debt Service.

5/ Central Government Debt = Domestic Central Government Debt + Foreign Central Government Debt. Central

Government Debt is the Islamic bonds or Sukuk that are issued domestically for capital market development

purposes only and not for financing fiscal deficit.


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TABLE 3: MONETARY POLICY

Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Monetary Policy Framework Please see the following page (Table 4)

Headline Inflation (%, year-on-year) 1/ 1.0 2.1 1.0 0.4 0.1 0.1 0.4 -0.2 -0.4 N/A N/A N/A

Core Inflation (%, year-on-year, optional) 2/ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Money Growth (%, year-on-year) 3/ 6.7 9.6 9.7 4.8 10.1 0.9 1.5 3.2 -1.76 N/A N/A N/A

Credit Growth (%, year-on-year) 4/ 4.0 -2.4 -2.3 -2.7 -1.6 2.1 8.1 N/A 7.6 N/A N/A N/A

Notes:

1/ Headline Inflation is defined as year on year percentage change of Consumer Price Index (CPI). Annual

headline inflation is calculated as the average of monthly year-on-year inflation.

2/ Core Inflation is defined as the percentage change in the CPI excluding volatile prices, typically food, energy,

and administrative prices. Annual core inflation is calculated as the average of monthly year on year core

inflation. This definition may vary country to country. Core inflation is not calculated in Brunei Darussalam.

3/ Annual money growth is generally based on end of calendar year's M2 which is defined as “currency in

circulation and deposits”. M3 is defined as “M2 plus deposits at institutions that are not banks”. These

definitions of M2 and M3 may vary country to country.

4/ Credit is generally defined as "total outstanding domestic bank loans excluding those to financial institutions”.

Inter-bank loans as well as loans used for off-shore are excluded as possible. Alternatively, for an economy of

which full set of bank loan data is not available, "domestic claims to private sector by depository corporations

excluding central bank" is used following to IMF MFSM 2000. Annual credit growth is calculated based on the

end of the calendar year.


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TABLE 4: MONETARY POLICY FRAMEWORK AND RECENT POLICY RESPONSES

Monetary Policy Framework

Objective • The main objectives of AMBD are as follows: a) To achieve and maintain domestic price stability;

b) To ensure the stability of the financial system, in particular by formulating financial

regulation and prudential standards;

c) To assist in the establishment and functioning of an efficient payment and

settlement systems and to oversee them; and

d) To foster and develop a sound and progressive financial services sector.

Regime • The nation’s monetary discipline of having a currency board system has ensured the full convertibility of base money with the exchange rate pegged at par to the Singapore Dollar. Following the establishment of the AMBD, the Currency Interchangeability Agreement between the Government of Negara Brunei Darussalam and the Government of the Republic of Singapore remains intact. Under this agreement, the Singapore Dollar is customary tender in Brunei and vice-versa.

Instruments • Given that Brunei operates a currency-board-based monetary policy, its main role is the issuance and management of Brunei currency notes and coins to banks in the domestic financial system. It also administers the printing of Brunei currency notes and in-house minting of coins

Decision-Making

Process

• Information on monetary and financial policies and statistics are available on AMBD’s website at www.ambd.gov.bn. AMBD also issues directives and notices to financial institutions, where necessary.

Major Monetary Policy Decisions and Updates

No major monetary policy decisions.

Other updates:

AMBD had issued several new Regulatory Notices to relevant financial institutions on 28th May 2015. These Regulatory Notices aim to reduce household debt, which is as a source of vulnerabilities to the socio-economy as a whole by:- - Inculcating responsible and ethical lending practices by banks in their dealings with individual

customers; - Promoting responsible lending and borrowing behaviours to foster a healthy and sustainable credit

market which in turn contributes to economic and financial stability; and - Further strengthening the protection of consumers’ interests.

The new regulatory notices issued to all banks, Perbadanan TAIB and finance companies which is effective from 8th June 2015 are as follows:-

Notice No. Items

Notice No. BS/N/1/2015/30 Total Debt Service Ratio

Notice No. BS/N/2/2015/31 Unsecured Personal Credit Facility

Notice No. BS/N/3/2015/32 Unsecured Personal Financing Facility

Notice No. BS/N/4/2015/33 Consolidation Loan Scheme

Notice No. BS/N/5/2015/34 Consolidation Financing Scheme

Notice No. BS/N/6/2015/35 Service Fees/Charges

AMBD has also issued the following guidelines to the Takaful/Insurance Operators:

Outsourcing Guidelines; and

Guidelines on Financial Reporting for Takaful Operators.

http://www.ambd.gov.bn/

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TABLE 5: FINANCIAL SECTOR SOUNDNESS AND SUPERVISION

Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/ 12.5 14.0 18.0 21.1 18.8 20.9 20.4 21.4 21.1 N/A N/A N/A

Non-Performing Loans (net provision) to Capital (%) 2/

4.6 6.6 12.0 8.4 4.9 4.3 4.5 6.1 4.8 N/A N/A N/A

Non-Performing Loans to Total Gross Loans (%) 3/ 7.7 9.3 11.2 8.5 7.6 6.8 5.7 4.9 4.6 N/A N/A N/A

Return on Assets (ROA, %) 4/ 1.9 1.5 1.5 1.5 1.1 0.8 1.3 1.4 1.4 N/A N/A N/A

Loan to Deposit Ratio (LTD, %) 5/ 43.0 34.8 39.1 34.7 26.9 30.0 33.6 35.6 42.9 N/A N/A N/A

Residential Real Estate Loans to Total Loans (%, optional) 6/

N/A N/A N/A 17.7 19.2 21.0 22.4 24.3 23.4 N/A N/A N/A

Notes:

1/ Regulatory Capital to Risk-Weighted Assets is calculated as the ratio of aggregated regulatory capital to

aggregated risk-weighted assets (following the Basel Guidelines).

2/ Non-Performing Loans (net provision) to Capital is the ratio of value of non-performing loans less the value of

specific loan provisions to total capital and reserves.

3/ Non-Performing Loans to Total Gross Loans is calculated as the ratio of the value of non-performing loans to

total value of the loan portfolio (including NPLs, and before the deduction of specific loan loss provisions).

4/ Return on Assets is calculated as the ratio of net income before extraordinary items and taxes to average value

of total assets (financial and non-financial).

5/ Loan to Deposit Ratio is calculated as the ratio of total loans to total deposits (non-interbank loans and

deposits).

6/ Residential Real Estate Loans to Total Loans is calculated as the ratio of outstanding residential real estate

loans to outstanding loans of depository institutions.


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TABLE 6: DATA ADEQUACY – PRIMARY EVALUATION BASED ON ERPD MATRICES1

ERPD Matrix Indicators Availability(i) Timeliness(ii) Other Issues,

if Any(iii)

I/ External Position and Market Access

Gross External Debt (% of GDP)

Gross Short-term External Debt (% of Foreign Reserves)

Current Account Balance (% of GDP)

Foreign Reserves (in months of imports)

II/ Fiscal Policy

Revenue (% of GDP)

Expenditure (% of GDP)

Overall Balance (% of GDP)

Primary Balance (% of GDP)

Central Government Debt (% of GDP)

III/ Monetary Policy

Monetary Framework and Recent Policy Responses

Headline Inflation (%, year-on-year)

Core Inflation (%, year-on-year, optional)

Money Growth (%, year-on-year)

Credit Growth (%, year-on-year)

IV/ Financial Sector Soundness and Supervision

Regulatory Capital to Risk-Weighted Assets (%)

Non-Performing Loans (net provision) to Capital (%)

Non-Performing Loans to Total Gross Loans (%)

Return on Assets (ROA, %)

Loan to Deposit Ratio (LTD, %)

Residential Real Estate Loans to Total Loans (%, optional)

Notes:

1/ Data availability indicates if the data are available for provision by the authorities. In the case of non-available data, the data might be either non-existent or existent but have not been officially computed or provided by the authorities.

2/ Data timeliness indicates how up-to-date the data have been as of the assessing period or the latest data point provided by the authorities to AMRO by the time of assessment.

3/ Other issues, if any, refer to any issues that might be related to the assessment of the provision of data and information of the four above ERPD Matrix areas, which could be consisted of, but not limited to, the consistency and accuracy of the data, and potential areas of improvements that the authorities could consider for their data provision in the future.

1 “Secondary evaluation based on AMRO Economic Reports” is separately provided in AMRO’s April 2016 surveillance report of

Brunei Darussalam.

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CAMBODIA


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Gross External Debt (% of GDP) 1/ 21.7 24.3 29.1 28.2 29.4 41.3 43.9 44.8 N/A N/A N/A N/A


18.1 28.8 14.3 16.7 18.8 43.6 46.8 43.4 N/A N/A N/A N/A

Current Account Balance (% of GDP) 3/ -1.9 -5.4 -6.3 -5.8 -5.9 -8.2 -13.0 -9.9 N/A N/A N/A N/A

Foreign Reserves (in months of imports) 4/ 4.4 5.0 5.8 5.5 5.1 5.1 4.5 5.0 N/A N/A N/A N/A

Notes:






The table below provides the current account balance excluding official transfers and net error and omission

2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Current Account Balance, excl. official transfers (% of GDP)

-4.3 -8.6 -8.9 -9.2 -9.0 -10.5 -14.9 -11.6 N/A N/A N/A N/A

Net Errors and Omissions (% of GDP)

-0.5 -0.4 -0.3 -0.2 -0.4 -0.3 -0.1 -0.3 N/A N/A N/A N/A


month average).


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Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 2106

Revenue (% of GDP) 1/ 12.1 13.3 11.9 13.2 13.2 14.5 15.0 16.8 17.1 N/A

Expenditure (% of GDP) 2/ 14.7 15.9 20.5 21.3 20.7 19.7 21.0 21.6 19.5 N/A

Overall Balance (% of GDP) 3/ -2.8 -2.9 -6.4 -8.7 -7.3 -5.2 -5.9 -4.8 -2.4 N/A

Primary Balance (% of GDP) 4/ -2.6 -2.7 -6.2 -8.4 -7.0 -4.9 -5.5 -4.4 -1.9 N/A

Central Government Debt (% of GDP) 5/ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Notes:





5/ Central Government Debt = Domestic Central Government Debt + Foreign Central Government Debt.


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Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Headline Inflation (%, year-on-year) 1/ 7.7 25.0 -0.7 4.0 5.5 2.9 2.9 3.9 1.2 N/A N/A N/A


Money Growth (%, year-on-year) 3/ 62.9 4.8 36.8 20.0 21.4 20.9 14.6 29.9 14.7 N/A N/A N/A

Credit Growth (%, year-on-year) 4/ 76.0 55.0 6.3 23.4 31.2 28.0 26.7 31.3 27.1 N/A N/A N/A

Notes:.

1/ Headline Inflation is defined as year on year percentage change of Consumer Price Index (CPI). Annual headline inflation is calculated as the average of monthly year-on-year inflation. Currently CPI data covers only the capital city (Phnom Penh). A national CPI data with provincial price index integrated has yet been made available.

2/ Core Inflation is defined as the percentage change in the CPI excluding volatile prices, typically food, energy, and administrative prices. Annual core inflation is calculated as the average of monthly year on year core inflation. This definition may vary country to country.

3/ Annual money growth is generally based on end of calendar year's M2 which is defined as “currency in circulation and deposits”. M3 is defined as “M2 plus deposits at institutions that are not banks”. These definitions of M2 and M3 may vary country to country. With unofficial dollarization, it is difficult to ascertain total amount of foreign currency in circulation and the actual figure of the money supply in Cambodia. Statistics published by the National Bank of Cambodia include only deposits in banks (denominated in both local and foreign currencies) and bills in circulation (in local currency only).

4/ Credit is generally defined as "total outstanding domestic bank loans excluding those to financial institutions”. Inter-bank loans as well as loans used for off-shore are excluded as possible. Alternatively, for an economy of which full set of bank loan data is not available, "domestic claims to private sector by depository corporations excluding central bank" is used following to IMF MFSM 2000. Annual credit growth is calculated based on the end of the calendar year.


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Objective

Price stability: “Law on the Organization and Conduct of the National Bank of Cambodia (NBC)” sets price stability in order to facilitate economic development within the framework of the country's economic and financial policy as the principal mission of the NBC.

However, the central bank’s ability to use traditional monetary instruments in

conducting monetary policy is limited due to high dollarization in the economy.

Regime

Cambodia has adopted managed float exchange rate regime. The exchange rate has been stabilized but there is neither anchor nor specific band of exchange rate fluctuation.

Instruments

In the context of dollarization, the tools available for the NBC comprise of foreign

exchange interventions, and reserve requirements. The interest rate is determined

by the market and could not be influenced by the central bank.

Foreign Exchange Intervention: When there was a strong upward/downward pressure on the KHR/USD exchange rate, the NBC would intervene to reduce the over pressure.

Reserve requirements: Currently, the NBC requires commercial banks to maintain reserve requirements of 8% of total deposits in KHR and 12.5% of foreign currency deposits and foreign borrowings. The Microfinance Depository Institutions (MDIs) have to deposit the reserve requirement of at least 8% of its client deposits for both KHR and USD with the NBC.

Negotiable Certificates of Deposits (NCDs): NBC has issued the Negotiable Certificates of Deposits (NCDs) since September 2013 in order to develop the interbank and money market. Yet, this new instrument has not served the monetary policy purpose as its market is at the early stage of development. In order to increase the demand for NCDs in the market, the NBC has recently reduced the face value of NCDs in Riel from 2 billion Riel to 200 million Riel and in USD from 500 thousand U.S dollar to 50 thousand U.S dollar. Also, the NBC has stopped providing fixed deposits for banking institutions. The NBC has increased interest rate of NCDs to attract bank and financial institutions to buy the NCDs.

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Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/

23.6 27.6 32.3 31.4 26.2 25.0 24.8 21.5 21.9 N/A N/A N/A


2.9 5.9 4.7 3.4 2.8 3.0 3.6 3.3 3.2 N/A N/A N/A

Non-Performing Loans to Total Gross Loans (%) 3/

2.0 2.9 3.9 2.9 2.1 2.0 2.3 1.8 1.7 N/A N/A N/A


Loan to Deposit Ratio (LTD, %) 5/ 64 95 76 75 83 87 97 96 103 N/A N/A N/A Residential Real Estate Loans to Total Loans (%, optional) 6/

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Notes:










deposits). As the economy is highly dollarized, a large share of bank deposits is in foreign currency. Below are

the ratios of foreign currency deposits to total deposits in Cambodia’s banks from 2007:

2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Foreign Currency Deposits (% of Total Deposits)

98.0 97.0 96.4 96.8 96.3 95.7 95.2 95.1 94.4 N/A N/A N/A




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ERPD Matrix Indicators Availability(i) Timeliness(ii)

Other Issues, if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)


















Notes:





Cambodia.

17


CHINA


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Gross External Debt (% of GDP) 1/ 11.5 8.6 8.6 9.3 9.5 9.0 9.3 8.6 13.4 17.9 N/A N/A


15.4 11.6 10.8 13.2 15.7 16.3 17.7 16.2 24.6 25 N/A N/A

Current Account Balance (% of GDP) 3/ 10.1 9.3 4.9 4.0 1.9 2.6 2.0 2.1 2.7 2.4 N/A N/A

Foreign Reserves (in months of imports) 4/ 19.2 20.6 28.7 24.5 21.9 21.9 23.5 23.4 23.7 24.9 22.8 22.8

Notes: 1/ Gross External Debt = current liabilities owed to non-residents by residents of the economy = external debt of


Significant growth in 2015 is due to new statistical caliber (SDDS).





month average).


18



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 2106

Revenue (% of GDP) 1/ 19.0 19.2 19.6 20.1 21.2 21.7 21.7 21.8 22.2 21.4

Expenditure (% of GDP) 2/ 18.4 19.6 21.9 21.8 22.4 23.3 23.6 23.6 25.7 25.2

Overall Balance (% of GDP) 3/ -0.7 -0.6 -2.7 -2.4 -1.7 -1.5 -2.0 -2.1 -2.4 -2.9

Primary Balance (% of GDP) 4/ N/A N/A -2.3 -2.0 -1.2 -1.0 -1.5 -1.5 -1.8 -2.3

Central Government Debt (% of GDP) 5/ 19.3 16.7 17.3 16.4 14.7 14.4 14.6 14.9 15.6 16.1

Notes: Fiscal year starts with January and ends in December in the following year. 1/ Revenue = Tax + Non-Tax Revenue. 2/ Expenditure = Current Expenditure + Capital Expenditure. 3/ Overall Balance = Revenue – Expenditure. 4/ Primary Balance = Overall Balance + Debt Service. 5/ Central Government Debt = Domestic Central Government Debt + Foreign Central Government Debt. Sources: National authorities.

Note: The National Bereau of Stastics has revised the GDP calculation method and renewed the statistics of GDP since 1952 on July 5, 2016.

19



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Headline Inflation (%, year-on-year) 1/ 4.8 5.9 -0.7 3.3 5.4 2.6 2.6 2.0 1.4 1.7 2.1 2


Money Growth (%, year-on-year) 3/ 16.7 17.8 27.7 19.7 13.6 13.8 13.6 13.1 13.3 11.5 11.3 11.3

Credit Growth (%, year-on-year) 4/ 16.1 15.9 31.7 19.9 14.3 15.0 14.1 13.7 13.4 12.5 12.8 12.8

Notes:

1/ Headline Inflation is defined as year on year percentage change of Consumer Price Index (CPI). Annual

headline inflation is calculated as the average of monthly year-on-year inflation.

2/ Core Inflation is defined as the percentage change in the CPI excluding volatile prices, typically food, energy,

and administrative prices. Annual core inflation is calculated as the average of monthly year on year core

inflation. This definition may vary country to country. China does not disclose core inflation officially.

3/ Annual money growth is generally based on end of calendar year's M2 which is defined as “currency in

circulation and deposits”. M3 is defined as “M2 plus deposits at institutions that are not banks”. These

definitions of M2 and M3 may vary country to country. For China, M2 is used in the above table.

4/ Credit is generally defined as "total outstanding domestic bank loans excluding those to financial institutions”.

Inter-bank loans as well as loans used for off-shore are excluded as possible. Alternatively, for an economy of

which full set of bank loan data is not available, "domestic claims to private sector by depository corporations

excluding central bank" is used following to IMF MFSM 2000. These numbers are presented as italic. In the

case of China, "Financial Institution Loan" published by the People's Bank of China is used. Annual credit

growth is calculated as year on year percentage change of the defined credit at the end month of the calendar

year".


20



Monetary Policy Framework and Recent Policy Responses in China


Monetary policy objectives

The objective is to maintain the stability of the value of the currency and thereby promote economic growth.

Monetary policy instruments and implementation of monetary policy To implement monetary policy, the People's Bank of China may apply the following monetary policy instruments:

Require banking institutions to place deposit reserves at a given ratio;

Determine the benchmark interest rate of the central bank;

Conduct rediscount for banking financial institutions with accounts in the People's Bank of China;

Provide lending to commercial banks;

Trade treasury bonds, other government securities, financial bonds and foreign exchange on the open market; and

Other monetary policy instruments specified by the State Council. RMB exchange rate regime

A managed floating exchange rate regime is based on market supply and demand with reference to a basket of currencies.

Decision-making of monetary policy The People's Bank of China shall, under the leadership of the State Council. The People's Bank of China shall report to the State Council its decisions concerning annual monetary supply, interest rate, exchange rate and other important issues specified by the State Council for approval before they are implemented. The People's Bank of China may, on its own, make and put into immediate effect decisions on other monetary policy issues. The Monetary Policy Committee is a consultative body for the making of monetary policy by the PBC, whose responsibility is to advise on the formulation and adjustment of monetary policy and policy targets for a certain period, application of monetary policy instrument, major monetary policy measures and the coordination between monetary policy and other macroeconomic policies.

Major Policy Responses and Updates

On December 26, Notice on Issues Related to Cross-border RMB Settlement for Overseas Institutions

Issuing RMB Bonds Onshore was issued.

On December 21, the PBC and the Central Bank of Iceland renewed their bilateral local currency swap

agreement. The size of the swap facility is RMB 3.5 billion/ISK 66 billion.

On December 12, the PBC launched direct trading between the RMB and seven other currencies in the

interbank foreign exchange market, including the Hungarian forint, the Polish zloty, the Danish krone,

the Swedish krona, the Norwegian krone, the Turkish lira, and the Mexican peso.

On December 8, the Shanghai Bill Exchange was established and the national bill trading platform was

launched.

On December 6, the PBC and the Central Bank of Egypt signed a local currency swap agreement. The

size of the swap facility is RMB 18 billion/EGP 47 billion.

On November 29, the PBC further regulated the offshore RMB lending business of domestic

enterprises and ensured orderly cross-border RMB settlement of offshore lending.

On November 14, the PBC launched direct trading between the RMB and the Canadian dollar (CAD) in

the interbank foreign exchange market.

On November 4, the PBC and the CSRC jointly issued the Notice Related to the Mainland and the Hong

21


Kong Stock Connect. The Shenzhen-Hong Kong Stock Connect was officially launched on December 5.

On October 1, the inclusion of the RMB in the Special Drawing Right (SDR) basket became effective.

On September 30, 2016 the International Monetary Fund (IMF) announced that the new Special Drawing Right (SDR) basket including the Chinese Renminbi (RMB) would become effective on October 1.

On August 31 2016, the People’s Bank of China, along with six other government agencies, issued the “Guidelines for Establishing the Green Financial System”, with the approval of the State Council

On 24 June 2016, With the authorization of the People's Bank of China, the China Foreign Exchange Trade System (CFETS) launched direct trading between RMB and Korean Won (KRW) on the inter-bank foreign exchange market.

On 17 June 2016, With the authorization of the People's Bank of China, the China Foreign Exchange Trade System (CFETS) launched direct trading between RMB and South African Rand (ZAR) on the inter-bank foreign exchange market.

From 15 June,2016 The People’s Bank of China started to release the yield curves of Chinese Government Bonds (CGB) and other financial products on its official website

On March 28, the PBC issued the Notice on Launching Refinance Business for Poverty Alleviations (PBC Document [2016] No.91)

On March 25, approved by the State Council, the PBC and the CBRC jointly released the Instructions on Enhancing Financial Support to New Areas of Consumption

On March 21, the PBC, National Development and Reform Commission, Ministry of Finance, the CBRC, CSRC, CIRC, and Poverty Alleviation and Development Leading Group Office of the State Council, jointly issued the Operational Opinion on Financial Support to Poverty Alleviation

On March16, the PBC issued the Measures on the Pilot Program of Mortgage Loans for the Property Rights of Rural Homes

On March 1, the PBC lowered the RMB deposit RRR of all financial institutions by 0.5 percentage point, in a bid to maintain the financial system liquidity at reasonably adequate levels.

On February 25, the PBC adjusted reserve requirement ratio (RRR) of certain financial institutions that have participated the targeted RRR reduction plan.

In February 24, the PBC released the Public Statement [2016] No.3 to introduce more QFIIs to the inter-bank bond market, to remove the limit on investment quotas, and to streamline management process.

In February 2016, the PBC issued a statement and decided to formally establish, with an immediate effect, a daily mechanism of open market operations.

In February 2016, the PBC decides to lower reserve requirement ratio, effective from March 1, 2016.

In January 2016, the PBC normalized deposit reserve requirement on offshore financial institutions’ onshore deposits.

22



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16


N/A N/A N/A 12.2 12.7 13.3 12.2 13.18 13.5 13.3 13.3


N/A N/A N/A -2.1 -4.0 -4.5 -11.6 -9.8 -7.9 N/A -7.8


N/A N/A N/A 1.1 1.0 1.0 1.0 1.1 1.7 1.8 1.7

Return on Assets (ROA, %) 4/ N/A N/A N/A 1.1 1.3 1.3 1.3 1.3 1.1 1.1 0.98

Loan to Deposit Ratio (LTD, %) 5/ 65.1 66.9 66.7 64.5 64.9 65.3 66.1 65.1 67.2 67.3 67.6


N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Notes: 1/ Regulatory Capital to Risk-Weighted Assets is calculated as the ratio of aggregated regulatory capital to









deposits).




23




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)


















Notes:




3 “Secondary evaluation based on AMRO Economic Reports” is separately provided in AMRO’s April 2016surveillance report of

China.

24


HONG KONG, CHINA


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Gross Short-term External Debt

(% of Foreign Reserves) 2/ 357.4 266.1 194.3 241.7 251.6 237.0 276.9 282.6 251.3 258.6 N/A N/A



Notes:







month average).


25




Revenue (% of GDP) 1/ 21.7 18.5 19.2 21.2 22.6 21.7 21.3 21.2 18.8

Expenditure (% of GDP) 2/ 14.2 18.3 17.4 17.0 18.8 18.5 20.3 17.5 18.2

Overall Balance (% of GDP) 3/ 7.5 0.3 1.8 4.3 3.8 3.2 1.0 3.7 0.6

Primary Balance (% of GDP) 4/ 7.5 0.2 1.8 4.2 3.8 3.2 1.0 3.6 0.6

Central Government Debt (% of GDP) 5/ 1.1 0.9 0.7 0.6 0.6 0.6 0.5 0.1 0.1

Notes: Fiscal year starts with April and ends in March in the following year. Government debt and interest

payment includes HK$20 billion Government bonds and notes issued to retail and institutional investors in July

2004. Gross government assets are larger than gross debts.


2/ Expenditure = Operating Expenditure + Capital Expenditure (repayment of bonds and notes issued in July 2004

not included).

3/ Overall Balance = Primary Balance + Net Interest Payment (i.e. exclude interest payment of bonds and notes

issued in July 2004 from the Expenditure).

4/ Primary Balance = Revenue - Expenditure.

5/ Government Debts= Bonds and notes issued to retail and institutional investors in July 2004; not including the

outstanding bonds and alternative bonds issued under the Government Bond Programme of the Bond Fund

which does not form part of the fiscal reserves and is managed separately from Consolidated Government

Account.

6/ GDP is nominal and from January to December in the corresponding calendar year.


26



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Headline Inflation (%, year-on-year) 1/ 2.0 4.3 0.5 2.4 5.3 4.1 4.3 4.4 3.0 3.1 1.2 2.4



Credit Growth (%, year-on-year) 4/ 15.6 10.3 -2.4 23.3 13.8 7.2 13.8 11.7 3.9 5.0 7.3 7.3

Notes: The quarterly data in this table refer to the simple average of the monthly data. For example, Q4 year-on-

year growth rate equals average of year-on-year growth rates in October, November and December.

1/ Headline Inflation is defined as year on year percentage change of Consumer Price Index (CPI). Annual headline inflation is calculated as the average of monthly year-on-year inflation.

2/ Core Inflation is defined as the percentage change in the CPI excluding volatile prices, typically food, energy, and administrative prices. Annual core inflation is calculated as the average of monthly year on year core inflation. This definition may vary country to country. Hong Kong does not disclose core inflation officially.

3/ Annual money growth is generally based on end of calendar year's M2 which is defined as “currency in circulation and deposits”. M3 is defined as “M2 plus deposits at institutions that are not banks”. These definitions of M2 and M3 may vary country to country. For Hong Kong, M3 is used in the above table.

4/ Credit is generally defined as "total outstanding domestic bank loans excluding those to financial institutions”. Inter-bank loans as well as loans used for off-shore are excluded as possible. Alternatively, for an economy of which full set of bank loan data is not available, "domestic claims to private sector by depository corporations excluding central bank" is used following to IMF MFSM 2000. Annual credit growth is calculated based on the end of the calendar year. In the case of Hong Kong, the sum of “trade finance” and “other loans for use in Hong Kong” published by HKMA is used.


27



Policy Framework

Objective Monetary stability: The HKMA is responsible for achieving the monetary policy objective in Hong Kong determined by the Financial Secretary, including determining the strategy, instrument and operational means for doing so, and for maintaining the stability and integrity of the monetary system of Hong Kong.

Currency stability: The monetary policy objective of Hong Kong is currency stability, defined as a stable external exchange value of the currency of Hong Kong, in terms of its exchange rate in the foreign exchange market against the USD, at around HKD7.80 to USD1.

Regime Currency board system: The structure of the monetary system is characterized by Currency Board arrangements, requiring the HKD Monetary Base to be at least 100 per cent backed by, and changes in it to be 100 per cent matched by corresponding changes in, USD reserves held in the Exchange Fund at the fixed exchange rate of HKD7.80 to USD1.

Interest rate adjustment mechanism: Under the Currency Board system, the stability of the HKD exchange rate is maintained through an automatic interest rate adjustment mechanism. When there is a decrease in demand for HKD assets and the HKD exchange rate weakens to the convertibility rate, the HKMA stands ready to purchase HKDs from banks, leading to a contraction of the Monetary Base. Interest rates then rise, creating the monetary conditions conducive to capital inflows so as to maintain exchange rate stability. Conversely, if there is an increase in the demand for HKD assets, leading to a strengthening of the exchange rate, banks may purchase HKDs from the HKMA. The Monetary Base correspondingly expands, exerting downward pressure on interest rates and so discouraging continued inflows.

Instruments Lender of last resort: In the event of a bank facing serious funding difficulties, the HKMA may decide to provide Lender of Last Resort (LoLR) support if it is satisfied that the bank’s failure may pose systemic risk. Under the LoLR framework, the HKMA can employ a wide range of instruments, such as repos, FX swaps and credit facilities, to provide funding support to a problem bank. The range of eligible collateral for LoLR support includes bank placements, residential mortgage loans and investment-grade securities denominated in HKD or other currencies.

FX swaps and term repos: For system-wide HKD liquidity shortage, the HKMA may provide liquidity assistance to banks via FX swaps and term repos against HKD or foreign-currency denominated securities of acceptable credit quality. These were originally two of the five temporary measures introduced in September 2008 during the global financial crisis to help relieve tensions in the local interbank market. Upon expiry of the five temporary measures at end-March 2009, the HKMA decided to incorporate FX swaps and term repos into its ongoing market operations to offer HKD liquidity assistance to banks if needed, on a case-by-case basis.


Policy Responses

FX operation under the Currency Board system: There was no FX operation during November 2016 – February 2017. In response to the Fed’s rate hike, the HKMA in tandem raised the Base Rate of the Discount Window by 25 basis points on 15 December 2016 and 16 March 2017 respectively to 1.25%.

28



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/ N/A 14.8 16.9 15.9 15.8 15.7 15.9 16.8 18.3 19.6 N/A N/A


N/A 3.7 3.5 1.9 1.6 1.4 1.5 1.3 1.9 2.0 N/A N/A

Non-Performing Loans to Total Gross Loans (%) 3/ N/A 1.2 1.6 0.8 0.7 0.6 0.5 0.5 0.7 0.9 N/A N/A

Return on Assets (ROA, %) 4/ N/A 0.6 0.8 0.9 0.8 0.9 1.1 1.0 1.0 1.3 N/A N/A

Loan to Deposit Ratio (LTD, %) 5/ 50.5 54.2 51.5 61.6 66.9 67.1 70.3 72.2 70.1 67.3 68.4 68.4


N/A N/A N/A N/A 15.8 15.7 14.1 13.6 14.3 14.0 13.9 13.9

Notes:










deposits).




29




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)








Core Inflation (%, year-on-year, optional) Instead of core inflation indicator, the government releases the underlying CPI which excludes one-off relief measures’ impact on the headline CPI.










Notes:





Hong Kong, China.

30


INDONESIA


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Gross External Debt (% of GDP) 1/ 32.2 30.1 31.8 26.5 25.0 27.4 29.1 33.0 36 35.8 33.9 33.9


32.8 39.7 36.4 34.4 34.7 39.2 43.0 40.3 36.3 35.5 36.1 36.1

Current Account Balance (% of GDP) 3/ 2.4 0.0 20. 0.7 0.2 -2.7 -3.2 -3.1 -2.0 -1.8 -0.8 -1.8


Notes:







month average).


31



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015

2016*

Revenue (% of GDP) 1/ 17.9 19.8 15.7 15.5 16.3 16.2 15.8 15.4 13.0 12.5



Primary Balance (% of GDP) 4/ 0.8 1.7 0.1 0.6 0.1 -0.6 -1.1 -0.9 -1.2 -1.0

Central Government Debt (% of GDP) 5/

35.2 33.1 28.4 24.5 23.1 23.0 24.9 24.7 27.4 27.9

*based on revised state budget 2016

Notes:





5/ Central Government Debt = Domestic Central Government Debt + Foreign Central Government Debt. Base year 2000 is used for 2007-2009 while the base year 2010 is used for 2010-2015 data points. Sources: National authorities.

32



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016



Core Inflation (%, year-on-year, optional) 2/ 5.9 8.1 5.8 4.0 4.6 4.3 4.4 4.5 4.9 3.3 3.1 3.4



Notes:



3/ Annual money growth is generally based on end of calendar year's M2 which is defined as “currency in circulation and deposits”. M3 is defined as “M2 plus deposits at institutions that are not banks”. These definitions of M2 and M3 may vary country to country.



33



Monetary Policy Framework Objective • Stability of the Rupiah: Article 7 of Act No. 3 of 2004 stipulates BI’s goal as achieving and

maintaining the stability of the rupiah. This goal is defined as a stability of prices for goods and services reflected in inflation. Exchange rate stability plays a crucial role in achieving price and financial system stability. So Bank Indonesia also operates an exchange rate policy designed to minimize excessive rate volatility, rather than to peg the exchange rate to a particular level.

Regime • Enhanced Inflation targeting: Bank Indonesia has opted for a working framework known as the Inflation Targeting Framework, adopted in July 2005, by replacing the previous monetary policy target using base money. Current year’s inflation target has been set at 4.0% +/- 1% in terms of the year-on-year rate of increase in CPI. In accordance with this target, Bank Indonesia will continue to maintain rupiah stability in line with its fundamental value.

Policy rate • 7-days Repo Rate: Bank Indonesia strengthened monetary operations by introducing a new policy rate known as the BI 7-Days (Reverse) Repo Rate, effective from 19 August 2016. Implementation of the BI 7-Day Reverse Repo Rate shall be accompanied by normalisation of the interest rate corridor. The Lending Facility (LF) and Deposit Facility (DF) shall continue to act as the ceiling and floor of the interest rate corridor. Now, however, the LF and DF are positioned symmetrically from the BI 7-Day Reverse Repo Rate at a distance of 75bps respectively. Under the old monetary operations regime, the LF was slightly closer from the policy rate (BI Rate) than the DF, leading to an asymmetrical corridor.

• The BI 7-Day Reverse Repo Rate was selected as the new policy rate based on the following considerations: (i) The BI 7-Day Reverse Repo Rate refers to monetary operations actively transacted between Bank Indonesia and the banking sector; (ii) BI 7-Day Reverse Repo monetary operation instruments benefit from a comparatively deep market (iii) The BI 7-Day Reverse Repo Rate correlates closely with the operational target of monetary policy, namely the overnight interbank rate. Meanwhile, a symmetrical interest rate corridor was preferred in order to signal that the central bank maintains a neutral preference to bank liquidity and urges the banking industry to undertake optimal liquidity management in pursuance of economic dynamics/requirements. In addition, lowering the LF to create a symmetrical corridor shall also strengthen the position of LF instruments as liquidity support for banks requiring short-term liquidity. Reducing the cost of being liquid is expected to give the banks space to hold longer tenors on financial markets and, thus, support money market deepening efforts.

Instruments • Open market operations (OMOs): This is implemented to achieve overnight interbank rate as the operational target of monetary policy. OMOs are divided into the two following categories; (1) Contractionary OMOs: using instruments with (i) SBI and SBIS issuance, (ii) Reverse Repo of Government Securities (SBN) transactions, (iii) Outright sale of Government Securities (SBN), (iv) Term Deposit and (v) Foreign exchange selling transactions against Rupiah. (2) Expansionary OMOs: using instruments with (i) Repo transactions, (ii) Outright purchase of Government Securities (SBN) and (iii) Foreign exchange buying transactions against Rupiah.

• [note] Standing facilities: Standing facilities are parts of monetary operation which function to limit the volatility of overnight interbank rates. (1) Provision of Rupiah funds to bank (lending facility): the facility for banks experiencing liquidity problems by using its SBI and/or SBN as an underlying for the repo transaction with Bank Indonesia. (2) Placement of Rupiah funds in Bank Indonesia by banks (deposit facility): the facility for banks with excess liquidity by placing its own funds to Bank Indonesia.

34


Decision Making Process

• Monetary Policy Committee (MPC): The monetary policy stance is adopted by Bank Indonesia in the Board of Governors Meeting. This meeting convenes in the third week of each month for a comprehensive assessment of the latest developments in macroeconomic and policy conditions and of projections for the economy, including inflation. The Board Meeting is valid if attended by more than half of the members of the Board of Governors. Decisions in a Board meeting are adopted through mutual deliberation to achieve a consensus. If the meeting fails to reach a consensus, the Governor shall adopt a final decision.

Major Policy Responses and Updates Policy Responses

Current Update on the Monetary Policy: - The BI Board of Governors agreed on 15th and 16th March 2017 to hold the BI 7-day

(Reverse) Repo Rate (BI-7 day RR Rate) at 4.75%, while maintaining the Deposit Facility (DF) and Lending Facility (LF) rates at 4.00% and 5.50% respectively, effective 17th March 2017.

- The decision is consistent with Bank Indonesia's efforts to maintain macroeconomic and financial system stability amidst growing global uncertainty. Bank Indonesia continues to monitor and remains vigilant of various short term risks, both global and domestic. Global risks include rising global inflation, US economic and trade policy direction and Fed Fund Rate hike effects, as well as geopolitical risks from Europe. Domestically, the impact of administered prices (AP) on inflation still needs to be monitored. Therefore, Bank Indonesia constantly optimises its monetary, macroprudential and payment system policy mix to preserve macroeconomic and financial system stability. Furthermore, Bank Indonesia will continue to strengthen coordination with the Government, focusing on controlling inflation within the target corridor as well as accelerating structural reform programs to support sustainable economic growth.

Current Update on Macro-prudential policy: - Effective from 29 August 2016, Bank Indonesia relaxed the Loan to Value Ratio (LTV) and

Financing to Value Ratio (FTV) on housing loans at 85-90% for the first mortgage lending facility, 80-90% for the second mortgage lending facility, and 75-85% for the third mortgage lending facility.

- The relaxation is only applicable to banks with net NPL for total loan below 5% and gross NPL for property loan/financing below 5%. The rationale is to stimulate domestic demand in order to drive domestic economic growth momentum while maintaining compliance to prudential principles. In terms on nominal and growth, mortgage loan has shown increase since the relaxation of LTV in August, albeit automotive loan in nominal and growth is yet to pick up.

- Furthermore, to boost banks loan, in August 2016 Bank Indonesia raised the floor on the Reserve Requirement - Loan to Funding Ratio (RR-LFR) by increasing the funding component from 78% to 80%, with the ceiling maintained at 92% taking into account prudential principles through incentives / disincentives.

- The meeting of the Board of Governors of Bank Indonesia in November 2016 also decided the level of Countercyclical Buffer (CCB) unchanged at 0% (zero percent). The magnitude of CCB remain unchanged from the previous statement on May 2016. The decision is based on the absence of indication of excessive credit growth that can lead to systemic risks, as shown by the Credit to GDP gap as a main indicator of CCB. In addition, Indonesia's financial cycle indicator indicates that Indonesia is still in the contraction phase. With 0% CCB, it is expected that banking intermediation function can still improve in order to encourage economic growth considering there is no obligation for banks to establish additional capital (buffer).

Other Updates Bilateral Swap Arrangement (BSA): BI has a swap line (BSA) with Japan (USD 22.76 billion, as of December 2015).

Billateral Currency Swap Arrangement (BCSA): BI has swap lines with Korea (KRW10.7 trillion or equivalent IDR115 trillion, as of March 2014) and with Australia (AUD10 billion or IDR100 trillion, as of December 2015).

35



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/ 19.3 16.8 17.4 16.2 16.1 17.3 19.8 18.72 21.28 20.64 20.62 20.62


8.2 8.1 7.2 6.1 4.7 4.7 4.6 5.48 5.89 6.12 5.66 5.66

Non-Performing Loans to Total Gross Loans (%) 3/ 4.1 3.2 3.3 2.6 2.2 1.9 1.8 2.07 2.43 3.03 2.9 2.9

Return on Assets (ROA, %) 4/ 2.8 2.3 2.6 2.7 2.9 3.1 3.1 2.74 2.25 2.27 3.02 3.02



28.2 28.1 30.4 7.7 8.2 7.8 8.0 8.21 8.17 8.2 8.28 8.28

Notes:










deposits).




36




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)


















Notes:





Indonesia.

37


JAPAN


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16

(P) 2016 (P)

Gross External Debt (% of GDP) 1/ 37.3 38.2 38.5 41.7 48.8 52.3 58.5 63.4 66.3 68.5 73.3 73.3


109.5 136.8 132.9 161.2 175.1 182.6 174.3 164.1 176.7 212.9 211.2 211.2

Current Account Balance (% of GDP) 3/ 4.7 2.9 2.8 3.9 2.1 1.0 0.9 0.8 3.1 4.5 3.0 3.8


Notes:

1/ Gross External Debt = Current liabilities owed to non-residents by residents of the economy = External debt of


2/ Gross Short-term External Debt = External debt with (original) maturity of one year or less.

3/ Current Account Balance (as % of GDP) = Current account balance / GDP = (Exports - Imports) + Net Service +

Net income from abroad + Net current transfers) / GDP at current year

4/ Foreign Reserves = Months of import cover of foreign reserves = Foreign reserves / Monthly import of goods

and services value (BOP, 12-month average).


38



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenue (% of GDP) 1/ 32.2 34.0 31.4 31.2 31.9 32.2 33.4 35.4 34.1 N/A



Primary Balance (% of GDP) 4/ -2.1 -2.5 -8.1 -7.3 -7.7 -7.4 -6.7 -4.4 -4.9 N/A


Notes: Fiscal year starts with April and ends in March in the following year. Data except the government debt are

“general government” numbers.







39



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Headline Inflation (%, year-on-year) 1/ 0.1 1.4 -1.3 -0.7 -0.3 0.0 0.4 1.2 0.3 -0.5 0.3 -0.1

Core Inflation (%, year-on-year, optional) 2/ 0.0 1.5 -1.3 -1.0 -0.2 -0.1 0.4 1.1 0.1 -0.5 -0.3 -0.3


Credit Growth (%, year-on-year) 4/ 0.9 4.0 -1.3 -2.0 0.7 1.9 2.8 3.2 3.3 2.3 2.8 2.8

Notes: For headline and core inflation, the direct effect from the consumption tax hike in April 2014 is excluded.



3/ Annual money growth is generally based on end of calendar year's M2 which is defined as “currency in circulation and deposits”. M3 is defined as “M2 pluses deposits at institutions that are not banks”. These definitions of M2 and M3 may vary country to country.



40




Objective Price stability. The Bank of Japan (BOJ) Act states that the BOJ's monetary policy should be "aimed at achieving price stability, thereby contributing to the sound development of the national economy."

Regime The BOJ set the "price stability target" at 2 percent in terms of the year-on-year rate of change in the consumer price index (CPI) in January 2013, and has made a commitment to achieving this target at the earliest possible time.

Instruments According to the guideline for money market operations decided at MPMs, the BOJ controls the amount of funds in the money market, mainly through money market operations.

The BOJ supplies funds to financial institutions by, for example, extending loans to them, which are backed by collateral submitted to the BOJ by these institutions. Such an operation is called a funds-supplying operation. The opposite type of operation, in which the BOJ absorbs funds by for example issuing and selling bills, is called a funds-absorbing operation.

Decision-

Making Process

The BOJ's Policy Board decides on the basic stance for monetary policy at Monetary Policy Meetings (MPMs). The Policy Board discusses the economic and financial situation and then decides an appropriate guideline for money market operations at MPMs. After every MPM, and the BOJ releases its assessment of economic activity and prices as well as the BOJ's monetary policy stance for the immediate future in addition to the guideline for money market operations.


On April 2013, the BOJ introduced the "Quantitative And Qualitative Monetary Easing" (QQE) to achieve the price stability target. Under the QQE, the BOJ continues to pursue a new phase of monetary easing both in terms of quantity and quality. It will double the monetary base and the amounts outstanding of Japanese government bonds (JGBs) as well as exchange-traded funds (ETFs) in two years, and more than double the average remaining maturity of JGB purchases.

On February 2014, the BOJ decided to double the scale of (i) the Fund-Provisioning Measure to Stimulate Bank Lending and (ii) the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth, and to extend the application period for these facilities by one year.

On October 2014, the BOJ decided to expand the QQE. The pace of increase in the monetary base is accelerated from 60-70 trillion to 80 trillion. In addition, the target amount of JGB purchase is increased from JPY50 trillion to JPY80 trillion with extended maturity from 7 years to 7-10 years (on December 2015, extended to 7-12 years).

On December 2015, the BOJ decided to extend the application period for (i) Fund-Provisioning Measure to Stimulate Bank Lending and (ii) the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth by one year.

On January 2016, the BOJ introduced "Quantitative and Qualitative Monetary Easing (QQE) with a Negative Interest Rate" in order to achieve the price stability target of 2 percent at the earliest possible time. Going forward, the BOJ will pursue monetary easing by making full use of possible measures in terms of three dimensions; quantity, quality, and interest rate.

On July 2016, the BOJ decided to purchase ETFs so that their amount outstanding will increase at an annual pace of about 6 trillion yen (almost double the previous pace of about 3.3 trillion yen), to Increase the size of the BOJ's lending program to support growth in U.S. dollars and to establish a new facility for lending securities to be pledged as collateral for the U.S. Dollar Funds-Supplying Operations.

On September 2016, the BOJ decided to to introduce "QQE with Yield Curve Control" by strengthening the previous policy frameworks.

41



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/ 12.6 12.0 12.4 13.9 14.2 14.2 15.9 15.3 15.9 N/A N/A N/A


17.0 16.0 26.3 22.6 22.2 21.4 17.8 14.3 12.2 N/A N/A N/A



Loan to Deposit Ratio (LTD, %) 5/ 77 79 76 73 71 70 69 68 68 67 67 67


14.5 13.9 14.4 14.4 14.3 14.2 14.0 13.9 14.1 14.8 14.7 14.7

Notes:










deposits).




42




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)


















Notes:





Japan.

43


KOREA


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Gross Short-term External Debt

(% of Foreign Reserves) 2/ 63.3 74.0 55.1 46.8 45.6 39.1 32.3 32.0 28.3 28.8 28.3 28.3



Notes:


general government + monetary authority + banks + other sectors.(nb: not including contingent liabilities)




4/ Foreign Reserves = months of import cover of foreign reserves = foreign reserves/monthly import value (12-

month average).


44



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenue (% of GDP) 1/ 23.4 22.7 21.8 21.4 21.9 22.6 22.0 21.6 21.8 24.7


Overall Balance (% of GDP) 3/ 3.6 1.4 -1.5 1.3 1.4 1.3 1.0 0.6 0.0 0.2

Primary Balance (% of GDP) 4/ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A


Notes:

1/ Revenue = Tax + Non-Tax Revenue + Social Security Contribution.

2/ Expenditure = Current Expenditure + Capital Expenditure + Net Lending (including Net Acquisition).

3/ Overall Balance = Revenue – Expenditure & Net Lending.

4/ Primary Balance = Overall Balance + Interest Payment (not an official data). National authorities do not

officially calculate primary balance and no data for this indicator are thus provided.

5/ Central Government Debt = Domestic Central Government Debt + Foreign Central Government Debt + Central

Government Guaranteed Debt.


45



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016






Notes:

1/ Headline inflation is defined as the year-on-year percentage change of Consumer Price Index(CPI). Annual

headline inflation is calculated as the growth rate of 12-month average headline CPI.

2/ Core inflation is defined as the percentage change in the CPI excluding prices of agricultural products and oil.

Annual core inflation is calculated as the growth rate of 12-month average core CPI.

3/ Annual money growth is calculated as the growth of M2 based on the end of calendar year. M2 is defined as

“currency in circulation and deposits”.

4/ Credit growth is calculated as the growth in total loans of commercial and specified banks in Korea, based on

the end of the calendar year.


46



Policy Framework

Objective Price stability: “Bank of Korea (BOK) Act” sets it as the main purpose of the BOK's establishment in 1950.

Financial stability: In order for the national economy to achieve stable growth, a revised BOK Act was promulgated on 16 September 2011 and included “The Bank of Korea needs to pay attention to financial stability in the implementation of monetary policy.” Thus, the Bank of Korea is also making policy efforts to maintain financial stability while pursuing price stability through implementing its monetary policy.

Regime Inflation targeting: The BOK has adopted inflation targeting as the operational framework for its monetary policy since 1998. The inflation target for 2016~2018has been set at 2.0%±0.5%p in terms of the year-on-year rate of increase in CPI.In order to clearly convey policy determination for price stability, as well as to stabilize inflation expectations, new inflation target has been set as a point target rather than a range(the target for 2013~2015 was 2.5~3.5%).

Policy Rates The BOK Base Rate: This is the reference rate applied in transactions between the BOK and financial institutions, such as repurchase agreements (RPs) and the Bank’s liquidity adjustment deposits and loans. The Base Rate is used as a fixed bid rate for its sales of 7-day RPs and as the minimum bid rate for its purchases of 7-day RPs.

Monetary Policy Board (MPB): MPB determines the Base Rate. From 2017 the BOK adjusted the annual number of Monetary Policy Decision meetings from 12 to 8, and change the purposes of the other 4 meetings to discussions of financial stability.The MPBapplies a holistic approach, taking into overall account domestic price movements, the economy, financial and foreign exchange market conditions, changes in the flow of the world economy, etc. The minutes are released on Tuesday two weeks after the meeting.

Instruments Open market operations: The BOK buys or sells securities with financial institutions in the open markets, thereby influencing the amount of money in circulation and/or interest rates. These operations are conducted in three ways: (i) through outright or RP (mostly with 7-day maturities) transactions of securities such as government bonds, government-guaranteed bonds, and securities specified by MPB, (ii) through the issuance and repurchase of Monetary Stabilization Bonds (MSBs) which have relatively long maturities, and (iii) and through commercial banks’ term deposits made in the Monetary Stabilization Account (MSA).

Lending and deposit facilities: Through these, the BOK supplies loans to or receives deposits from individual banking institutions. Lending facilities include (i) Liquidity Adjustment Loans, (ii) Bank Intermediated Lending Support Facility (formerly Aggregate Credit Ceiling Loans), (iii) Intraday Overdrafts, and (iv) special loans such as Emergency Credit to financial institutions and Credit to for-profit enterprises. The BOK also operates 'Liquidity Adjustment Deposit' facilities, which enable financial institutions to deposit their excess cash arising in the process of their supply of and demand for funds. The interest rates of liquidity adjustment deposits and loans are 100bp below and above the Base Rate, respectively.

Reserve requirements: Commercial banks and special banks are obliged to hold a certain ratio of their liabilities subject to reserve requirements (Reserve Requirement Ratio, RRR) in their accounts with the central bank. RRR varies depending upon their deposit liability types; 0.0% for long-term savings deposits for housing, property formation savings; 2.0% for time deposits, installment savings, mutual installments, housing installments, CDs; 7.0% for others.


Policy Responses

Base Rate Cut: In June 2016, the BOK lowered the Rate by 25 bps to 1.25 percent.

Credit Policy: Apart from the Base Rate, there is Bank Intermediated Lending Support Facility, which provides funds up to a ceiling, taking into account the recipient banks' SME loan performances. In terms of the conduct of monetary policy, the BOK has begun to make public the number of votes cast for or against the Base Rate setting decisions and names of members who expressed minority opinionsat the press briefing held immediately after the policy meeting.

Other Updates

Bilateral Swap Arrangements (BSAs): The BOK has entered into BSAs with 4 central banks: Malaysia (renewed in Jan 2017),Australia (renewed in Feb2017),Indonesia (renewed in Mar2017) and China (renewed in Oct 2014).

47



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/ 12.3 12.3 14.4 14.6 14.0 14.3 14.5 14.0 13.9 14.8 14.9 14.9



Non-Performing Loans to Total Gross Loans (%) 3/ 0.7 1.1 1.2 1.9 1.4 1.3 1.8 1.6 1.8 1.7 1.4 1.4

Return on Assets (ROA, %) 4/ 1.1 0.5 0.4 0.5 0.7 0.5 0.2 0.3 0.2 0.6 -0.4 0.1



27.2 25.6 27.2 28.4 28.5 28.5 28.1 28.9 29.6 30.5 29.6 29.6

Notes:










deposits).




48




if Any(iii)



Gross Short-term External Debt (% of Foreign Reserves) Current Account Balance (% of GDP) Foreign Reserves (in months of imports)

II/ Fiscal Policy

Revenue (% of GDP) Expenditure (% of GDP) Overall Balance (% of GDP) Primary Balance (% of GDP) Central Government Debt (% of GDP)


Monetary Framework and Recent Policy Responses Headline Inflation (%, year-on-year) Core Inflation (%, year-on-year, optional) Money Growth (%, year-on-year) Credit Growth (%, year-on-year)


Regulatory Capital to Risk-Weighted Assets (%) Non-Performing Loans (net provision) to Capital (%) Non-Performing Loans to Total Gross Loans (%) Return on Assets (ROA, %) Loan to Deposit Ratio (LTD, %) Residential Real Estate Loans to Total Loans (%)

Notes:





Korea.

49


LAO PDR


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016




Current Account Balance (% of GDP) 3/ 4/ 2.5 1.7 -1.1 0.4 2.0 -4.2 -4.0 -9.9 -18.0 -2.3 -2.0 -8.5

Foreign Reserves (in months of imports) 5/

6.0 5.4 5.2 4.3 3.4 3.9 4.8 4.7 6.4 6.4 5.3 5.3

Notes: Recent current account revisions are due to high values of errors and omissions in the balance of

payments.



2/ Gross Short-term External Debt = external debt with (original) maturity of one year or less.



4/ The current account and the capital account have occasionally been inaccurate due to large errors and

omissions and have been revised from time to time. The table below provides the current account balance

excluding official transfers and net error and omission

2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Current Account Balance,

excl. Official Transfers

(% of GDP)8

0.5 0.3 -2.8 -1.2 0.1 -6.0 -5.4 -11.3 -18.9 -2.4 -2.2 -9.2

Net Errors and Omissions

(% of GDP)9 -6.8 -8.0 -9.1 -4.8 -14.4 -4.2 -9.3 -3.3 -3.0 -2.2 -2.9 -10.2


month average).


8 AMRO staff calculations based on the data provided by national authorities.

50




(P)

Revenue (% of GDP) 1/ 17.8 17.3 22.3 22.4 24.1 24.4 24.3 23.7 N/A

Expenditure (% of GDP) 2/ 20.9 20.7 24.6 24.4 25.5 30.8 28.7 28.9 N/A

Overall Balance (% of GDP) 3/ -3.1 -3.4 -2.3 -2.0 -1.4 -6.4 -4.4 -5.2 N/A

Primary Balance (% of GDP) 4/ -2.3 -2.8 -1.6 -1.3 -0.6 -5.1 -3.4 -4.1 N/A

Central Government Debt (% of GDP) 5/ N/A N/A N/A N/A N/A N/A N/A N/A N/A

External Government Debt (% of GDP, in

calendar year) - - 48.2 41 36.5 42.3 47.2 49.4 53.8

Notes: Fiscal year starts with October in the previous year and ends in September in the following year. FY13/14

is as of 2Q 2013 (calendar year)

1/ Revenue = Tax + Non-Tax Revenue + Grant. In the case of Lao PDR, revenue includes grant.



4/ Primary Balance = Overall Balance + Debt Service. In the case of Lao PDR, debt service only includes interest

payment.


(Central government debt, we can provide only External Government Debt)

Sources: Ministry of Finance.

51


TABLE3: MONETARY POLICY

Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016




2/ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A



Notes:



3/ Annual money growth is generally based on end of calendar year's M2 which is defined as “currency in circulation and deposits”. M3 is defined as “M2 plus deposits at institutions that are not banks”. These definitions of M2 and M3 may vary country to country. With certain degree of dollarization within the economy, it is certainly difficult to ascertain total amount of foreign currency in circulation, as well as the actual figures of the money supply in Lao PDR. The only data available for the amount of foreign currency in the economy is its share out of total bank deposits.



52




Objective The Bank of Lao PDR (BoL) performs a combined monetary policy framework with an objective to promote and maintain the national monetary stability, as well as to contribute socio-economic development.

Regime The BoL undertakes a managed floating exchange regime as the main instrument in order to maintain the national monetary stability by keeping a close watch on exchange movements in both domestic and international as a basis to set a daily reference rate of LAK/USD.

The BoL intervenes in the foreign exchange market if deems necessary as the lender of last resort, with an aim to provide sufficient foreign exchange liquidity to meet the demand of the society and diminish an illegal foreign exchange trading.

Instruments

In recent years, the BoL has used several instruments to implement monetary policy:

Reserve Requirement: The reserve requirement has been set at 5 percent for LAK and 10 percent for foreign currency deposits since 2006. In 2008, a reserve requirement for eligible bonds to reserve requirement ratio was introduced at 2 percent for both LAK and foreign currency and changed to 2.5 percent in 2016 while the reserve requirement remain at the same rate.

Standing Facility: The BoL has a non-collateralized overdraft lending facility, on which banks can draw for short-term liquidity. Overdraft must be paid within 7 days. Interest is charged at a fixed rate set by the BoL and adjusted infrequently. This rate is generally regarded as the policy rate, as it is the only central bank rate that is published.

Open Market Operations (OMO): The BoL utilizes net sales of the BoL bonds (a short-term instrument) and auctions of treasury bills to conduct OMO. Nets sales of BoL bonds have been the most active instrument in recent years, as they have been used to sterilize BoL’s quasi-fiscal operations. Treasury bills have been used much less.

Statutory Liquidity requirements (SLR): Net Open Position (NOP) has been used, commercial banks are required to hold NOP at 20 percent for a single foreign currency and 25 percent for multiple foreign currencies.

Monetary Policy Responses and Updates

• Since 2013, up to date in response to the foreign liquidity squeeze in the banking sector, the BoL stepped in to provide foreign exchange liquidity to the commercial banks.

• Since 2013, the BOL keep announced that the central bank would not allow any commercial bank to release foreign currency loans to companies which do not generate foreign currency income, as part of efforts to build up the foreign reserves.

• In January 2016, the BOL has canceled the announcement number 356/BSD dated 21 May 2014, a suspension on the establishment of new commercial banks in Lao PDR, and has replaced by the agreement on establishment of new commercial banks and branches number 42/BOL dated 15 January 2016.

• Since 2015, BOL adjusted the difference between the buying-selling LAK/THB rate for commercial banks and currency exchange services from 0.5% to 0.75%.

• In August 2016, BOL cut short-term interest rate of Lao KIP for less than 7 days to 4.25% per year, 14 days to 5.31% per year and more than 14 days but less than or equal to 1 year to 10.63%.

• In August 2016, the BOL has announced to impose deposit interest rate of LAK for commercial banks which revised the BOL’s announcement number 705/MPD dated 04 August 2015 and number 663/MPD dated 21 July 2015. A saving deposit account should not exceed 1.91 percent and fixed deposit account for 3 months is not over 3.20 percent, 6 months is 4.02 percent, 12 months is 5.72 percent, 24 months is 6.84 percent, 36 months is 6.90 percent, 48 months is 6.97 percent and 60 months is 7.04 percent respectively.

53


TABLE5: FINANCIAL SECTOR SOUNDNESS AND SUPERVISION

Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/ N/A N/A N/A N/A N/A 16.87 20.33 22.29 19.62 15.76 16.38 16.38

Non-Performing Loans (net provision)

to Capital (%) 2/ N/A N/A N/A N/A N/A 4.58 7.36 8.27 9.06 8.71 8.94 8.94

Non-Performing Loans to Total Gross Loans (%) 3/ N/A N/A N/A N/A N/A 1.50 2.14 2.50 3.04 3.03 3.00 3.00

Return on Assets (ROA, %) 4/ N/A N/A N/A N/A N/A 1.49 1.24 0.23 0.20 0.19 0.29 0.29


Residential Real Estate Loans to Total Loans

(%, optional) 6/ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Notes:

1/ Regulatory Capital to Risk-Weighted Assets is calculated as the ratio of aggregated regulatory capital to aggregated risk-weighted assets (following the Basel Guidelines).

2/ Non-Performing Loans (net provision) to Capital is the ratio of value of non-performing loans less the value of specific loan provisions to total capital and reserves.

3/ Non-Performing Loans to Total Gross Loans is calculated as the ratio of the value of non-performing loans to total value of the loan portfolio (including NPLs, and before the deduction of specific loan loss provisions).

4/ Return on Assets is calculated as the ratio of net income before extraordinary items and taxes to average value of total assets (financial and non-financial).

5/ Loan to Deposit Ratio is calculated as the ratio of total loans to total deposits (non-interbank loans and deposits).Despite a gradual decline in share of foreign currency, the phenomenon of dollarization remains. As a ratio of the overall bank deposits, more than half of the total deposits are still denominated in foreign currency. Below are the shares (ratios) of foreign currency deposits out of total deposits in Lao PDR for the period 2007-2013:

2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Foreign Currency Deposits (% of Total Deposits)

67.39 62.35 57.83 53.63 53.37 51.1 50.19 49.91 49.22 50.71 51.98 51.98

6/ Residential Real Estate Loans to Total Loans is calculated as the ratio of outstanding residential real estate loans to outstanding loans of depository institutions.


54




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)


















Notes:





Lao PDR.

55


MALAYSIA


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016



16.2 25.4 23.4 24.2 24.5 66.4 76.7 89.6 86.0 82.5 88.8 88.8


Foreign Reserves (in months of retained imports) 4/

8.0 7.3 9.1 7.5 8.9 8.5 8.2 7.1 7.2 8.4 8.8 8.6

Notes:


general government + monetary authority + banks + other sectors. (nb: not including contingent liabilities). As

of 2014, external debt has been redefined in line with international standards to include non-resident

holdings of local-currency denominated debt papers and other debt-related non-resident financial flows, such

as trade credits, currency and deposits, and other loans and liabilities. Data from 2012 onwards reflect

redefined external debt according to the new classification.




4/ Foreign Reserves in months of retained import cover of foreign reserves = foreign reserves / monthly retained

import value (12-month average).


56



Indicators* 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenue (% of GDP) 1/ 21.0 20.8 22.3 19.4 20.3 21.4 20.9 19.9 18.9 17.3



Primary Balance (% of GDP) 4/ -1.2 -3.0 -4.7 -3.4 -2.7 -2.3 -1.7 -1.3 -1.1 -1.0


Notes:







57



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016



Core Inflation (%, year-on-year, optional) 2/ - - - - - - 1.5 2.3 3.1 2.1 2.1 2.1



Notes:



3/ For Malaysia, M3 is used in the above table. M3 is currency in circulation and deposits placed with banking institutions (commercial, investment and Islamic banks).

4/ For Malaysia, credit is defined as "total outstanding banking system loans which comprises outstanding loans of domestic business enterprises and households, domestic financial institutions, domestic non-bank financial institutions, Government, domestic other entities, and foreign entities”. Annual credit growth is calculated based on the end of the calendar year.


58



Policy Framework

Objective According to Central Bank of Malaysia Act 2009, the primary objective of Bank Negara Malaysia is to promote monetary stability and financial stability conducive to the sustainable growth of the economy.

Regime BNM does not conduct inflation targeting. Since April 2004, Bank Negara conducts monetary policy through the Overnight Policy Rate. The OPR has a dual role – as a signaling device to indicate the monetary policy stance and as a target rate for the day-to-day liquidity operations of the central bank.

Instruments Monetary operations: BNM conducts monetary operations through the use of various monetary instruments, which include unsecured borrowings, repurchase (RP) and reverse repurchase (RRP) transactions, sales and purchases of securities, and issuance of Bank Negara Monetary Notes. Monetary operations of the central bank will target the overnight interbank rate to be moving close to the Overnight Policy Rate (OPR). This is achieved through ensuring the appropriate level of liquidity that would influence the overnight interbank rate. Liquidity operations will also be conducted at other maturities but without targeting a specific interest rate level.

Overnight Operating Corridor and Standing Facilities. To minimize excessive volatility in the overnight rate, BNM will specify a corridor around the OPR. The corridor is set at ± 25 basis points around the OPR. Day-to-day liquidity operations will aim to hold the overnight rate close to the announced OPR. A standing facility is introduced to ensure that the overnight interbank rate fluctuates within this corridor by providing a lending facility at the upper limit of the operating band and a deposit facility at the lower limit of the operating band. Market participants will transact among interbank institutions at a rate within the operating band to meet their short-term liquidity needs before utilizing the standing facility.

Statutory Reserve Requirements: Banking institutions namely commercial banks, merchant/investment banks and Islamic banks are required by BNM to maintain balances in their Statutory Reserve Accounts (SRA) equivalent to a certain proportion (at present, at least 4 %) of their eligible liabilities (EL), this proportion is called the SRR rate. The SRR is used to withdraw or inject liquidity when the excess or lack of liquidity in the banking system is perceived by the Bank to be large and long-term in nature.

Decision-Making Process

The responsibility for formulating monetary policy lies with the Monetary Policy Committee (MPC), comprising of the Governor, Deputy Governors and not less than three but not more than seven other members. The MPC typically holds meetings six times a year.


Policy Responses

OPR cut. BNM reduced the OPR by 25bps to 3.00 percent at its monetary policy meeting in on 13 July 2016, and has since maintained the OPR.

Other Updates

Please refer to BNM’s Press Releases at: (http://www.bnm.gov.my/index.php?ch=en_press&lang=en&yr=2016)

59



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


13.2 12.6 15.4 14.8 15.7 15.7 14.9 15.9 16.1 16.7 16.5 16.5


19.0 13.9 9.9 13.6 10.7 8.2 8.2 7.1 7.0 7.3 7.4 7.4


6.5 4.8 3.6 3.4 2.7 2.0 1.9 1.7 1.6 1.6 1.6 1.6


Loan to Deposit Ratio (LTD, %) 5/ 76.1 77.7 77.9 81.3 80.9 82.1 84.7 86.7 88.7* 88.7 89.8 89.8


27.1 26.5 26.8 26.9 26.8 27.4 28.1 29.1 30.2 31.5 31.4 31.4

Notes:





5/ Loan to Deposit Ratio is calculated as the ratio of total loans to total deposits (non-interbank loans and deposits). *From July 2015 onwards, loans exclude financing funded by Islamic Investment Accounts due to reclassification of Islamic Investment accounts under the Islamic Financial Services Act (IFSA) 2013



60




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)



Primary Balance (% of GDP) Estimate only using debt service charges















Notes:





Malaysia.

61


MYANMAR


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q’16 2Q’16 3Q’16

Gross External Debt (% of GDP) 1/ 29.0 36.2 29.0 13.6 14.2 16.1 14.4 16.1 N/A N/A N/A N/A



Current Account Balance, excluding grants (USD Million) 3/

N/A N/A N/A N/A N/A N/A -1,090.9 -1,720.7 -3,416.5 -845.0 N/A N/A

Foreign Reserves (in months of imports) 4/

15.1 14.2 17.7 12.8 10.8 11.1 10.2 4.7 4.1 4.1 3.9 4.5

Notes: Annual numbers are based on fiscal year which starts in April and ends in March of the following year.




3/ Current Account Balance, excluding grants= net exports of goods and services + net primary income + net

secondary income (excluding grants).


month average). Foreign Reserves cover only Central Bank of Myanmar.


Notes: Since 2014/2015 International reserves include only CBM’s Foreign Assets.

62



Indicators* FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 * FY15 ** FY16 **

Revenue (% of GDP) 1/ 17.2 15.9 13.9 15.0 13.9 23.7 24.5 25.8 24.6 24.2



Primary Balance (% of GDP) 4/ N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A


Notes: Fiscal year starts in April and ends in March of the following year.

* Provisional Actual

** Revised Estimate







63



Indicators* 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


Headline Inflation (%, year-on-year) 1/ 35.0 26.8 1.5 7.7 5.1 1.5 5.5 5.5 10.8 6.93

Core Inflation (%, year-on-year, optional) 2/

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Money Growth (%, year-on-year) 3/ 29.9 14.9 30.6 42.5 30.6 32.6 31.4 21.0 30.7 17.4

Credit Growth (%, year-on-year) 4/ 22.3 14.2 29.0 61.1 64.8 52.8 56.1 36.1 29.8 33.2

Notes: Annual numbers are based on fiscal year which starts in April and ends in March of the following year.

*/ Indicators for money growth and credit growth are all expressed as year on year percentage change



3/ Money supply (M1) is defined as currency in circulation and demand deposits. Broad money (M2) is defined as M1 pluses quasi money which covers other deposits including time deposits and saving deposits. Annual money growth (M2) is based on the end of calendar year.

4/ Annual credit growth is calculated based on year on year changes of the "domestic claims on private sector by other depository corporations excluding central bank" in accordance with IMF MFSM 2000.


64



Policy Framework

Legal framework - The Central Bank of Myanmar law was promulgated on July 11, 2013. - This law provides the legal provision for autonomous power to the Central Bank of

Myanmar for implementing its aim and objectives effectively.

Objective - With 2013 Central bank of Myanmar Law, Central Bank of Myanmar implement its objectives independently from Ministry of Finance.

- The aim of the Central Bank of Myanmar under the 2013 Central Bank of Myanmar law shall be to preserve and maintain the domestic price stability.

- The Central Bank shall, in accordance with its aim, also endeavor to attain the following objectives :

- To promote monetary stability in order to support the general economic policy of the Government conducive to the sustained economic development.

- To enhance financial system stability through effective regulatory and supervisory framework and in providing lender of last resort facilities to the banks.

- To develop payment and settlement system by providing safe and efficient national electronic payment system for both retail and large value payment.

- The CBM will no longer be permitted to provide loans and advances to the Government without the approval of Parliament (PyidaungsuHluttaw). The CBM can purchase and sell the government securities from the financial institutions and the general public through secondary market.

- The CBM is required to submit the report to the Government and Parliament (PyidaungsuHluttaw) regarding the monetary stability and financial stability, the implementation of its objectives. CBM shall also provide such report to the ministry.

Regime - To formulate and implement monetary policy, CBM has been exercising “Reserve Money Targeting “monetary policy framework. Under the “Reserve Money targeting “monetary policy framework, reserve money is the operational target and broad money is intermediate target.

- To implement the exchange rate policy, CBM has introduced “Managed Floating Exchange Rate Regime” since April 2012. Under this regime, exchange rate policy is to avoid redundant volatility and to foster convergence among prevailing exchange rates.

Instruments - In the conduct of monetary stability, 2013 CBM Law authorizes the CBM to use the Open market operations via the purchase and sale of securities in the financial market in order to manage the monetary conditions. That kind of open market operations do not exist yet as secondary securities market does not yet process in Myanmar.

- CBM has conduct the monetary operation such as deposit and credit auction to adjust the liquidity.

- CBM sets its discount rate and maximum lending rate and minimum deposit rate from time to time to affect the broader monetary conditions. Currently, CBM sets its discount rate, maximum lending rate and minimum deposit rate at 10%, 13% and 8% per annum respectively. So, banks can set their retail interest rate freely between 8% and 13%.

- CBM stipulates the required reserve ratio which is to be compliant by banks to influence the broader monetary condition. Currently, reserve requirement ratio is 5% of total deposits. The CBM is monitoring and encouraging to the banks to be fully compliant reserve requirement.

65


Decision-Making Process

- A Board of Directors is to be the CBM’s internal decision-making body. - Governor shall serve as chief executive officer of the central bank and be

responsible to the Board for the management and implementation of the policy. - The governor of the CBM is elevated to level of union minister of the Cabinet. - The Board of Directors is to be the CBM’s decision-making body. The Board

constitutes with nine members appointed by the president with the consent of Parliament (PyidaungsuHluttaw). The Board is chaired by the Governor and members are three deputy governors and five external professional experts. The five external directors of the Board shall have experience and professional standing in the area of central banking, economics money & banking, law, accounting and auditing.

- Member of the Boards shall not be a member of political party and shall not be involved in the activities of such parties.

- Deputy Ministers for the both Ministry of Finance and Ministry of National Planning and Development are permitted to attend the Board of Directors meeting as observers.

Major Monetary Policy Decisions and Updates( October 2015)

Policy Reponses

- In accordance with 2013 CBM Law, the CBM has been given the mandate to maintain price stability.

- CBM set the reserve money growth by 13% and broad money growth by 24% for FY 2016-2017.

- CBM projects liquidity condition by using liquidity forecasting framework and conducts bi-weekly deposit auctions as exercising the tight monetary policy.

- During FY 2016-2017, the CBM has taken more tighten monetary stance by scaling up deposit auctions to mop up excess liquidity and applying a new recalibrated reserve requirement as a monetary policy instrument to maintain the inflation at the targeted level.

- In strengthening the external position and maintaing trade competitiveness, the CBM has been implementing exchange rate flexibility and encourage the interbank FX market development.

- The CBM has been making necessary coordination and cooperation with related ministries through regular policy consultation meetings for export oriented strategy.

66



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 1Q’16 2Q’16 3Q’16

Regulatory Capital to Risk-Weighted Assets (%) 1/ N/A N/A 40.23 36.53 31.53 27.94 26.57 19.81 18.83 19.32 19.36 19.37


N/A N/A N/A N/A N/A N/A N/A 14.84 23.18 23.46 32.67 30.96

Non-Performing Loans to Total Gross Loans (%) 3/ N/A N/A 2.84 2.88 1.48 1.64 1.58 1.25 2.45 2.61 3.66 3.50

Return on Assets (ROA, %) 4/ N/A N/A N/A N/A N/A N/A N/A 1.08 0.75 1.16 0.30 0.42

Loan to Deposit Ratio (LTD, %) 5/ N/A N/A 67.75 71.65 67.99 67.39 64.63 70.57 68.51 70.62 67.47 65.59


N/A N/A N/A N/A N/A N/A N/A 0.86 0.01 0.02 0.07 0.22

Notes:

1/ Regulatory Capital to Risk-Weighted Assets is calculated as the ratio of aggregated regulatory capital to aggregated risk-weighted assets (following the Basel Guidelines). This data series refers to Capital Adequacy Ratio according to the authorities’ definition.


3/ Non-Performing Loans to Total Gross Loans is calculated as the ratio of the value of non-performing loans to total value of the loan portfolio (including NPLs, and before the deduction of specific loan loss provisions). Loans are classified as non-performing after six months of non-payment.


5/ Loan to Deposit Ratio is calculated as the ratio of total loans to total deposits (non-interbank loans and deposits).



67




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)


















Notes:





Myanmar.

68


THE PHILIPPINES


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Gross External Debt (% of GDP) 1/ 44.5 37.6 38.4 36.9 33.7 32.0 28.9 27.3 26.5 N/A N/A N/A


29.0 26.3 14.7 16.9 16.0 19.6 20.3 20.4 18.7 N/A N/A N/A

Current Account Balance (% of GDP) 3/ 5.4 0.1 5.0 3.6 2.5 2.8 4.2 3.8 2.6 N/A N/A N/A

Foreign Reserves (in months of imports) 4/ 6.7 6.4 9.2 10.4 11.6 11.5 11.6 9.9 9.9 10.0 N/A N/A

Notes:





(net current transfers). Current account surpluses are attributed to strong remittance flows from Filipinos

abroad.


month average).


69



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenue (% of GDP) 1/ 16.5 16.2 14.6 13.4 14.0 14.5 14.9 15.1 15.8 N/A



Primary Balance (% of GDP) 4/ 3.9 2.7 -0.3 -0.2 0.8 0.7 1.4 2.0 1.5 N/A

Central Government Debt (% of GDP) 5/ 60.9 54.7 54.8 52.4 51.0 51.5 49.2 45.4 44.7 N/A








70



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Headline Inflation (%, year-on-year) 1/ 2.9 8.3 4.2 3.8 4.6 3.2 3.0 4.1 1.4 N/A N/A N/A

Core Inflation (%, year-on-year, optional) 2/ 2.9 5.8 4.2 3.6 4.3 3.7 2.9 3.0 2.1 N/A N/A N/A

Money Growth (%, year-on-year) 3/ 15.5 10.1 9.9 10.0 7.1 9.4 31.8 11.2 9.4 N/A N/A N/A

Credit Growth (%, year-on-year) 4/ 8.3 20.5 10.0 8.9 19.3 16.2 16.4 19.9 12.12 N/A N/A N/A

Notes:






71




Objective • According to the New Central Bank Act (Republic Act 7653), signed into law on 14 June 1993 and became effective on 3 July 1993, the primary objective of the BSP’s monetary policy is to promote price stability conducive to a balanced and sustainable growth of the economy.

Regime • The BSP formally adopted inflation targeting as the framework of monetary policy in January 2002. The National Government – through the Development Budget Coordinating Committee (DBCC), an inter-agency body responsible for setting the annual government targets for macroeconomic variables – sets the inflation target two years ahead in consultation with BSP.

• In February 2015, the DBCC kept the inflation target at 3.0 ± 1.0 percent for 2015-2016 and approved the inflation target of 3.0 ± 1.0 percent for 2017-2018.

Instruments • Open market operations: Open Market Operations consist of repurchase (RP) and reverse repurchase (RRP) transactions, outright transactions, and foreign exchange swap. The interest rates for the overnight RRP and RP facilities signal the monetary policy stance and serve as the BSP’s primary monetary instruments.

• Acceptance of fixed-term deposits: The Special Deposit Accounts (SDA) facility was introduced in November 1998 to enable the BSP to expand its toolkit in liquidity management. The SDA facility consists of fixed-term deposits by banks and by trust entities of banks and non-bank financial institutions with the BSP.

• Standing facilities: The BSP extends discounts, loans and advances to banking institutions in order to influence the volume of credit in the financial system. Through rediscounting facility, a financial institution is allowed to borrow money from the BSP using promissory notes and other loan papers of its borrowers as collateral.

• Reserve requirements: Banks are required to keep a certain percent of their deposits and deposit substitute liabilities. The required reserves are mainly kept in the form of deposits with the BSP and government securities.

Decision-

Making

Process

• The power and function of the BSP are exercised by its Monetary Board (MB), consisting of the BSP Governor as the Chairman, one member from the Cabinet, and five members from the private sector. All MB members are appointed by the President of the Philippines.

• Starting in 2012, the Monetary Board has held monetary policy meetings eight times a year with meeting intervals of six to eight weeks to deliberate, discuss, and decide on the appropriate monetary policy stance of the BSP in order to keep inflation within the target.

• The decisions of the Monetary Board concerning monetary policy are determined by a majority vote. The votes of individual Board members are not publicly disclosed to emphasize the collegial, consensus-based nature of the decision-making process.

Major Monetary Policy Responses and Updates

• At its monetary policy meetings during the quarter (on 23 June and 12 May), the BSP decided to maintain its key policy interest rate for the overnight reverse repurchase or RRP facility. The interest rates for other monetary policy instruments were also kept steady. Similarly, the reserve requirement ratios were left unchanged. The BSP’s policy decisions during the quarter were based on its assessment that the inflation environment continued to be manageable.

• On 3 June 2016, the BSP made a formal shift in its monetary operations to an interest rate corridor (IRC) system. The system for monetary operations was modified to consist of the following:overnight liquidity facilities, namely, the overnight lending facility (OLF) and the overnight deposit facility (ODF); the overnight RRP facility; and a term deposit facility (TDF).The adjustments in the key interest rates under the IRC reform were primarily operational in nature and were not expected to materially affect prevailing monetary policy settings. The key benefit of the adoption of an IRC system in the Philippines is the strengthening of monetary policy transmission by ensuring that money market interest rates move within a reasonable rangearound the BSP’s policy rate. At the same time, the IRC system is also seen to confer other benefits over time. It is expected to promote greater interbank market activity by encouraging banks to undertake their day-to-day liquidity management more actively as BSP monetary operations gradually exert astronger influence on short-term liquidity conditions.

72



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/ 14.7 14.6 15.5 16.0 16.7 17.3 16.6 15.6 15.2 N/A N/A N/A Non-Performing Loans (net provision) to Capital (%) 2/

4.7 8.3 5.7 4.3 3.8 2.4 2.9 2.4 2.1 N/A N/A N/A



Loan to Deposit Ratio (LTD, %) 5/ 67.8 66.5 63.6 61.9 71.9 74.8 64.4 68.4 70.7 N/A N/A N/A Residential Real Estate Loans to Total Loans (%, optional) 6/

5.6 5.7 6.0 6.4 6.3 6.7 7.0 7.3 7.2 N/A N/A N/A

Notes:








73




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)


















Notes:





the Philippines.

74


SINGAPORE


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016



490.8 435.6 391.9 382.4 380.2 379.3 386.1 405.7 387.9 384.7 N/A N/A



Notes:







month average).


75



Indicators FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY167/

Revenue (% of GDP) 1/ 15.5 17.0 15.9 16.1 16.8 17.5 17.1 17.6 18.1 20.1


Overall Balance (% of GDP) 3/ 2.8 0.1 -0.3 0.3 1.1 1.6 1.3 0.1 -1.0 1.3

Primary Balance (% of GDP) 4/ 2.8 0.1 -0.3 0.3 1.1 1.6 1.3 0.1 -1.0 1.3

Central Government Debt (% of GDP) 5/ 6/ 86.3 93.9 104.2 99.6 102.1 106.5 103.1 99.2 103.2 112.9


1/ Revenue = Tax revenue + Fees and Charges + Others + Net Investment Returns 2/ Expenditure = Operating Expenditure + Development Expenditure + Special Transfers including Top-ups to

Endowment and Trust Funds. 3/ Overall Balance = Revenue – Expenditure. 4/ Primary Balance = Overall Balance+ Debt service. Debt service is zero, according to Singaporean authority. 5/ Central Government Debt = Domestic Central Government Debt + Foreign Central Government Debt. The debt

ratio is based on the calendar year since the central government debt numbers are as at end of the calendar year.

6/ Singapore Government borrowings are not for spending. Singapore Government Securities (SGS) are issued to develop the domestic debt market and Special Singapore Government Securities (SSGS) are issued specifically to meet the investment needs of the Central Provident Fund (CPF) Board.

7/ FY16 numbers are revised budget estimates.


76



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Headline Inflation (%, year-on-year) 1/ 2.1 6.6 0.6 2.8 5.2 4.6 2.4 1.0 -0.5 -0.4 0.0 -0.5



Credit Growth (%, year-on-year) 4/ 19.9 16.6 3.4 14.7 30.3 16.7 17.0 5.7 -1.2 -0.8 2.9 2.9

Notes:


2/ The MAS Core Inflation Index is an exclusion-based measure which removes the costs of private road transport

and accommodation as these components are volatile and significantly influenced by administrative policies.




77




Objective Price stability: The primary objective of the Monetary Authority of Singapore (MAS) is promoting medium term price stability as a sound basis for sustainable economic growth.

Regime Since 1981, monetary policy in Singapore has been centered on the management of the exchange rate. There are 4 main features of the exchange rate system in Singapore:

The Singapore dollar is managed against a basket of currencies of major trading partners and competitors. The various currencies are given different weights depending on the extent of trade dependence with that particular country.

MAS operates a managed float regime for the Singapore dollar, wherein the trade-weighted exchange rate is allowed to fluctuate within a policy band. If the exchange rate moves outside the band, MAS will usually step in, either buying or selling foreign exchange so as to steer the exchange rate back within the band.

The exchange rate policy band is periodically reviewed to ensure that it remains consistent with the underlying fundamentals of the economy.

By setting the exchange rate as the intermediate target, this implies that MAS cedes control over domestic interest rates.

Policy Rate Policy Rate: MAS cedes control over domestic interest rates. In the context of free movement of capital, interest rates in Singapore are determined to a large extent by foreign interest rates and investor expectations of future movements in the S$. (domestic interest rates have typically been lower than US interest rates, and reflect market expectations of an appreciation of the S$)

Instruments MAS manages the S$ NEER within parameters established by the level, slope and width of the exchange rate policy band.

MAS may “tighten” monetary policy by increasing the slope of the exchange rate policy band or re-centering the band upwards (Note: For “loosening” monetary policy, the reverse is true).

MAS may also adjust the policy band at a wider or narrower setting.


On 14 Apr 2016, MAS reduced the slope of the S$NEER policy band to zero percent. There was no change to the width of the policy band and the level at which it was centred.

On 14 Oct 2016, MAS maintained the rate of appreciation of the S$NEER policy band at zero percent. There was no change to the width of the policy band and the level at which it was centred.

78



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/ N/A 14.7 17.3 18.6 16.0 18.1 16.4 15.9 15.9 16.9 16.5 16.5


N/A 7.2 8.5 6.0 5.4 4.9 5.1 4.5 5.6 7.1 6.9 6.9

Non-Performing Loans to Total Gross Loans (%) 3/ N/A 1.4 2.0 1.4 1.1 1.0 0.9 0.8 0.9 1.2 1.2 1.2

Return on Assets (ROA, %) 4/ N/A 0.9 1.3 1.4 1.1 1.4 1.2 1.1 1.2 1.2 1.1 1.1



15.4 14.8 16.7 18.0 16.9 17.6 16.1 15.7 16.3 17.1 16.9 16.9

Notes:



3/ Non-Performing Loans to Total Gross Loans is calculated as the ratio of the value of non-performing loans to total value of the loan portfolio (including NPLs, and before the deduction of specific loan loss provisions) for the local banking groups. In the case of Singapore, the authorities also provide an alternative ratio - Classified Exposures to Total Exposures, which is calculated as the ratio of the value of classified exposures to total value of total exposure (including Pass, Special mention and Classified exposures and before the deduction of specific loan loss provisions) for the Singapore banking system.

Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Classified Exposures as a Share of Total Exposures (%)

N/A N/A 1.38 1.03 0.80 0.76 0.83 0.75 1.08 1.38 1.48 1.48



6/ Residential Real Estate Loans to Total Loans is calculated as the ratio of outstanding residential real estate loans to outstanding non-interbank loans of depository institutions.


79




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)


















Notes:





Singapore.

80


THAILAND


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016



38.6 29.3 24.0 29.4 27.0 32.0 37.0 36.2 33.6 31.0 30.8 30.8

Current Account Balance (% of GDP) 3/ 5.9 0.3 7.9 3.3 2.6 -0.4 -1.0 3.7 8.1 10.1 9.4 11.4


Notes:

1/ Gross External Debt = current liabilities owed to non-residents by residents of the economy = external debt of general government + monetary authority + banks + other sectors. (nb: not including contingent liabilities). Gross external debt is actual for the quarter, GDP used is a 3-yr moving average.

2/ Gross Short-Term External Debt = external debt with (original) maturity of one year or less. Gross s-t ex. debt is actual for the quarter, as are FX reserves

3/ Current Account Balance = net exports of goods and services + net primary income + net secondary income (net current transfers). (both GDP and current account are of the current year or quarter).

4/ Foreign Reserves = months of import cover of foreign reserves = foreign reserves / monthly import value (12-month average). Import is monthly average taken from a 1-year moving average


81



Indicators FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

Revenue (% of GDP) 1/ 15.9 15.9 14.6 15.8 16.7 16.0 16.8 15.8 16.4 17.1



Primary Balance (% of GDP) 4/ 0.3 0.7 -3.4 1.1 -0.9 -1.2 -0.7 -1.7 -1.7 -1.9


Notes: Fiscal year starts one quarter earlier than the calendar year, i.e. on 1st October of the preceding year, and

ends in end-September of that year. For instance, FY 2013 runs from October 2012-September 2013.

1/ Revenue = Tax + Non-Tax Revenue. (Total Revenue Collected by Government, from FPO Fiscal Cash Balance data)

2/ Expenditure = Current Expenditure + Capital Expenditure. (Expenditure, current year plus carry over, from FPO Fiscal Cash Balance data)

3/ Overall Balance = Revenue – Expenditure. 4/ Primary Balance = Overall Balance + Debt Service. (Debt service is the amount of allocated budget for

government & SOEs debt repayment (principal, interest and fees, from PDMO)). 5/ Central Government Debt = Direct government debt + FIDF debt


82



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Headline Inflation (%, year-on-year) 1/ 2.3 5.5 -0.9 3.3 3.8 3.0 2.2 1.9 -0.9 0.3 0.7 0.2




Notes:

1/ Headline Inflation is defined as year on year percentage change of the Consumer Price Index (CPI). Annual headline inflation is calculated as the average of monthly year-on-year inflation. Data for inflation are the average of monthly yoy inflation for that period.

2/ Core Inflation is defined as the percentage change in the CPI excluding volatile prices-typically food, energy, and administrative prices. Annual core inflation is calculated as the average of monthly year-on-year core inflation. This definition may vary country to country. Data for inflation are the average of monthly yoy inflation for that period.

3/ Annual money growth is generally based on end of calendar year's M2 which is defined as “currency in circulation and deposits”. M3 is defined as “M2 plus deposits at institutions that are not banks”. These definitions of M2 and M3 may vary country to country. It refers to Broad Money in the case of Thailand.



83




Objective Price stability: The main objective of the Bank of Thailand (BoT) is to ensure price stability in the economy, which is defined as low and stable inflation. The Monetary Policy Committee (MPC) sets monetary policy in order to support sustainable and full potential economic growth, without causing inflationary problems or economic and financial imbalances or bubbles.

Regime Inflation targeting: - Inflation target in 2015: On December 25, 2014, the MPC and the Minister of Finance agreed to

propose a new monetary policy target for 2015, and the Cabinet approved the proposal on January 6, 2015. The new target set for the annual average of headline inflation in 2015 to be at 2.5 percent with a tolerance band of ± 1.5 percent, replacing the core inflation quarterly average between 0.5-3.0 percent which had been adopted as the policy target since 2009. The main objective for the change was to strengthen the effectiveness of monetary policy in anchoring long-term inflation expectations.

- Inflation target in 2016: On December 29, 2015, the Cabinet approved the headline inflation target of 2.5 ± 1.5 percent as the target for 2016 and for the medium-term horizon. This was to reinforce commitment to the inflation target and to reassure the general public that the MPC would take necessary policy actions to return headline inflation to the target within an appropriate time horizon without jeopardizing growth and macrofinancial stability.

- Inflation target in 2017: On December 20, 2016, the Cabinet approved the headline inflation target of 2.5 ± 1.5 percent as the monetary policy target for 2017 and for the medium-term horizon. The decision to keep the target unchanged was to further reinforce the MPC’s commitment to the inflation target of 2.5 percent and ensure that the public’s medium-term inflation expectations remain well-anchored at the target. Meanwhile, the MPC would continue to closely monitor global structural changes that would affect inflation dynamics going forward, so that the policy target and the formulation of monetary policy are consistent with monetary policy objectives.

The Monetary Policy Committee: Under the Bank of Thailand Act, the MPC comprises the Governor and two deputy Governors, as well as four external members. Approximately every 6 weeks (8 times a year), the MPC meets to assess the economic and financial conditions as well as the risk factors that may affect future inflation and economic growth in its assessment of the monetary policy direction.

Policy Rate Policy rate: The MPC utilizes the 1-day bilateral repurchase transaction rate as the key policy rate to signal the monetary policy stance.

Instruments Monetary Policy Communication: The MPC arranges many forms of communication, including (1) organizing a press statement at 14.00 hrs. on the day of meetings, (2) publishing Edited Minutes of the MPC meeting two weeks after the meeting, and (3) publishing the Monetary Policy Report every quarter.

The BOT’s Operational Framework consists of a set of instruments which can be classified into three categories: 1. Reserve Requirements: Commercial banks are required to maintain a minimum reserves on

average over a fortnightly period, (starting on a Wednesday and ending on a second Tuesday thereafter, consistent with MPC meeting rounds) with carry-over provisions, equaled to a specified percentage of the previous period's average level of commercial banks' deposits/liabilities base.

2. Open Market Operations (OMOs): The BOT undertakes transactions in financial markets to affect the aggregate level of reserves balances (financial institutions’ deposits at the BOT) in the banking system, and in turn short-term market interest rates. OMOs are the primary instrument used to maintain the policy rate, while ensuring that there is sufficient liquidity in the banking system to satisfy banks’ demand for required reserves and settlement balances. The BOT employs four main types of open market operations: 1) Bilateral Repurchase Operations (BRP); 2) Issuance of Bank of Thailand bills/bonds; 3) Foreign Exchange Swap; 4) Outright Purchase/Sale of Debt Securities 3. Standing Facilities: The BOT provides standing facilities, through which financial institutions can

borrow from (by pledging eligible securities as collateral) or deposit funds at the BOT overnight to help adjust their liquidity position at the end of the day.

84



Policy rate movements: In 2015, the MPC reduced the policy rate at March 11 and April 29 meetings, lowering the rate from 2.00% to 1.75%, and to 1.50%, respectively. Since then, the MPC has voted unanimously to keep the rate unchanged at 1.50% at all subsequent meetings (as of February 2017).

85



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


14.9 14.1 16.1 16.2 15.2 16.3 15.7 16.8 17.4 18.5 18.0 18.0


25.1 20.0 17.0 12.1 9.2 6.9 6.7 6.8 7.1 7.7 7.5 7.5


7.3 5.3 4.8 3.6 2.7 2.3 2.2 2.2 2.6 2.9 2.8 2.8




13.4 13.6 15.3 15.8 15.1 14.6 14.7 15.8 16.4 17.1 17.1 17.1

Notes:


aggregated risk-weighted assets (following the Basel Guidelines). The coverage is all commercial banks.


specific loan provisions to total capital and reserves. The coverage is all commercial banks.



NPLs are gross NPLs. The coverage is all commercial banks.


of total assets (financial and non-financial). ROA = Net Income (before taxes)/Average Assets, where average

assets are calculated following the Financial Soundness Indicators 2006: Compilation Guide. The coverage is

all commercial banks.


deposits). L to D ratio used includes bills of exchange (B/E) to the deposit base but excludes interbank

borrowing and lending. The coverage is all commercial banks.


loans to outstanding loans of depository institutions. This ratio covers housing loans from all financial

institutions which include commercial banks, specialized depository institutions (SFIs) and other depository

corporations. Data during 2007 - 2009 do not cover housing loans from SFIs.


86




if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)


















Notes:





Thailand.

87


VIETNAM


Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Gross External Debt (% of GDP) 1/ 32.5 33.4 38.8 38.9 37.9 37.4 37.3 38.3 43.1 N/A N/A 43.5


N/A N/A N/A 53.4 47.8 22.8 33.4 28.2 35.1 N/A N/A 32.5

Current Account Balance (% of GDP) 3/ -10.0 -11.1 -6.6 -3.9 0.2 5.9 4.5 4.9 -0.1 6.5 N/A N/A

Foreign Reserves (in months of imports) 4/ 4.5 3.6 2.7 1.8 1.6 3.0 N/A N/A N/A N/A N/A N/A

Notes:






2015 and 2016 Current Account Balance figures were calculated based on GDP data (in VND) given by

General Statistics Office of Vietnam and the Average Interbank Rate for the period.


month average).


88



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenue (% of GDP) 1/ 34.6 33.9 34.8 36.0 34.6 32.0 30.2 21.9 22.5 20.3



Primary Balance (% of GDP) 4/ -0.6 -0.6 -2.3 -1.0 -0.04 -2.1 -3.5 -2.7 -2.4 -2.0

Public Debt (% GDP 5/) N/A N/A N/A 51.7 50.0 50.8 54.5 58.0 62.2 64.7

Notes: Data for 2014 is the second estimate and 2015 data is the government plan.

1/ Revenue = Tax and Fees + Capital Revenues + Grants + Investment Mobilizations (under Article 8, Clause 3,

State Budget Law) + Brought Forward Revenue.

2/ Expenditure = Investment and development expenditure + Current expenditures +Brought forward

expenditure.

3/ Overall Balance = Revenue - Expenditure - Difference of revenue and expenditure of Local Budget.

4/ Primary Balance = Overall Balance + Interest Payment.

5/ Public debt = Central Government Debt + Government-guaranteed Debt + Local Debt. It follows the definition

of Public Debt Management Law in 2009 and the figures are provided by the Vietnam Authorities and

available since 2010.


89



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016


Headline Inflation (%, year-on-year) 1/ 8.3 23.0 6.9 9.2 18.6 9.2 6.6 4.1 0.6 2.8 N/A 2.7

Core Inflation (%, year-on-year, optional) 2/

N/A N/A N/A N/A N/A N/A N/A N/A 2.05 1.84 N/A 1.83

Money Growth (%, year-on-year) 3/ 46.1 20.3 29.0 33.3 12.1 18.5 18.8 17.7 16.23 19.9 N/A 18.38

Credit Growth (%, year-on-year) 4/ 53.9 25.4 39.6 32.4 14.3 8.8 12.7 13.8 18.82 16.8 N/A 18.80

Notes:


2/ Core Inflation is defined as the percentage change in the CPI excluding volatile prices, typically food, energy, and administrative prices. Annual core inflation is calculated as the average of monthly year on year core inflation. This definition may vary country to country. Since April 2015, Vietnam has consolidated and publicized the core inflation data.




90



Policy Framework

Objective The national monetary policy shall be monetary decisions at the national level of state authorities, including decisions on the currency value stabilizing objective identified by the inflation target, decisions on using instruments and measures in order to reach the set-up objectives.

Regime Upon the SBV’s proposal of annual inflation target, measured by consumer price index, the Government submits to the National Assembly for approval.

The National Assembly decides/approves the annual inflation target and supervises the implementation of the national monetary policy.

The Prime Minister and SBV Governor use different monetary tools and measures in order to achieve the objectives of the monetary policy.

Instruments Refinancing: The State Bank shall stipulate and effect the refinancing to credit institutions in the

following forms: (i) Granting loans secured by the pledge of valuable papers; (ii) Discounting valuable

papers; (iii) Other forms.

Interest rates: The SBV shall announce the refinancing interest rates, basic interest rates and other types of interest rates for the purpose of managing the monetary policy and preventing usury. In case of the monetary market is anomalous, the SBV shall determine the management mechanism of interest rates applied to the relationship among credit institutions, between credit insitutions and their customers, and other credit relationships.

Foreign exchange rates: The SBV announces the central exchange rate of VND versus USD (reference rate) for the interbank market and other transactions as well as the band within which the exchange rate for transactions could fluctuate from the reference rate.

Reserve requirements: Banks and other credit institutions are required to reserve a certain percent of their deposits at the SBV. The reserve requirement ratio could vary among different banks and credit institutions, as well as for different types of deposits (e.g. VND-denominated or USD-denominated), for different periods of time.

Open market operations (OMOs): The SBV buys or sells valuable papers from/to commercial banks and other credit institutions in the open markets via repos and outright transactions. Valuable papers eligible for open market operations include SBV bills, some government bonds, government-guaranteed bonds, as well as municipal government bonds.

Other tools, if deemed necessary: The SBV implements some measures of credit operation in order to overcome difficulties in business activities in accordance with the Government’s policy.


Adjustment of exchange rates: In 2015, the SBV adjusted the average interbank exchange rate 3 times with the total adjustment of 3% (from VND 21,246 to VND 21,890 per USD). The SBV also increased the trading band from +/-1% to +/-3%. This is to actively guide the market and to create flexibility for exchange rate in preparation for possible negative impacts in the international market. This also helps to stabilize the foreign currency market and ensure that Vietnamese goods remain competitive. From the beginning of 2016, the SBV changed the way it managed exchange rate. Accordingly, the SBV announced the central exchange rate fluctuating on a daily basis based on domestic supply and demand and the movements in the global market. However, the role of the SBV in managing and directing monetary policies is still maintained. These changes are made to achieve the overarching objective of strengthening the VND, stablilizing the exchange rate and the foreign exchange market so as to stabilize the macroeconomic environment, support of businesses’ manufacturing and trade activities.

VND/USD rate reference adjustments:

On 7th January 2015 SBV increased the average interbank VND/USD exchange rate by 1% from 21,246 to 21,458 in order to proactively direct the market consistently with the developments of domestic and international financial markets, and stabilize the foreign currency market.

On 7th May 2015 SBV increased the average interbank VND/USD exchange rate from 21,458 to 21,673 in order to implement proactively and effectively socio-economic development plan set by the Government for 2015 and to cope with negative effects in the international market (Decision no. 1595/QD-NHNN dated 11th August 2015).

On 12th August 2015 SBV increased the exchange rate amplitude between the VND and the USD from +/-1% to +/-2% for flexibility of exchange rates in the context of negative effects in the international market in order

91


to ensure the competitiveness of Vietnamese goods.

On 19th August 2015, SBV increased the average interbank VND/USD exchange rate from 21,673 to 21,890, and the exchange rate amplitude from +/-2% to +/-3% (Decision no. 1636/QD-NHNN dated 18 August 2015) in order to direct the market and create the flexibility of exchange rates the end of 2015 and in early months of 2016 for stabilizing the foreign currency market and ensuring the competitiveness of Vietnamese goods.

Interest rate stably maintained: After the policy rates cut in March 2014, the SBV has been maintaining key interest rates such as refinancing rate at 6.5% p.a., rediscount rate at 4.5%/p.a., overnight lending rate in interbank electronic payment at 7.5% p.a..

On 28 September 2015, the SBV lowered the USD deposit rate cap for individuals from 0.75% p.a. to 0.25% p.a., and for organizations to 0% p.a.. On 18 December 2015, the SBV applied the 0% p.a. interest rate to USD deposits by individuals. In 2016, the SBV specified the maximum VND short-term lending rate at 7% p.a. for some industries and sectors, the maximum VND mobilizing rate at 1% p.a. for demand deposits and deposits with terms of less than 1 month, 5,5% p.a. for time deposits with terms of less than 6 months. Meanwhile, the USD deposit rate for organizations and individuals was kept at 0% p.a.

92



Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q’16 4Q’16 2016

Regulatory Capital to Risk-Weighted Assets (%) 1/ N/A 14.26 12.50 11.83 11.84 13.75 13.25 12.75 13.00 12.73 N/A 12.84


N/A 6.92 8.02 8.34 8.83 15.40 13.16 15.10 12.22 11.52 N/A 12.25

Non-Performing Loans to Total Gross Loans (%) 3/ 4/

N/A 2.13 1.99 2.16 3.06 4.08 3.61 3.25 2.55 2.53 N/A 2.46

Return on Assets (ROA, %) 5/ N/A 1.00 0.97 0.92 1.00 0.40 0.49 0.57 0.52 N/A N/A 0.58

Loan to Deposit Ratio (LTD, %) 6/ N/A 85.93 92.92 88.66 89.65 84.40 78.49 N/A 87.96 86.09 N/A 87.74



Notes:







4/ The reported NPL ratio is calculated based on the inputs provided by banks, which might exclude certain NPLs

restructured via the State Bank of Vietnam’s Decision 780 in 2012. According to the SBV, if prudently

calculated, the actual NPL to total gross loans ratio could be about 9.71% as of end 2013.




deposits).




93



ERPD Matrix Indicators Availability(i) Timelines(ii) Other Issues,

if Any(iii)






II/ Fiscal Policy

Revenue (% of GDP)








Core Inflation (%, year-on-year, optional) Data have been consolidated and publicized by the General Statistics Office since 2015.






Non-Performing Loans to Total Gross Loans (%) The State Bank of Vietnam also releases some prudently-calculated NPL data, which show a gap with the officially-reported figures.


Loan to Deposit Ratio (LTD, %) Data have been publicized by the State Bank of Vietnam since June 2015.


Notes:





Vietnam.

erpd (economic review and policy dialogue) matrix report ......strictly confidential 2017/svl/pld/02...

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