. consequently, gdp growth accelerated steadily, while inflation eased gradually from the double - digit rates of the seventies and eighties. and the philippines started to be recognized as one of the new tiger economies of asia. but the good times did not last. in 1997, the asian financial crisis came. fortunately, the bangko sentral had instituted structural and banking reforms by then. these reforms sustained philippine banks through the crisis in spite of higher problem loans. “ he who does not look back to where he came from will never see his destination. ” various cbp and bsp annual reports ; lamberte, m. ( 2002 ) “ central banking in the philippines : then, now and the future ”. pids discussion paper 2002 – 10. bis central bankers ’ speeches the 1997 crisis taught the bsp three important lessons : one, that a transactional approach to banking supervision that emphasizes individual bank compliance to regulations is not sufficient to mitigate system - wide risks ; two, that interest rate deregulation and financial innovations eroded the traditional link among money, output and inflation ; and three, that a strong financial system needs to be supported by an efficient payment system. thus, in the years that followed, the bangko sentral pursued with great vigor more banking and structural reforms. these have resulted in what we now know as risk - based supervision, inflation targeting and real - time gross settlement or the philpass. fast forward to 2013, and we see just how far the bangko sentral and our economy have come. the economy has more than doubled in size from 20 years ago. in the first quarter this year, the economy expanded at a rate of 7. 8 percent – the fastest in the region. at the same time, inflation has fallen to historic lows and within - target levels for four consecutive years now. the gross international reserves at more than $ 82b can now cover almost one year of imports of goods and services. the banking system ’ s npl ratio is less than 2 percent and capital at 17 percent is more than double the international standard of 8 percent. the payment system is robust, processing an average of p1. 5t worth of transactions daily, 11 times more than the daily value just 10 years earlier. in addition, the bangko sentral ’ s financial inclusion and financial education program continues to inform, protect and empower filipinos. in fact, our regulatory framework and various initiatives for microfinance continue to earn recognition as among the best in the world

structural foreign exchange flows from overseas filipino remittances, business process outsourcing receipts, and foreign direct investments. cash remittances from overseas filipinos are steadily flowing in with a 5. 3 - percent growth posted in january to october 2021 from a slight contraction in 2020. meanwhile, business process outsourcing services exhibited strong recovery in the same period with 8. 3 - percent growth, as the sector was quick to adjust to the new work arrangements. net foreign direct investments in january to september 2021 increased to usd7. 3 billion from us $ 5. 1 billion last year. this is due to positive foreign investor sentiment and improving confidence on the country ’ s growth prospects. this bodes well for job creation. favorable external debt profile acts as a cushion against external shocks. external debt - to - gdp ratio settled at 27. 3 percent as of end - september 2021, compared with about 60 percent in mid - 2000s. given that the bulk of the country ’ s external debt have medium and long - term maturity, and bears fixed interest rate, debt repayment schedule is more manageable and financially sustainable over the medium to long term. considering recent economic developments and significant progress in vaccine rollout, we are optimistic that there is sufficient support for the country ’ s recovery this year and in the near term. the management of risks, the expected revitalization of key industries from government policy support and structural reforms, as well as the resumption of global economic activities, should 2 / 3 bis central bankers'speeches help the philippine economy move toward a steady recovery path. while there are challenges ahead of us, we are making good progress in terms of economic recovery. that should motivate us to persevere harder and keep moving forward. we, at bsp, are all set to support and guide the economy on a steady recovery path toward growth and onward to a post - covid - 19 economy that is sustainable and digitally inclusive. maraming salamat at manigong bagong taon sa ating lahat! 3 / 3 bis central bankers'speeches