largest share of total jobs generated at 61. 6 percent. however, msmes account for only 35. 7 percent of the country ’ s gross domestic product! msmes are unable to reach their full potential due to a range of barriers, including financial access, characteristic of msmes even in other countries. indeed, bank lending to msme leave much to be desired, comprising only 6. 1 % of total loan portfolio. 1 / 80 % of sme investments are internally financed compared to only 10 % that are bank financed. giant leaps bridge gaps at the bsp, we are troubled by these numbers and take them seriously. we have been hard at work providing the regulatory environment that will create a more inclusive financial system. we strongly believe that the deeply ingrained barriers to financial access – cost, information asymmetry, and lack of infrastructure, among others – are market frictions that can be addressed without compromising on other policy objectives. enabling access to msme credit to promote msme access to finance, we have pursued continuing prudential reforms to improve the overall environment for credit allocation in the economy. we implemented the comprehensive credit risk management ( crm ) guidelines for banks under circular no. 855. the rationale is that with robust credit risk management, banks can be more flexible, extend more credit, and implement innovative credit products and lending programs. the intention is for banks to focus on cash flow analysis and ability - to - pay rather than collateral when determining a borrower ’ s creditworthiness. collateral ( particularly real estate ) should only play a secondary role in credit decisions. this addresses a significant issue since msmes often lack collateral even if these are fundamentally good businesses. in addition to providing an enabling regulatory environment, the bsp also initiated the credit surety fund ( csf ) program as convenor and promoter. the csf is a credit enhancement scheme to improve the credit worthiness of msmes that experience difficulty in obtaining bank loans. 2 / 4 bis central bankers'speeches early this month, the 50th csf was established in cauayan city, isabela and the 51st csf will be launched in two ( 2 ) weeks in batangas city. the program already covers 31 provinces and 19 cities nationwide. expanding network our progressive regulatory issuances have allowed a wider range of financial products, a more expanded physical and virtual reach of financial services, more competition, easier on - boarding of customers, and more protection for financial consumers. to date,

nestor a espenilla, jr : supporting the backbone as we sprint speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the philippine chamber of commerce and industry's ( pcci ) 43rd philippine business conference and expo, manila, 18 october 2017. * * * pcci president george barcelon ; philippine business conference and expo chair joey leviste, undersecretary jonas leones, co - workers in government ; pcci officers and members, special guests, ladies and gentlemen, good afternoon. thank you philippine chamber of commerce and industry ( pcci ) for the opportunity to speak during this 43rd philippine business conference and expo. i am often asked how the bsp addresses wealth inequality and if we support micro, small and medium enterprises ( msmes ). while this is not directly written in our charter, we approach our mandate with precisely this as a key strategic goal. maintaining price and financial stability benefit all sectors maintaining price and financial stability are the bsp ’ s primary mandates. keeping inflation low and stable benefits everyone, especially msmes. a managed inflation and stable financial system allow msmes the best foundation to grow. reduced uncertainty allows expansion. in this regard, i am happy to report that amidst various challenges, the domestic economy continued to deliver on all fronts. real gdp grew by 6. 5 percent in the second quarter of 2017, making us one of the fastest growing economies in asia. this also extends our streak of uninterrupted growth for 74 consecutive quarters. let me stress that beyond the nominal numbers, we also emphasize the quality of growth. economic expansion is driven by broad - based factors with the re - emergence of the industry sector, particularly manufacturing, as another key growth driver. we are optimistic that we will be able to achieve our high growth targets of 6. 5 – 7. 5 percent this year and even faster beyond, fuelled by the massive infrastructure agenda of the government. government investment spending, which picked up in q2, confirms this important direction. the positive alignment between growth and inflation has been a sustained narrative. maintaining price stability amid a challenging global and domestic environment validates our inflation targeting framework. inflation expectations continue to be well - anchored. the year - to - date average inflation rate of 3. 1 percent puts us firmly on track to stay within the target range of 3. 0 percent ± 1. 0 percentage point for