the crisis. however, research has shown, 2 that they were instrumental in the resilience of countries with respect excessive capital inflows and sudden stops. in addition, differences in macro prudential policies in controlling capital flows helped somewhat mitigating excessive capital flows, but their effectiveness were very far from perfect. though the situation on financial markets consolidated somewhat in the last year or year and a half, i believe, that lower risk tolerance compared to pre - crisis levels will prevail in the next countries of central, eastern and southeastern europe. see for example bakker, b. b. and gulde, a. m. ( 2010 ) “ the credit boom in new member states : bad luck or bad policies? ” imf wp 10 / 130. few years. this is a natural consequence of global deleveraging, which takes several years after a financial crisis. 3 as is shown in several papers, 4 deleveraging means, that cesee countries in the post crisis world might rely on external financing to a lesser extent, than previously. unless these countries find more domestic savings to finance the catch - up process, real convergence will slow down. lower risk tolerance at the end of the day might lead to higher uncertainty, and higher volatility. lower risk tolerance means, that economic sustainability had become a key issue, and there are very few if any countries among cesee who are surely on a sustainable path. the closer is a country to a point where the sustainability of a country ’ s economic policy is questioned, the more sensitive it becomes to both global and country specific economic news. as a hungarian central banker, i had to learn this lesson already several years ago. we need economic policies that push countries towards sustainability. as already mentioned, on the fiscal side, sustainability requires tight policies, we have to decrease indebtness to levels, where countries do not become excessively reliant on external financing sources. as cesee countries are less developed than core europe – contrary to the traditional macroeconomics – the same level of government debt can not be afforded. as lower gdp / capita implies lower household wealth, the same level of government debt as e. g., in germany, would require much more external financing, hence external debt. this is also a lesson, you must learn from the hungarian case. tight fiscal policy also helps private savings to finance private investments, and hence we can avoid a slowdown in real convergence in a period of scarce external

efficient financial system by lowering financial intermediation costs. fifth, another key contributor to the 2019 growth performance was the improving external sector position of the country amid narrower trade deficit. the external sector remains a pillar of strength for the economy given the recorded surpluses in the balance of payments ( bop ), along with a lower current account deficit in the first three quarters of 2019. the bop position made a turnaround — from a deficit of us $ 2. 3 billion in 2018, to a surplus of us $ 7. 84 billion in 2019. the reversal was due to higher net receipts of trade in services, personal remittance inflows from overseas filipinos, and sustained net inflows of foreign direct investments and portfolio investments. at the same time, the current account deficit for the first nine months of 2019 shows narrower deficit of us $ 992 million from us $ 5. 8 billion in the same period in 2018. this was largely a result of the lower trade in goods deficit, combined with higher net receipts in the trade in services, and in the primary and secondary income accounts. sixth, the current account deficit is manageable and financeable. a current account deficit is not necessarily a negative for the economy. an economy growing at an average of 6. 5 percent annually in the past eight years, like the philippines, needs to import capital goods and services to expand its absorptive capacity and avoid overheating of the economy. as the government commits to accelerate infrastructure - focused investments, the increased 3 / 5 bis central bankers'speeches importation of capital goods, raw materials, and intermediate goods follow. also, the country ’ s current account deficit is manageable and financeable given the sustained structural sources of foreign exchange inflows in the economy. these include overseas filipino remittances, bpo revenues and tourist receipts, as well as net inflows of both foreign direct investments ( fdis ) and foreign portfolio investments ( fpis ). as of end 2019, the country ’ s gross international reserves ( gir ) reached us $ 87. 9 billion — equivalent to 7. 7 months ’ worth of imports of goods and services and payments of primary income. this is more than twice the traditional metric used to determine reserves adequacy, that is, equivalent of 3 months worth of imports. the sustained favorable external debt profile, demonstrated by the continued easing of the country ’ s external debt to gdp ratio, supports the external sector position. the country