amando m tetangco, jr : the philippine economy : developments and prospects speech by mr amando m tetangco, jr, governor of the central bank of the philippines, at the 4th national convention, chinese – filipino business club inc, manila, 9 february 2006. * * * the officers and members of the chinese - filipino business club, inc. led by president rufino ko pio, special guests, ladies and gentlemen, good afternoon. thank you for inviting me to join you at your 4th national convention. i am truly glad for this opportunity to be with you. chinese - filipino businessmen represent a very important segment of the philippine economy. you have a unique place in our economy as you personify the convergence of the best from two cultures : the highly admired chinese work ethic combined with filipino ingenuity. this formidable combination has given wings to a strong entrepreneurial spirit that has helped strengthen the backbone of the philippine economy. i am pleased therefore to give you an overview of how our economy performed in 2005, the developments that can affect your business and how we at the bangko sentral ng pilipinas see the prospects for the philippine economy. later, we can have a discussion on economic issues of particular interest to you. recent economic developments i will now give you a brief overview of recent economic developments. we had to deal with many challenges in 2005. among others : we had to grapple with the impact of record high oil prices ; slower growth in exports ; the el nino weather phenomenon which stunted the growth of agricultural output ; credit ratings downgrade ; and domestic political concerns. and yet, in the face of all these, our economy proved its resilience and fundamental strength. our domestic economy, as measured by gross domestic product, continued to expand and managed to grow by 5. 1 %. as businessmen, you know that achieving such growth, in a year marked with challenges, did not happen by chance ; it resulted from the continuous implementation of a comprehensive economic reform program involving both the government and the private sector. part of this reform program is fiscal consolidation, which is now generating benefits for the country. the combined effects of government ’ s cost cutting programs, improved tax collection efforts, and higher revenues from sin taxes and the evat, brought down the government ’ s fiscal deficit in 2005 to p146. 5 billion, substantially lower than the programmed deficit of p180 billion. this has led government to say that it is now possible for

about longevity, interest rates and growth. businesses need to make sure their expectations about investment returns reflect the current and likely future reality and reconfigure their investment plans accordingly. and policy - makers need to make sure they are working to increase the economy ’ s potential output and reduce uncertainty – whether economic, political or regulatory – that may be holding back investment. what the bank can, and will, continue to do is to provide certainty about the future value of money through inflation control. together, we can make the necessary adjustments and boost confidence that will foster the economic growth we all want to see. bis central bankers ’ speeches