staying the course: gaining momentum for sustained growth
TRANSCRIPT
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7/30/2019 Staying the Course: Gaining Momentum for Sustained Growth
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Joint Foreign Chambers Meeting with the Governor
30 August 2013
Staying the Course:Gaining Momentum for Sustained Growth
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Key Macro Indicators
2002-2006
Ave
2007-2011
Ave 2012 2013Sustained growth
momentumReal GDP growth (2000=100) 5.1 4.6 6.8 7.6 (H1)
Manageable inflation Headline inflation (2006=100) 4.4 4.8 3.2 2.9 (Jan-Jul)
Improving fiscal
position Fiscal balance (% of GDP) -3.3 -2.1 -2.3 -2.5 (Q1)Ample liquidity and
credit supportive of
economic activity
Domestic Liquidity (% of GDP) 42.9 48.0 49.0 47.6 (Q1)
Domestic Credits* (% of GDP) 53.9 48.4 50.5 51.7 (Q1)
Sound and stable
banking system
Non-performing loans
(% of total loans) U/KBs**11.1 3.2 2.8 2.8 (May)
Capital Adequacy Ratio (consolidated
basis)*** - U/KBs17.8 16.5 18.4 n.a.
Robust externalprofile
Current Account Balance
(% of GDP)1.6 4.0 2.8 5.3 (Q1)
GIR (in months of imports of goods and
services)3.9 8.4 11.9 12.0 (end-Jul)
External debt (% of GDP)**** 58.4 31.6 24.1 22.8 (end-Mar)
External debt service burden ****
(% of exports of goods, receipts of
services & income)
14.7 9.6 7.4 9.6 (Jan-Apr)
Philippines sustains economic improvements
*Computed using Net Domestic Credit (NDC)
** Data for 2012 and May 2013 are computed as prescribed under BSP Circular No. 772. Gross NPL represents the actual level of NPL without any adjustment for loans treated as loss and
fully provisioned.***Computation based on the combined reports of parent bank (head office and branches) and its subsidiaries engaged in financial undertakings but excluding insurance; also excludes trust
department
**** External debt ratios for 2002-2011 are based on BPM5 concept while 2012 and Q1 2013 data are based on BPM6 concept.
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Year Structural/Policy Reforms in the Philippine Economy
1993 Creation of the Bangko Sentral ng Pilipinas
1994 Liberalization of foreign bank entry
1995 Liberalization of the telecommunications industry
1997 Privatization of water services (MWSS)
1998 Deregulation of the oil industry; Adoption of consolidated bank supervision
2000 Passage of the Philippine E-Commerce Act
2001 Liberalization of the power sector (EPIRA)
2002 Adoption by BSP of Inflation Targeting Framework; Passage of the Special Purpose Vehicle Act
2003 Passage of the Government Procurement Reform Act
2004 Passage of the Securitization Act or Republic Act 9267; Adoption of Basel 2
2005 Passage of expanded value-added tax (E-VAT)
2006 Establishment of the Wholesale Electricity Spot Market (WESM)
2007 Full implementation of risk-based bank supervision
2009
Privatization of the National Transmission Corporation (TransCo) and National Power Corporations (NPC)
assets
2011Issuance of the guidelines on the adoption of Philippine Financial Reporting Standards (PFRS) 9; Adoption
of phased-in migration to Basel III
2013 Implementation of the revised excise tax rates on alcohol and tobacco (Sin tax)
Philippines institutes critical reforms
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3.1 4.4 2.9 3.6
5.06.7
4.8 5.26.6
4.21.1
7.6
3.6
6.8 7.6
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Q1
Fourth consecutive quarter that the GDP has been expanding above 7 percent
PH remains fastest growing economy among emerging economies in the ASEAN region
Rebalancing in composition of growth, from consumption-driven to investment-led and
industrialized
Real GDP Growth (%)
Average: 4.7%
Economic growth in Q2 2013 remains robust
Source: National Statistical Coordination Board
2013H1
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2.5%
July
Inflation remains low and stable, within target
Headline Inflation (%), 2006=100
Monetary policy keptinflation in 2012 at3.2%, well-within
target
YTD 2013 inflation of2.9%
Inflation projected tosettle within 3-5 %
target range in 2013
and 2014, and 2-4%
target range in 2015
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Aug 2013:
3.50%
22 Aug: 1.55%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Jan
Feb
Mar
Apr
MayJunJul
Aug
SepOct
Nov
DecJan
Feb
Mar
Apr
MayJunJul
Aug
SepOct
Nov
DecJan
Feb
Mar
Apr
MayJunJul
Aug
SepOct
Nov
DecJan
Feb
Mar
Apr
MayJunJul
Aug
SepOct
Nov
DecJan
Feb
Mar
Apr
MayJunJul
Aug
2009 2010 2011 2012 2013
Overnight RRP
364-day T-bill Rates
(Secondary Market Rates)
BSP maintains key policyrates
Previous rate cuts work their way
through the economy Effective policy balance
between safeguarding price
stability and supporting
economic growth
Market rates remain lowgiven low BSP policy rates
and benign inflation
expectations
Domestic Interest Rates (in percent)
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Credit conditions continue to supporteconomic growth
Average Lending Rate and Bank Outstanding Loans (net of RRPs)(in percent, January 2009-June 2013)
June: 5.6 %
June: 12.3 %
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0
2
4
6
8
10
12
14
16
18
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
RatiosinPerc
ent(%)
LevelsinPh
PBillions
Levels in PhP Bi llions Growth Rate
in percent
Banking system is sound and stableASSETS GROWTH: U/KBs
2001 May 2013
CAPITAL ADEQUACY RATIO (CAR) :U/KBs
2001-2012
NPL COVERAGE RATIO*:U/KBs
As of May 2013
14.8%
P7,754.0BMay 2013:
P3,685 B
2.8%
2.50%
2.60%
2.70%
2.80%
2.90%
3.00%3.10%
3.20%
3.30%
0
1,000
2,000
3,000
4,000
May 12 Dec 12 Jan 13 Feb 13 Mar 13 Apr 13 May 13
Total loan portfolio, gross Gross NPL ratio
In billion PHP
TOTAL LOAN PORTFOLIO and GROSS NPL RATIO* :U/KBs, May 2012-May 2013
* Starting January 2013, figures are computed as prescribed under BSP Circular No. 772. Gross NPL represents the actual level of NPLwithout any adjustment for loans treated as loss and fully provisioned.
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US$1.535 B
-10
-5
0
5
10
15
20
Current Account Capital & Fin'l Account Balance of Payments
0
5
10
15
20
25
30
0
2
4
68
10
12
14
16
18
20
22 Cash Remittances thru banks (RHS)
Growth Rate (LHS)
In billion US$ In percent
External payments position remains robust
BOP surplus for Q1
2013 at US$1.5 billion
Current accountsurplus from resilient
OF remittances, strongBPO earnings, and
rising tourism receipts
Overseas Filipinos Remittances
2004 June 2013 (in billion US$)
* Data for 2004-2010 based on BPM5; 2011 onwards based on BPM6
Balance of Payments*2004 Q1 2013 (in billion US$)
US$ 10.7B
5.6%
in billion US$
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Foreign exchange reserves could cover 12 months worth of imports of goods and
payments of services and income Reserves are equal to 8.0 times the countrys short-term external debt based on original
maturity
FX reserves provide ample buffer againstexternal shocks
Strong build-up of foreign exchange reserves continues to provide buffer from external shocks
FX reserves continue to grow
0
10
20
30
40
50
60
70
80
90
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
0
2
4
6
8
10
12
14
GIR (lhs) Import Cover (rhs)
in billion US$ monthsGIR Jul 13: US$83.2 B
Import Cover Jul 13: 12.0 months
GIR 2004: US$16.2 B
Import Cover 2004: 3.6 months
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Medium &
Long Term
83.4%
Short Term
16.6%
External debt dynamics continue to improve
No. of Years
Total MLT Debt 20.3
Public Sector 22.0
Private Sector 10.5
External debt ratios have declined significantly over the last 8 years
Medium to Long-Term External DebtBy maturity profileAs of Q1 2013
Short-term debt accounts for only about 16.6% ofexternal debtAs of Q1 2013
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Peso moves broadly in line with regional trend
Peso USD Daily Average Exchange RateJanuary 2009 August 2013
40
42
44
46
48
50
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
PhP44.64/US$1*(29 Aug13)
Cum2009** 2010 2011 2012 2013 2001-2013
Korean Won -3.7 10.78 -0.5 15.2 2.3 8.8 -0.7 -25.7 8.2 2.7 -2.0 7.7 -4.1 19.1
Thai Baht (Onshore) -1.9 2.6 8.8 1.8 -5.1 15.7 5.2 -2.9 4.1 10.7 -3.9 3.0 -4.8 33.3
Singaporean Dollar -6.0 6.4 2.1 4.2 -2.0 8.7 5.9 1.1 1.8 8.7 -0.6 6.1 -4.4 31.8
Indian Rupee -3.3 0.6 5.2 5.0 -3.5 1.8 12.3 -19.2 4.9 3.6 -15.2 -3.1 -18.8 -29.9
Indonesian Rupiah -7.0 16.2 6.3 -9.2 -5.7 9.5 -4.5 -15.4 18.2 4.7 -0.4 -5.9 -10.3 -3.5
Philippine Peso -3.2 -3.1 -4.0 -1.4 6.0 8.3 18.8 -13.1 2.9 5.4 0.9 6.8 -8.3 15.9Japanese Yen -13.1 10.8 10.8 4.5 -12.9 -1.0 5.2 23.9 -2.6 14.2 4.0 -10.9 -11.6 21.3
Malaysian Ringgit 0.0 0.0 0.0 0.0 0.6 7.3 6.2 -4.3 1.2 11.2 -2.9 3.5 -7.8 14.8
Chinese Yuan 0.0 0.0 0.0 0.0 2.6 3.4 6.9 7.0 0.0 3.4 4.2 1.0 1.8 30.2
New Taiwan Dollar -5.3 0.9 2.0 7.0 -3.4 0.9 0.2 -0.9 2.5 9.9 -3.8 4.3 -3.1 11.2
*Last done deal in the afternoon session.
**Negative value represents depreciation of the currency against the USD.
***Closing prices except for Phillipine peso. Source:Bloomberg
20022001 2008*2006
`
Year-to-Date Changes in Selected Dollar Rates (As of 29 August 2013)
Appreciation/(-Depreciation), In Percent
2003 2004 2005 2007
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a/ Based on projectionsadopted by theDevelopmentBudget CoordinatingCommittee (DBCC) on 3 July 2013b/ Based on BSP projectionspresented duringthe Monetary Board meetingon 16 May 20131/ Cash remittances coursed through banksr/ revised
Actual Projections
2012 2013 2013
GDP Growth (%, 2000=100) 6.8 7.6 (H1) 6.0 7.0 a/
Headline Inflation (%, 2006=100) 3.2 2.9 (Jan-Jul) 3.0 5.0 a/
Exports Growth (%)Based on the BPM6 concept
Based on NSO data20.9
7.9
7.9 (Q1)
-4.4 (Jan-Jun)
11.0 a/
Imports Growth (%)
Based on the BPM6 concept
Based on NSO data
11.3
2.7
-8.2 (Q1)
-3.8 (Jan-Jun)
13.0 a/
OF Remittances 1/
Amount (US$ Bn)
Growth Rate21.4
6.3
10.7 (Jan-Jun)
5.6
22.5b/
5.0 b/
Current Account
(US$ Bn) 7.1 3.4 (Q1) 7.0 b/
Balance of Payments
(US$ Bn) 9.2 2.6 (Jan-Jun) 4.4b/
GIR (US$ Bn) 83.8 83.2 (Jan-Jul) r/ 87.0 r/
Sound Fundamentals:
2013 Macroeconomic Outlook
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A more protracted recession in the euro area
Longer growth slowdown in several key emerging market
economies
Volatility in asset markets and capital flow reversal
affecting emerging markets
Challenges ahead
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On monetary stability: sustain appropriate monetary policy stance
Continued vigilance over inflation dynamics to safeguard non-inflationary
growthOn financial stability: continue to initiate key reforms
Implement macroprudential measures to minimize systemic risks
Enhance corporate governance framework
Support capital market development
Sustain advocacies on microfinance, financial inclusion and consumer
protection
On external sector stability: strengthen resilience to external shocks
Maintain market-determined exchange rate
Keep comfortable level of reserves and ensure manageable external debt
profile
BSP policy directions
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7/30/2019 Staying the Course: Gaining Momentum for Sustained Growth
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Joint Foreign Chambers Meeting with the Governor
30 August 2013
Staying the Course:Gaining Momentum for Sustained Growth