benjamin e diokno : the new economy - redefining resilience amidst a pandemic remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the virtual roadshow on the economic recovery program, 28 may 2020. * * * good afternoon, everyone. it is my pleasure to meet with you all virtually to discuss with you the macroeconomic outlook and outline the government ’ s policy responses to the global health crisis. in this presentation, i will give a brief overview of the country ’ s macroeconomic fundamentals going into the crisis, and move on to the policy actions pursued by the bsp, in support of the government ’ s overall strategy, to mitigate the impact of covid - 19 pandemic on the domestic economy. i will also provide you with the measures and reform initiatives that the bsp intends to pursue under post - lockdown conditions. the country entered this crisis equipped with strong macroeconomic fundamentals. last year, real gdp grew by 6. 0 percent, continuing the record of over 20 years of uninterrupted broadbased growth. headline inflation eased to 2. 5 percent and was within the government ’ s target range in 2019. we have maintained a robust external payments position, with a surplus in the balance of payments ( bop ), record - high international reserves, and external debt to gdp ratio. at the same time, the philippine banking system remained sound and stable. banks were adequately capitalized and the quality of their loans and assets were maintained. these provides sufficient cushions going into the crisis. these sound fundamentals have put the philippines on a favorable footing relative to its peers. earlier this month, the prestigious publication, the economist surveyed 66 emerging economies and concluded that the philippines is the 6th most robust country when the health crisis started, as characterized by ample level of foreign exchange reserves and relatively lower debt - to - gdp ratios. the health crisis has considerably altered our near - term growth narrative. in the first quarter of 2020, real gdp declined by 0. 2 percent with full - year gdp projected to contract between 2. 0 to 3. 4 percent. meanwhile, latest baseline forecasts indicate that inflation could settle at the low end of the government ’ s target range of 2. 0 percent to 4. 0 percent. we expect inflation to average 2. 0 percent for 2020 due to the decline in global crude oil and non

- oil prices and the impact of covid - 19 on global and domestic growth prospects. to mitigate the impact of the pandemic and ensure economic recovery post - covid, the ng laid out its 4 - pillar socioeconomic strategy. the bsp ’ s contributions to the overall stabilization efforts fall under the third pillar. we expect that the economy will recover more strongly once fiscal and monetary stimulus gain traction and workers and firms resume operations. on the part of the bsp, our focus is ensuring that we pursue all necessary monetary actions under the third pillar to ensure that we are able to deliver on our mandate of promoting price and financial stability. 1 / 4 bis central bankers'speeches cognizant of this, we have been decidedly proactive in pursuing policy measures to support credit activity and domestic demand as well as ensure the continuous and smooth functioning of domestic financial markets by easing monetary policy settings and providing liquidity to the financial system as well as relaxing regulatory rules. consistent with a manageable inflation outlook and well - anchored inflation expectations, the monetary board undertook an assertive policy response through a reduction in the overnight policy interest rate by a cumulative 125 basis points to cushion the country ’ s growth momentum and uplift market confidence amid stronger headwinds. the bsp has likewise provided liquidity boost to the financial system by reducing the reserve requirement ratio ( rrr ), suspending the term deposit facility auctions for certain tenors, ensuring availability of the overnight lending facility ( olf ) to counterparties to cover temporary day - to - day liquidity needs, and scaling down of rrp operations to help provide sufficient liquidity in the interbank loan and government securities markets. meanwhile, global uncertainties owing to the covid - 19 outbreak heightened risk aversion in bsp supervised financial institutions ( bsfis ). to encourage them to continue their intermediation activities, the monetary board approved the granting of temporary regulatory and rediscounting relief measures to these institutions. these measures include relaxation of bsp regulations such as the single borrower ’ s limit, penalty for reserve deficiencies, compliance period with bsp supervisory requirements, and know your customer ( kyc ) requirements to facilitate access to financial services. meanwhile, prudential accounting relief measures were also implemented to reduce the impact of mark - tomarket ( mtm ) losses on the financial condition of supervised financial institutions. in addition, the bsp has implemented extraordinary liquidity measures to complement the national government