are restructured or given relief ; and reducing the 5 - percent general loan - loss provision to 1 percent for restructured loans of borrowers in the affected areas. for all rediscounting banks granting of a 60 - day grace period to settle the outstanding rediscounting obligations as of 8 november 2013 with the bsp of all rediscounting banks in the affected areas ; and allowing banks to restructure with the bsp, on a case - to - case basis, the outstanding rediscounted loans of borrowers affected by the calamity. for quite a few other reasons, besides the calamities, 2013 has been described as a year of challenges, due to : bis central bankers ’ speeches 1. failing to reach a consensus on a fiscal legislation, the us government shut down for several days. 2. eurozone recovery remained weak and uneven across the member - countries. 3. china had to deal with growing shadow banking and rapid credit growth. 4. market anticipation of the fed ’ s policies added uncertainty in the financial markets and led to greater volatility of capital flows. nonetheless, the philippine economy was able to ride out turbulence in the global financial markets due to significant sources of strength. notwithstanding the slowdown in global economic growth, the philippine economy continued to have vibrant growth. for the first three quarters, gdp increased by 7. 4 percent, higher than the 6. 7 percent in the same period in 2012. growth was boosted by the strong performance of services, manufacturing and construction. on the expenditure side growth came mainly from consumer and public spending buttressed by increased investments in fixed capital ; exports contributed in the third quarter. this was supported by a benign inflation environment. the full - year 2013 average inflation rate of 3. 0 percent was at the low end of the government ’ s inflation target range of 3 – 5 percent for 2013. this is the fifth consecutive year that the country has been able to keep inflation within the government ’ s target inflation range. moreover, the philippines has substantial cushions to ride out potential turbulence in the global financial markets : our gross international reserves reached us $ 83. 7 billion as of end - december 2013. – can adequately cover 12. 1 months ’ worth of imports of goods and payments of services and income – equivalent to 8. 4 times the country ’ s short - term external debt based on original maturity and 5. 8 times based on residual maturity we enjoy a current account surplus owing to

structural sources – bop position yielded a surplus of us $ 4. 7 billion for january - november 2013. the current account surplus was mainly on account of increased net receipts of primary and secondary income and in other services accounts. our banking system is stable and strong with capital adequacy ratios well above international standards. as of end - june 2013, the capital adequacy ratio ( car ) of uk / bs stood at 18 percent on solo and 19. 3 percent on consolidated bases. external debt dynamics are favorable – external debt - to - gdp ratio decreased to 21. 9 percent in the third quarter ( 2013 ) from 25. 6 percent in september 2012 and 24. 1 in december 2012. moreover, more than four - fifths of our external debt has medium - to long - term maturities. 1 the philippines ’ strong economic performance has been validated internationally. 1 ) credit rating upgrades. the year 2013 saw the philippines achieve investment grade credit rating – not just from one, but from all the three major credit rating agencies. these rating agencies have cited the disciplined fiscal management with the declining reliance on foreign currency debt, strong external position, and low and stable inflation levels as bases for the score. in a recent report, moody ’ s maintained its positive outlook on the philippine banking system. in fact, in that report, moody ’ s stated that the philippines ’ banking sector is the only one in the asia - pacific region which they have given a “ positive ” outlook. average maturity : public sector : 20. 1 years private sector : 9. 8. bis central bankers ’ speeches 2 ) the imf. an imf mission report in september 2013 cited that the country ’ s strong fundamentals would enable it to deal with any capital outflows when the u. s. federal reserve cuts its stimulus program. 3 ) doing business 2014. in the latest world bank and international finance corporation report ( october 2013 ), the philippines was ranked among the top 10 countries that made the biggest improvement in business regulation. the report took note of the government ’ s regulatory reforms in three areas : introduction of a fully operational online tax filing and payment system, simplified occupancy clearances for construction, and new regulations that guarantee borrowers ’ right to access credit information. while most of the sources of risks have dissipated, in particular with clearer forward guidance from the us federal reserve ( fed ), resolution efforts in eurozone gaining broad agreement, and accommodative policies in japan