gives it room to elevate public spending on infrastructure and foster public and private partnership. it is also imperative that we focus our efforts on inclusiveness, the second i. we must create an environment that not only enables more of our countrymen to enjoy prosperity as the economy grows … but also one where they can actively participate in making the economy grow. indeed, durable economic growth is one that is inclusive. it must cast a wider employment net in a broader set of industries, while remaining entrepreneur - friendly. on the bsp ’ s part, we continue to strengthen our initiatives to promote greater financial inclusion through regulations that broaden access to financial services and programs that deepen financial learning. finally, we must foster responsible and responsive political and economic institutions, the third “ i ” – institutions that are anchored on ethical and transparent governance systems. institutions that would engender a sound and upright policy framework … that would enforce the nation ’ s laws and regulations faithfully and consistently that would ensure the smoother functioning of the economy. the ongoing efforts to establish such institutions should help promote a stable and dependable business environment where entrepreneurial activity – particularly of the sme variety – can flourish. on the part of the bsp, we continue to support the country ’ s macroeconomic fundamentals by firmly adhering to our mandate of safeguarding price stability and ensuring that the financial system remains resilient. the bsp will continue to draw upon its policy toolkit to ensure that liquidity remains adequate to fuel the economy ’ s requirements in an environment of low and stable prices. we will also continue to maintain a flexible exchange rate policy that allows the market to essentially determine the exchange rate, but with scope for official action to ensure against any excessive volatility. the bsp will likewise continue to pursue banking reforms, in line with the global financial reform agenda, that would help further strengthen banks, individually, and the system as a whole. let me conclude on this note – the positive transformation of the economy that we now enjoy is the result of critical structural reforms, along with careful macroeconomic management. while we have amply demonstrated that we are capable of instituting critical reforms, we at the same time, continue to be mindful that the operating environment is evolving, and therefore we need to carefully move in step. and this is what we are doing. reforms will continue to play a significant role in further propelling economic activity going forward. as we are well aware, government cannot craft and

is born with enough resources, we need a social safety net when we are no longer working. finally, the state of the economy, employment, and capital markets are vital factors for both the banking system and the sss in charting their course. let me therefore spend the next few minutes to speak about our macroeconomic environment. the philippines has been experiencing strong growth in a low inflation environment. in particular, we have had 62 quarters of consecutive positive real economic growth and five consecutive years of within target inflation. in the second quarter this year, our gdp grew 6. 4 percent, making the philippines, together with malaysia, the second best performing economy in asia, next only to china. at the same time, inflation was 4. 9 percent in august, still within the 3 – 5 percent target band for this year. having said these, i will be the first to say that risks to growth remain. external factors – including the uneven growth in major economies, uncertainties surrounding monetary policy in the advanced countries, and geopolitical concerns – could impact the philippine economy through trade and volatilities in domestic financial markets. here at home, weather disturbances and recurring concerns about power rates and supply could also affect growth. still, i believe the philippines will overcome these challenges and continue its growth trajectory. our economic fundamentals remain sound and solid. this is because we have been instituting purposeful reforms ; we have been keeping our own house in order, so to speak. sure, we are far from perfect, but our continuing reform agenda has served us in good stead in this highly interconnected global environment. among others, we have a sound, stable, well - capitalized and liquid banking system that continues to attract record high deposits and provides credit to our productive sectors. we have a strong external position that provides sufficient buffers from possible external shocks. for instance, our gross international reserves amount to $ 80 billion, enough to support 11 months of imports and payments of services and income ; in the past, three months was good enough. sustained strong remittances from overseas filipinos, export investments and assets as of july 2014. fact and figures. social security system. bis central bankers ’ speeches earnings, bpos and tourism are behind this strong external position. in this period of external volatility, this is an anchor for stability. final thoughts ladies and gentlemen, if banking is about taking care of our financing needs, pension is about taking care of us when we are no longer