amando m tetangco, jr : pushing ahead through headwinds speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the regular membership meeting of the rotary club of manila, manila, 3 january 2008. * * * distinguished officers and members of the rotary club of manila led by your president benny laguesma, my colleagues from the bangko sentral led by monetary board member raul boncan, friends from the media, ladies and gentlemen, good afternoon. thank you for this opportunity to address your group on your first membership meeting in 2008. i know it is customary, having just moved into a new year, to begin a speech like this by looking back at the year past and taking stock of the positive outcomes that we had achieved. but for today ’ s remarks, i thought i would begin by considering instead the year ahead and anticipating the challenges we face amidst the uncertainty in the global arena. i liken this beginning to how one would probably wish to commence a round of golf on a course one has never played before. ( i hope you would pardon my reference to golf. but i know many here share my passion for the game. ) “ know your course. what hazards are around the corner? at midday, in which direction does the wind blow? etc, etc. in other words, let ’ s first consider the “ lay of the land ” ahead of us. then, after a quick review of these challenges, which i see to be manageable, let me put forward reasons why i believe the philippine economy would be able to ride out the headwinds that threaten to confront us and the steps we have taken and intend to take toward this end. challenges since the third quarter of last year, a good deal of attention has been focused on the turmoil in the financial markets in the us and europe and the sudden plunge in credit market confidence triggered by the us sub - prime mortgage crisis. since then portions of the underlying forces at work have been revealed – the complex nature of derivatives used, the high degree of leveraging on poor ( or even absent ) collateral, the underestimation of risk that had been prevalent in the financial markets and the surprisingly sizeable exposures of large financial institutions to some of the debt instruments and derivatives in question such as cdos. much, however, still needs to be uncovered for the general public to appreciate the full import of

on solid fundamentals that have been strengthened in recent years. these will serve us well in withstanding the “ pockets of vulnerability ” coming from the global financial markets. the key challenge will be to lock in the recent gains while steering the economy in riding out the current uncertainties, and then moving on to a higher and more sustainable growth path. the commitment to fiscal prudence and appropriate monetary policies and the intention to tackle policy challenges boldly through purposeful reforms should ensure that this path is sustained. this we hope to eventually translate to a reduction in poverty and improvement in the living standards of our people. i began these remarks by saying that a good strategy in playing a golf course for the first time is to know the “ lay of the land ”. but information about it is not sufficient to ensure that you win the game. to secure victory, you must play well. nay, you must play consistently and hopefully, better than others. all winners know that to have a consistently good golf swing, there are two important things to remember – 1. keep your eye on the ball, and, 2. follow through. don ’ t lose sight of your objective and make sure you execute a good follow through to deliver a successful outcome. do this throughout the game and you could guaranty a victory ( or at least a pleasing outcome ). 2006 was a good year, 2007 was an even better year. what do we foresee in 2008? i predict that we will continue to push ahead, despite significant headwinds. we have shored up an ample buffer in terms of our sound macro fundamentals and stable banking system that we are now more resilient and able to meet challenges. in the last few minutes, i hope i have been able to show you our roadmap for the new year and into the medium term. we hope to ride out this route together with you, confident that with solid economic fundamentals, we will prevail in our journey to a higher ground. thank you and good day.