23 percent. gross international reserves ( gir ) of us $ 80. 6 billion as of end - february 2018 provide ample manoeuvring room to manage shocks. the philippines ’ robust economic growth has been accompanied by manageable inflation. we have established since 2009 a solid track record of meeting our inflation targets. headline inflation ’ s year - to - date average rose to 3. 7 percent ( using the 2012 series ) in 2018. this is at the high end of the target range of 3. 0 percent ± 1. 0 percentage point in 2018. but we expect it to revert to the target midpoint in 2019. the philippine banking system remains safe and sound, with robust performance and sustained expansion in credit. this is complemented by improved asset quality, firm liquidity position, and strong capitalization. the road to a resilient banking sector has not been easy. systematic structural reforms were implemented to get the financial system to where it is now. we have seen significant progress in the adoption of basel iii reforms, particularly in the areas of capital, leverage, liquidity and regulation of systemically important banks. we have rolled out a four - phased program for liquidity risk management. we continue to upgrade our corporate governance and risk management standards and remain committed to pursue prudential reforms amid changing market conditions and increasing sophistication of financial services. today, our comprehensive risk - based supervision approach ensures that our banks operate in a safe and sound manner. we use a range of tools and techniques in deploying our supervisory resources on a proportionate basis, including deployment of calibrated enforcement actions. indeed, our financial system demonstrates discipline and sophistication. it operates in a regulatory environment that promotes innovation. at the same time, it provides mechanisms to correct misbehaviour. this, together with strong economic foundation, affords us more confidence to forge ahead with bold market - oriented reforms and liberalization efforts. this will allow financial institutions to seize more opportunities to support our growing economy ; to be more innovative, competitive and flexible and to adjust rapidly to the needs of their customers. we recognize that transformative reforms are needed to gear up the financial system to be more efficient and responsive to the changing economic landscape. taking the next ( confident ) steps – expanding policy toolkit and bold financial reforms as challenges evolve globally and domestically, the bsp continues to expand its policy toolkit, including enhancing price discovery and self - correcting mechanisms. as early as

, housing finance companies ( hfcs ) and mutual funds ( mfs ), and extending a special refinance facility, which banks can access without any collateral. the reserve bank is also unwinding the market stabilisation scheme ( mss ) securities, roughly synchronised with the government borrowing programme, in order to manage liquidity. measures aimed at managing forex liquidity include upward adjustment of the interest rate ceilings on the foreign currency non - resident ( banks ) [ fcnr ( b ) ] and non - resident ( external ) rupee account [ nr ( e ) ra ] deposits, substantially relaxing the external commercial borrowings ( ecb ) regime, allowing the nbfcs and hfcs access to foreign borrowing and allowing corporates to buy back foreign currency convertible bonds ( fccbs ) to take advantage of the discount in the prevailing depressed global markets. the reserve bank has also instituted a rupee - dollar swap facility for banks with overseas branches to give them comfort in managing their short - term funding requirements. measures to encourage flow of credit to sectors which are coming under pressure include extending the period of pre - shipment and post - shipment credit for exports, expanding the refinance facility for exports, counter - cyclical adjustment of provisioning norms for all types of standard assets ( except in case of direct advances to agriculture and small and medium enterprises which continue to be at 0. 25 per cent ) and risk weights on banks'exposure to certain sectors which had been increased earlier counter - cyclically, and expanding the lendable resources available to the small industries development bank of india ( sidbi ), the national housing bank ( nhb ) and the export - import bank of india ( exim bank ). to improve the flow of credit to productive sectors at viable costs so as to sustain the growth momentum, the reserve bank signalled a lowering of the interest rate structure by reducing its key policy rate viz., the repo rate by 250 basis points from 9. 0 per cent as on october 19 to 6. 5 per cent by december 8, 2008. although, we remain vulnerable to global financial and economic developments, the measures taken so far have eased the liquidity and credit flow situations considerably. i must also add that in managing the impact of the global crisis, we have been mindful that no policy initiative is totally costless. managing this delicate balance between costs and benefits has been one of our challenges. the measures taken by the rbi have been appreciated