of the global financial crisis ( gfc ). a large part of the country ’ s external debt remains in medium - to - long term maturity profile supporting a manageable debt repayment schedule over the medium - to - long term horizon. the philippine economy not only has ample monetary policy space but also fiscal space to respond to any downside risks to growth. the improving fiscal position of the government, supported by the series of fiscal reforms in both tax revenue generation and tax collection, provides the government the resources to increase public investments and support domestic demand. this fiscal space will also help boost private investment via the infrastructure push, and will consequently expand the country ’ s productive capacity to ensure a durable and sustainable growth in the years to come. moving forward, we are optimistic that the philippine growth momentum will be sustained. the current administration is in a strong position to push for reforms by leveraging on its strong political capital. results of institutional and governance reform surveys are positively recognized by independent third - party assessors. the country has indeed made important strides in enhancing its competitiveness over the past years. this is the essence of what we are doing on a pro - active basis, and this is to future - proof the philippine economy. the country ’ s improved creditworthiness, exemplified by the country ’ s elevation to investmentgrade territory, has cemented the philippines ’ status as an economy with one of the brightest prospects globally. our sound macroeconomic fundamentals, supported by structural reforms, have been duly recognized by credit rating agencies. international rating agencies have taken notice of the strides that the country has taken in the areas of economic reform and liberalization that have produced the current growth and stability the country exhibits. credit rating upgrades mean lower borrowing costs for the country. at investment grade, a country is seen to be fully able to service its foreign debts. fitch ratings and moody ’ s investors service kept the philippines one notch above minimum investment grade. meanwhile, the latest credit rating upgrades given by standard and poor ’ s and jcra in april 2019 and by the japan - based r & i credit rating agency just earlier this month place the philippines only a step away from our targeted single “ a ” grade in the next two years. having an a - rating will place the philippines in the radar of more investors, which bodes well for attracting more job - generating investments. the same optimism is shared by third - party assessors such as the international monetary fund 4 / 7 bis central bankers'speeches ( imf

longer horizon, concerns also remain about the persistence of global imbalances. concerning prices, recent oil price developments have created considerable upward pressure on consumer prices. according to eurostat ’ s flash estimate, annual hicp inflation was 2. 5 % in may, partly due to base effects, after standing at 2. 0 % in april. markets expect oil prices to decline gradually from recent peaks. if they were to remain at their recent high levels, it is to be expected that inflation rates would continue to be higher than previously anticipated and stay above 2 % for longer than just a few months ahead. when assessing price trends over the medium term, however, the outlook remains favourable. in particular, overall import price developments should remain moderate and inflationary pressure from wages and unit labour costs should be contained. both factors should help to bring annual rates of consumer price inflation back to below 2 % in 2005. these views are in line with the eurosystem staff projections, which put average annual hicp inflation at between 1. 9 % and 2. 3 % in 2004 and between 1. 1 % and 2. 3 % in 2005. they are also broadly consistent with recently released forecasts by international and private organisations. these forecasts and projections are subject to a number of risks and uncertainties. concerns relate in particular to oil price developments. moreover, there is insufficient knowledge today about future changes in indirect taxes and administered prices ; information on these items typically becomes available only towards the end of the year. against this background, the potential risk for second - round effects via wages needs to be monitored closely. finally, there has been an increase in measures of long - term inflation expectations derived from financial market indicators. while these indicators should be interpreted with caution, the recent upward trend calls for particular vigilance. moving on to the monetary analysis, we have seen increasing evidence of a normalisation of the portfolio behaviour of private investors. as a consequence, annual m3 growth has fallen quite significantly over recent quarters. still, the low level of interest rates continues to fuel monetary growth and the amount of excess liquidity remains high in the euro area. in an economic upswing, the persistence of excess liquidity could lead to inflationary pressures over the medium term. to sum up, the economic analysis indicates that the main scenario for the outlook for price developments over the medium term remains in line with price stability. however, short - term pressures on inflation have increased recently and some upside risks need to be taken into account