of key food items, and petitions for jeepney fare hikes due to higher oil prices. overall, the philippines remains in a sound position as its macroeconomic fundamentals underpin the economy ’ s recovery in 2022. the development budget coordination committee expects the economy to grow by 7. 0 to 9. 0 percent in 2022. risks and challenges remain as the emergence of highly transmissible covid - 19 variants delays the normalization of economic activities. nonetheless, the timely imposition of appropriate pandemic - related measures is necessary to control covid - 19 surges and arrest the spread of the omicron covid - 19 variant. the continued vaccination efforts and improving healthcare interventions in managing severe cases should usher the eventual transition of covid - 19 from pandemic to endemic. 2 / 3 bis central bankers'speeches on the external front, we are cognizant that ongoing policy normalization by major central banks could heighten volatility in financial markets. some central banks of major advanced economies, including the bank of korea, reserve bank of new zealand, and bank of england, have already raised key interest rates. while the shift to policy normalization of advanced economies could affect capital flows and lead to financial market volatility, this also reflects opportunities for economies like the philippines in terms of increased trade activities. nevertheless, the bsp remains steadfast in dealing with such spillover effects through our expanded policy toolkit. although the normalization of the currently ultra - accommodative monetary policy in advanced economies could lead to a rebalancing of global capital flows and depreciation of emerging markets ’ currencies vis - a - vis the dollar, the philippines is in a favorable position to navigate tightening global financial conditions given the manageable inflation environment and sufficient external buffers. the current level of gross international reserves – at usd108. 45 billion – is more than sufficient to withstand adverse external shocks. at the same time, structural flows from remittances, it - bpm revenues, and foreign direct investments are expected to further bolster the country ’ s external payments position. meanwhile, the bsp ’ s adherence to a market - determined exchange rate system and our macroprudential measures will continue to allow us to curb excessive fx volatility and respond to instability in financial markets. should external developments bring about risks to the domestic outlook for inflation and growth, the bsp stands ready to calibrate policy

applied by january 2, 2012 ; 2 / 3 by january 1, 2013 ; and the full risk weight by january 1, 2014. another major change is the increase in risk weight for real and other properties acquired exposures from 100 % to 150 %, which shall also be applied gradually for three years : 115 % risk weight shall be applied by january 1, 2012 ; 130 % by january 1, 2013 ; and 150 % by january 1, 2014. this revision is consistent with the bsp ’ s thrust of reducing the level of non - performing assets of banks to strengthen the overall asset quality of the banking system. another new feature in the revised framework is the capital requirement for operational risk which is based on 12 % of the average positive gross income of the bank for the past three years. the new guidelines also require important items to be disclosed in the annual reports and the quarterly published balanced sheet to enhance market discipline and transparency. the bangko sentral has considered delaying the effectivity of this new circular to 1 january 2012 to give concerned banks ample time to adjust to this new capital adequacy framework. and to make the transition more manageable, the implementation is on a staggered basis. ladies and gentlemen of the rural banking sector. it is important that you see these circulars not as mere issues of compliance undertaken to satisfy the regulator ; rather, it is our hope that there is a clear understanding and appreciation on your part that these measures are crucial to your growth and viability as a business. ultimately this will benefit your customers in terms of stronger social protection and your shareholders in terms of better returns. as it is, the rural banking sector as a whole is already on the right track, as far as operational bottom line is concerned. i base this on 2009 consolidated figures. in fact, even with the global financial crisis and isolated closures of some banks, consolidated return on equity of the rural banking sector in 2009 reached 12. 12 centavos for every one peso equity investment, even better than the commercial banking sector which posted an aggregate roe of 11. 38 centavos per peso of equity. total assets of the rural banking sector also continued to expand, rising from p146 billion in 2008 to p157. 4 billion in 2009. yearend 2009 figures also showed that rural banks ’ gross total loan portfolio was more than p98 billion, while deposits stood at over p105 billion. by any measure, these are respectable figures posted at a time