. in fact, these trends are all the more noteworthy in that they are happening against a backdrop of persistent and strong headwinds in the global economy. the progress in the economic front is the outcome of prudent and disciplined monetary and fiscal policymaking. and these conditions are sustainable because of strong and wellgrounded policy frameworks in place. these include : 1. the government is committed to sound fiscal policy. the government is appropriately focused on strengthening the quality of fiscal adjustments. it has increased spending for critical social priorities and economic infrastructures while keeping a watchful eye on the medium - term objective of fiscal consolidation. 2. the government continues to pursue a reform agenda that is aimed at raising the economy ’ s flexibility and unlocking the country ’ s growth potential. 3. a forward - looking monetary policy framework that has helped strengthen our commitment to non - inflationary economic growth. we have met our inflation target for the past consecutive four years ( 2009 – 2012 ), even as the economy ’ s engines have powered ahead ; 4. an enhanced policy toolkit that is geared to respond to the challenges brought about by strong capital inflows ; 5. finally, supervisory and regulatory practices that are benchmarked against international best practices. this is reflected in well - capitalized and better - governed banks that are able to efficiently perform financial intermediation and risk management. there are therefore fundamental reasons to believe that continued macroeconomic discipline and reforms can push the growth trajectory further to a path that will allow the economy to not only survive the global headwinds but to adapt and to thrive in a more challenging operating environment. as we are aware of the headway that has been made, we are equally mindful of the challenges and the risks to the favorable economic outlook. i can assure you that there are a lot of “ responsible adults ” in the room. these are policymakers who are attentive to the overt as well as the underappreciated risks to the philippine growth story. what are the challenges? what are the latent pressure points in the economy? let me cite three major ones, from the bsp ’ s standpoint : 1. managing capital flow surges – an issue repeatedly mentioned this morning 2. ensuring financial stability 3. going the distance with structural reforms in this challenging period of very strong capital flows and expectations of continuing strong capital flows, or as one economist has called it the whipsaw of huge capital movements, the question is – do

amando m tetangco, jr : the philippine economy – primes for a sustainable and solid growth speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the euromoney philippine investment forum, manila, 12 march 2013. * * * secretary cesar purisima, other government officials, mr. tony shale, ceo of euromoney institutional investor asia, distinguished leaders and members of the business and investor community, honored guests, ladies and gentlemen, good afternoon. over the recent period, there has been a welcome spate of rosy and positive commentaries on the philippine economy. we have been described as an emerging asian tiger. the venerable new york times has labeled the philippines as the economic bright spot in asia. the world bank has observed that macroeconomic stability is now the new normal in the philippines. the imf has singled out the philippines for being the only country whose growth forecast it has upgraded. the imf 2013 growth forecast was set at 4. 7 percent earlier on but was revised twice to reach 6 percent this january. 1 the imf is not the only multilateral financial institution that has upgraded the growth forecast of the philippine economy. the world bank upgraded its outlook on the philippines ’ 2013 economic growth from 5 percent ( october ) to 6. 2 percent ( december ). 2 the asian development bank likewise raised its earlier 2013 forecast of 4. 8 percent ( april 2012 ) to 5. 5 percent 6 months later ( october ). 3 these assessments are consistent with the series of sovereign credit rating upgrades received by the philippines even as the credit ratings of many other countries have been downgraded. in fact, it could be said that the financial markets have already voted the philippines as investment grade as evident in the pricing of our credit default risk in the same range as investment grade economies. all these assessments were driven mainly by the solid performance of the philippine economy across various metrics. these include : • robust and broad - based economic growth ; • low and stable inflation ; • strong external payments position ; imf statement at the conclusion of the 2013 article iv consultation mission to the philippines, press release no. 13 / 21, january 23, 2013 the world bank east asia and pacific economic update december 2012 asian development outlook 2012 bis central bankers ’ speeches • sound and stable banking system ; and • much improved fiscal performance. these macroeconomic conditions did not happen by chance. far from it