strong external payments dynamics, providing comfortable buffers against external shocks. reflecting these prudent external sector policies, the country ’ s balance of payments ( bop ) position posted a surplus of us $ 3. 2 billion in the first half of the year. the resilience of of remittances and the sharp recovery of exports contributed largely to the country ’ s favorable external payments dynamics. the country ’ s external debt profile continues to improve. six years ago, our external debt - to - gdp ratio was around 70 percent. as of march 2010, this ratio was down to 33 percent. the long - dated maturity structure of our foreign currency debt, helps limit rollover and foreign exchange risks. the country ’ s debt service burden as percent of gdp, which had previously hovered around 10 percent [ 2001 – 2003 ], eased to 6 percent as of march 2010. international reserves have climbed to new highs, providing strong coverage for both imports and short - term external debt. at end - july 2010, the gir stood at us $ 48. 6 billion. at this level, the gir can cover 9 months of imports and is equivalent to 9. 3 times the country ’ s short - term external debt based on original maturity and 5. 1 times based on residual maturity, thus providing a strong cushion against external shocks. as a result of the strong external liquidity position, the philippine peso has remained broadly stable. the trends in the real effective exchange rate ( reer ) show that the peso has generally maintained its international competitiveness over the last ten years. with generally lower inflation rates, the philippine peso has accommodated some appreciation, but without undermining external price competitiveness. third, on financial sector policy – the bsp has put in place critical reforms geared toward maintaining a healthy banking system. the package of reforms includes the disposal of banks ’ bad assets, the promotion of good corporate governance and transparency practices, and the upgrading of risk management standards. as a result, we have today an efficient, sound, and competitive financial system. these critical reforms have been successful in steadily expanding and strengthening the banking system. indicators of the health of the banking system continue to post favorable readings, with asset levels and bank earnings continuing to improve. the capital adequacy ratio remained high at 16 percent and non - performing loans also remained generally low at less than 4 percent of total loans. the favorable performance of the domestic financial markets reflects the upturn in the country ’ s

a necessary calibration to ensure that the financial needs of the public are truly met by the industry. the critical issue to determine then is how inclusive our banking system has become. our ultimate goal is for banks to cover even the underbanked, the unbanked, and those that have been mis - labeled as “ unbankable. ” this is quite a challenge in a country of 7, 107 islands with a total population of 100 million and where only 20 % of households have bank accounts. nevertheless, we continue to make progress in this area. while consolidation continues to reduce the number of our banks, the industry ’ s network and reach continue to grow and deepen through branch banking, atms, ebanking, and innovations in marketing and service delivery. our initiatives to develop an inclusive financial system through financial education, consumer protection and providing access to financial services also continue to generate positive results. bis central bankers ’ speeches for the 5th straight year, the economist intelligence unit ranked the philippine regulatory environment for microfinance as the best in the world. we now have 186 banks with microfinance operations, microfinance loans have more than tripled from 2002 to june 2013 at eight billion pesos, while the number of microfinance borrowers have also tripled to over one million. even better, the combined savings of the banks ’ microfinance clients have reached 8. 9 billion pesos, an amount surpassing their total loans. this tells us that these microentrepreneurs attained a level of financial independence because they gained access to microcredit. indeed, the socio - economic impact of developing an inclusive banking system cannot be overemphasized. moving forward, there is one point about our population structure that should be highlighted. based on 2015 population estimates, the median age of filipinos nationwide would be at the upper end of the 20 – 24 years old bracket. by the years 2020 and 2025, the average age of filipinos is estimated to move up to 25 years and 26 years old, respectively. this information should matter to the banking industry. it reflects a steady but young core of the population whose main financing needs lie 10 to 15 years ahead. on the other hand, there is also the more mature half of the population who are today already savers, investors, borrowers and entrepreneurs. indeed, the needs of your market vary considerably across constituents, across geographical communities and across the dimension of time. this presents challenges as well as opportunities