the monetary stability sector will also implement more streamlined cash management operations system this year, among others. at the same time, we are reorganizing our supervision and examination sector to adopt to a rapidly changing environment and implement reforms that will make our banking system stronger, more efficient, at par with international standards, and more responsive to the needs of our economy and our people. the resource management sector, on the other hand, will ensure that bspers are properly equipped with the appropriate skills and expertise required by our institution. 2008 also marks our shift to a more meaningful appraisal system in accordance with our merit system for salary adjustments and promotions. even the way we estimate and produce our currency requirements at the security plant complex is undergoing review to make it more efficient and responsive to the needs of the economy. indeed, change is happening around us. now, more than ever, we need to be open to change, to be flexible to be dynamic to achieve the goals we have set under our medium term development program. nevertheless, even as we welcome change, we should, at all times, remain faithful to the five core values of our institution, which are : patriotism, integrity, excellence, dynamism and solidarity. these core values should serve as our enduring and lasting guides as we deal with the opportunities and challenges ahead of us. ladies and gentlemen of the bangko sentral ng pilipinas. by tradition, this is the time of year when we commit to do better through what we call new year ’ s resolution. as our joint new year ’ s resolution therefore, let us commit to be guided by our core values, at all times, wherever we may be. muli sa ngalan po ng ating monetary board at nang aking pamilya kasama na ang aking maybahay na si elma at tatlong anak, ako po ay nagpapasalamat sa inyong lahat at humihiling na sana ay maging masaya, malusog, masagana, at matagumpay ang 2008 para sa ating lahat, at sa ating mga kababayan! mabuhay ang bangko sentral! mabuhay ang pilipinas!

months, generally remain at levels that continue to point to ongoing growth. our main scenario remains that of real gdp growth broadly in line with trend potential. the fundamentals of the euro area economy are sound, profitability has been sustained, employment growth has been robust and unemployment rates have fallen to levels not seen for 25 years. consumption growth should therefore continue to contribute to economic expansion, in line with real disposable income, and investment growth should provide ongoing support. on the expectation that the global economy will, on balance, remain resilient – with the slowdown in economic growth in the united states being mitigated by the continued strength of emerging market economies – external demand should support euro area exports. that said, uncertainty about the prospects for economic growth remains high and the risks surrounding the outlook for economic activity lie on the downside. the latter relate mainly to a potentially broader than currently expected impact of the ongoing reappraisal of risk in financial markets on financing conditions and economic sentiment, with a negative impact on world and euro area growth. further downside risks stem from the scope for additional oil and other commodity price rises, concerns about protectionist pressures and the possibility of disorderly developments due to global imbalances. with regard to price developments, according to eurostat ’ s flash estimate the annual hicp inflation rate was 3. 1 % in december 2007, unchanged from november. this confirms the strong upward pressure on inflation in the short term, stemming mainly from strong increases in oil and food prices in recent months. looking ahead, the annual hicp inflation rate is expected to remain significantly above 2 % in the coming months and is likely to moderate only gradually in the course of 2008. hence, the period of temporarily high rates of inflation would be somewhat more protracted than previously expected. moreover, it is important to stress that the expectation of a moderation in the rate of inflation – which is embedded in the december 2007 eurosystem staff macroeconomic projections – assumes some reversal of the recent rises in commodity prices – in line with what is currently captured by futures prices – and, more fundamentally, that recent oil and food price dynamics and their impact on hicp inflation do not have broadlybased second - round effects on wage and price - setting behaviour. risks to this medium - term outlook for price developments are fully confirmed to lie on the upside. these risks include the possibility that stronger than currently expected wage growth may emerge, taking into account capacity constraints and the positive developments in