financial system, and moderate credit growth are expected to mitigate the impact of inflationary pressures on market interest rates. there is also good reason to expect a strong external position this year. dollar inflows, primarily from ofw remittances and investments, are expected to continue to come in. with healthy inflows, the exchange rate is poised to remain broadly stable in the course of the year. the continuing challenges to monetary and banking policies while economic performance appears to be on track, we remain watchful of the potential risks and challenges to the economic outlook. these risks include the following : ( 1 ) volatility in world oil prices ; ( 2 ) a build - up of excess liquidity in the financial system ; ( 3 ) possible exchange rate volatility due to excess liquidity ; and ( 4 ) adverse shifts in the public ’ s inflation expectations. in the face of these challenges, the public can count on the bsp to make sure that these risks do not endanger our path to economic progress. the bsp will stay committed to its mandate of promoting low and stable inflation. the bsp is also committed to strengthening the financial sector through continued structural reforms. foremost of these measures is the clean - up of banks ’ balance sheets of non - performing assets. the clean - up will help spur credit and investment activity and create the basis for more sustainable growth in the medium term. other key financial reforms will be focused on : ( 1 ) improving the bsp ’ s supervision technology and capacity ; ( 2 ) aligning prudential regulation of the banking system with international standards and best practices ; ( 3 ) strengthening corporate governance standards and market discipline mechanisms ; further developing the domestic capital market ; and ( 5 ) enhancing the payments system. efforts are also underway for the implementation of basel ii accord and adoption of international accounting standards by local banks. these initiatives are designed to bring local banking practices in line with internationally accepted standards. in the area of capital market development, the bsp will continue its active collaboration with other government agencies and the private sector for the completion of much - needed market infrastructure to enhance system integrity and overall market confidence. we will likewise pursue further enhancements in financial information to guide investor decisions. a key effort in this area is the establishment of credit rating agencies. we are also working closely with congress on the establishment of a centralized credit information system to help private enterprises secure better access to credit, reduce borrowing costs, as well as minimize the risk exposure

amando m tetangco, jr : the philippine economy - the continuing challenge speech by mr amando m tetangco, jr, governor of the central bank of the philippines, during the 57th inaugural meeting of the management association of the philippines, manila, 24 january 2006. * * * introduction during the bsp ’ s annual reception for the banking and business community last tuesday, i had one principal appeal to our friends. to make the best of our circumstances, achieve progress in our own spheres, so that in the end, the whole nation will be better off. distinguished officers and members of the management association of the philippines led by 2005 president mon paterno and 2006 president evelyn singson, colleagues from the bsp and the government, distinguished guests, friends, ladies and gentlemen, good evening. map ’ s theme for this year, “ call to action : country above self ”, happens to be in accord with my tuesday ’ s appeal. we are all convinced that the must - do list for the philippines is long, some of the items are structural while some would require streamlining of policies. any and all efforts to address this must - do list are therefore quite crucial. the next best thing to do is precisely this – take action in your respective spheres of influence. as captains of industries – described by media as movers and shakers of our economy – you can truly generate tremendous benefits for our country and our people. ladies and gentlemen, what you have selected as guiding theme for this year is exactly the mindset we want filipinos to have : country above self. if you can widen the reach of this message to cover as many filipinos as possible, then you would be a part of a chain that seeks to improve the nation. now, let me share with you some positive news on the economic front which give us reason to be more confident about our future. 2005 a most challenging year by most accounts, 2005 was a very challenging year for the philippines. we had to contend with high oil prices, rising global interest rates, lower farm output, and non - economic tremors. yet our economy, as measured by gdp, continued to expand. sure, it wasn ’ t at the pace we aimed for, but our economy proved its resilience once again. the expansion in economic activity was achieved amid an easing inflation environment. inflation has continued to ease since the second half of 2005, supported mainly by the softening prices of food and oil, and to some