##finance ngos which collect savings greater than the compensating balance should be subject to regulation and supervision. circular 272 issued january 2001 by the bangko sentral ng pilipinas provided the enabling policy and regulatory framework for microfinance in the banking sector. parallel to this, bangko sentral mounted capacity building programs and sustained information campaigns. microfinance has flourished since then. today, 223 banks are involved in microfinance with a combined loan portfolio of about p4 billion lent out to over 660, 000 borrowers. nevertheless, there is still much more that we can do. it is fitting therefore that we are addressing the obstacles to gaining access to agricultural credit through microfinance, a methodology and technology that has been proven successful. it is important to remember that the success of microfinance is anchored on the following fundamental principles : first, microfinance is typically linked to households and their microenterprises. the household is seen as one with diverse activities and multiple streams of income and expenditures. microfinance therefore looks at the regular cash flow of the household and the microenterprise – not the loan use, in determining the size, term and repayment structure of the loan. as a result, microfinance loans are primarily short term loans with frequent repayments. second, microfinance loans are characteristically used for additional capital to grow an existing business. the loan amounts are not very large. some microfinance institutions even use a growth - loan process where the clients start off with a very small loan and can only access larger loans incrementally after showing a good repayment record. this has been proven successful in mitigating risks and in establishing credit discipline among the borrowers. there are several other basic principles of microfinance, but i have focused on these 2 characteristics as they are the features that seem fundamentally incongruent to the financing needs of the agriculture sector. in particular, cash flow lending and frequent repayments do not fit the seasonal nature of agricultural incomes. in addition, short term financing, as well as the relatively small loan amounts, result in a lack of term financing which is important to particular types of agricultural activities. the risks for both types of financing are also very diverse. agriculture finance bears unique risks such as price and yield risks. having said this, it does not mean we are dismissing the possibility of combining some of the best practices of microfinance with salient features of agriculture finance to create a

in flux and constantly changing, we look at our north star, our three pillars, which remain constant : price stability, financial stability, and an efficient and secure payments and settlements system. let me go over our plans for this year to ensure that we keep delivering on our three pillars. 1 / 5 bis - central bankers'speeches on price stability. based on our inflation projections, inflation may have already peaked last december. of course, the [ actual ] numbers will come out soon. from that point on, we see inflation slowing down in the first half of 2023 and settling between 2. 0 - 4. 0 %, our target range, by the third quarter of 2023. by the fourth quarter, and hopefully for the rest of 2024, inflation is expected to approach the low end of the target range due to base effects. what does this mean for us? of course, our monetary settings will continue to be based on and be guided by data. and of course, we are also ready to explain when our forecasts are quite different from what actually happened because we can account for them in our models. by the way, some models do not have this ; they use the past [ figures ] and gut feel on what inflation will be - and it does [ it ] quite well. the problem with these models is they cannot explain itself when it's wrong unlike our [ bsp's ] models that have very specific exogenous variables. aside from investments in better models, we are now leveraging big data and advanced analytics to improve further our forecasting and analytical abilities. [ our ] investments in better models, technology, and big data help us ensure that our actions are responsive to the needs of the time and help us as well in our communications. now, our second pillar : financial stability. we look to the strength of our banks as a barometer of the economy's health. if banks are actively lending to households and businesses, then the economy is in a much stronger position. and as we all know, when banks over - lend, this usually is followed by long periods of slower lending and we hope [ that ] our regulations, our supervision, prevent that from happening. fortunately, the philippine banking system is on much more solid footing than it was back then. both regulators and the regulated institutions learned lessons from past crises and built their buffers in anticipation of future shocks. so, when we look at all the indicators at this time, you can clearly