2017. in spite of recent inflation pick - up, we project average inflation in 2017 to remain at about 3. 2 percent. this is also our forecast for 2018 – 2019. the sound and stable condition of philippine banks has also been one of the anchors of sustained performance of the domestic economy. over the medium - term, we expect the country ’ s banking system to continue its robust performance based on sound fundamentals. the reforms pursued by the bsp, along with banks ’ commitment to improve their ability and capacity to manage risks have resulted in significant improvements in the quality of bank assets and capital. in terms of the country ’ s overall external payments position, the balance of payments as of the first eight months of 2017, posted a deficit of us $ 1. 39 billion. this is sustainable and represents less than one percent of gdp. this can be readily financed. the balance of payments deficit can be attributed, in part, to stronger growth in imports as the 1 / 4 bis central bankers'speeches economy continues to expand rapidly and ramps up investments. the deficit also reflects rebalancing of portfolio capital flows in line with potential monetary policy normalization in advanced economies. similarly, some residents are pre - paying their foreign debt to manage their risk exposures. we are likewise seeing a pick - up in outward investments both to take advantage of regional business opportunities and to diversify investment portfolios. we look at all these as healthy developments that support economic growth and resilience. in the meantime, we stay calm as the country ’ s gross international reserves ( gir ) remained ample as of end - september 2017 at us $ 81. 4 billion. this is more than enough to cover 8. 5 months of imports of goods and services and 5. 5 times the country ’ s short - term debt obligations. as part of the adjustment mechanism we employ to protect our economy, we have allowed a modest and gradual depreciation of the peso. this flexibility makes us more resilient, prevents overheating, and enhances the price competitiveness of our exports of goods and services. supporting the backbone since i began this speech, i have mentioned the word “ growth ” several times... as the economy grows ( and as we prepare to sprint forward ) it is important to support our backbone. msme sector is the backbone and a crucial driver of our economy. we all know the statistics. msmes comprise 99. 5 percent of all registered business firms nationwide and contribute the

meantime, our external liquidity position has been robust. we have been running current account surpluses for 13 years now, allowing us to beef up fx reserves to an all - time high of us $ 85. 5 billion as of end - july 2016. all - told, ladies and gentlemen, the philippine economy continues to enjoy a position of relative strength. and this has not been unnoticed by global investors. we have had our share of surges in capital inflows in search of yield. and while, some of these have “ come and gone ”, a large portion of the inflows have stayed and remain invested in our domestic assets. but what i wish to emphasize this morning is that the philippines is a destination not only for flighty capital. the philippines is, more importantly, a destination for serious investment. i am able to say this with conviction because we do not only have a solid macroeconomic track bis central bankers ’ speeches record, we also have the institutions that are critical to sustaining such a strong economic performance. good institutions are indispensable for more than two decades now, we have been putting in place structural reforms that have liberalized key industries, including utilities, the power sector, and the banking system. we have adopted legislation aimed at improving governance in government corporations ( gcg ) and public procurement ( gppb ) ; as well as ensuring fair competition in industry and vital services ( pcc ). these reforms have helped raise the country ’ s total factor productivity ( tfp ) and are seen to help further reduce incremental capital output ratios ( icor ). these efforts complement the ongoing reforms to further improve “ ease in doing business ” and lessen “ frictions ” for investments in the philippine economy. in parallel, the bsp, in collaboration with market participants and other regulators, is continuing to roll out specific market reforms under our capital market reform agenda. the reforms which include, among others, developing a benchmark governance framework and creating a repo market should further deepen our domestic capital market and align its functioning with global standards. alongside these, the bsp has also put out banking regulations that will enhance corporate governance and credit and it risk management among banks, in tandem with the adoption of the other components of basel 3. furthermore just last month, the bsp embarked on a significant liberalization of foreign exchange rules. these measures aim to encourage the public to transact their fx needs more with banks by, among others, increasing the