outlook for 2006 in the light of our better - than - expected economic performance in 2005, we are confident we will be able to achieve our targets this year. among others, we expect our economy to continue to expand at a reasonable pace, led by services, industry, and agriculture sectors. nevertheless, since oil prices continue to be a concern, gdp growth rate, according to the dbcc, may range between 5. 7 % and 6. 3 %. inflation is seen to rise slightly early this year, as a result of high oil prices and the vat rate adjustment. however, the continued stability of the peso should help cushion its impact. in the second half of 2006, we expect inflation to follow a decelerating trend as cost - push pressures subside. meanwhile, market interest rates are likely to remain stable during the year, due to improving fiscal position of the government, ample liquidity in the financial system and projected modest growth in bank lending. on the external front, dollar inflows from ofw remittances and foreign investments are expected to remain strong in 2006 as deployment of more workers escalate and as more high - salaried workers get jobs overseas. this should boost our external position and further build up our gross international reserves. it also underpins our expectations of a generally stable peso in 2006. policy directions for the bsp, our principal thrust over the near term will be oriented towards responding to inflationary risks and delivering price stability over the policy horizon. the bsp will also intensify its efforts to strengthen the financial system, further enhance the effectiveness of its supervision and regulation of banks, and help promote the development of the domestic capital market. we will continue to foster an environment that will facilitate further disposal of banks ’ non - performing assets. for those of you in the market for real estate, i recommend you take a look at the nonperforming assets of banks that are up for sale. the rates are attractive for buyers as banks now conform with the risk - based provisioning required by the bangko sentral. our policy is to require banks that take on more risks, to have correspondingly higher capitalization. the asset cleanup of banks should spur credit and investments, thereby creating the basis for more sustainable growth in the medium term. other key financial reforms will focus on aligning prudential regulation of the banking system with international standards and best practices, strengthening corporate governance standards as well as market discipline mechanisms, and further

national government and the bsp worked hand - in - hand in providing strong to the entire nation through the grant of stimulus, relief measures and moratoria. for its part, the bsp issued time - bound regulatory and operational relief measures to bspsupervised financial institutions to aid them in carrying out their vital role in the economy. we supported the national government through the grant of short - term provisional advances. we injected approximately ₱2 trillion pesos or approximately us $ 42 billion amount of liquidity to the financial system. let me highlight the three core strengths of the philippine banking system : first, the banking industry ’ s strong capital position. it posted stable capital adequacy ratios ( car ) at about 15. 0 percent in the past 10 years, which is well above the 10. 0 percent minimum threshold set by the bsp and 8. 0 precent minimum set by the bank for international settlements. in particular, the risk - based capital adequacy ratio of the universal and commercial banking industry stood at 17. 2 percent on consolidated basis as of end - september 2020. second, is the banks ’ ample liquidity buffers, which enable banks to withstand short - term liquidity shocks and to provide adequate stable funding in the medium term. in particular, the liquidity position of universal and commercial banks remained relatively stable as of end - november 2020 with liquidity coverage ratio ( lcr ) of 201. 0 percent, which is double the regulatory minimum of 100. 0 percent. 2 / 5 bis central bankers'speeches meanwhile, the minimum liquidity ratios ( mlr ) of stand - alone thrift, rural and cooperative banks continued to exceed the regulatory minimum requirement. third, is the expanding assets of banks on the back of increasing deposit liabilities. as of enddecember 2020, the banking system assets grew by 6. 1 percent year - on - year to ₱19. 4 trillion. all in all, these contributed to the sustained strength and resilience of the banking sector. yet, we observe slower bank credit growth as a result of the pandemic. gross loans fell by 0. 9 percent year - on - year as of end - december 2020, in sharp contrast to the 8. 8 percent growth rate recorded in december 2019. bank lending growth continues to wane as the pandemic dampens consumer spending and limits business activities. bsp ’ s survey indicates a net tightening of banks ’ overall credit standards for both