amando m tetangco, jr : the philippines – addressing the challenges. staying the course speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the philippine economic briefing, makati city, 17 september 2008. * * * good morning. thank you for joining us in this mid - year economic briefing. i am pleased to speak before you on the developments in the monetary, external and banking sectors. after providing you with an overview of recent economic developments, i will discuss the outlook for the next two years which takes into account the challenges that our economy is facing. then, i will walk you through how the bsp has responded to these challenges. i will close with the bsp ’ s policy thrusts going forward. let me start with the latest price developments. inflation averaged 8. 8 percent for the first 8 months of the year, rising to 12. 5 percent in august from 4. 9 percent in january 2008. core inflation, which measures the underlying trend in inflation by excluding specific food and energy prices, climbed to 7. 0 percent yearon - year in august, from 3. 4 percent in january. price pressures have been building up since early this year. initially the price increases were due to supply - side factors, specifically from elevated international oil and non - oil commodity prices. however, second round price pressures subsequently became apparent, as evident in the rise in core inflation and the adjustments in the pricing of services as well as wages. these have resulted in a more challenging inflation environment. meanwhile, the country ’ s external payments profile remains a major source of strength for the economy. the bop remained in surplus for the first eight months of 2008 at us $ 2. 0 billion. remittances from overseas filipinos continued to boost the bop, reaching us $ 9. 6 billion for the first seven months of 2008, higher by 18. 2 percent relative to the year - ago level. the sustained bop surplus resulted in the continued build - up of the country ’ s gross international reserves ( gir ), which stood at us $ 36. 7 billion as of end - august 2008. at this level, the gir is equivalent to 6. 0 months ’ worth of import cover, 2. 9 times the country ’ s short - term external debt based on residual maturity. the strong external position has allowed both the public and private sectors to prepay some of

, also my personal goal as bsp governor — is that at least 50 percent of the country ’ s total financial transactions be done digitally, and at least 70 percent of filipino adults must have financial accounts. the second objective involves the availability of more innovative digital financial products and services. these products and services, designed to be responsive to consumers ’ needs, will be enabled by a digital philsys id and supported by a next - generation payment and settlement system that facilitates the real - time processing of financial transactions. all these measures are integral parts of the strategy to become the central bank that understands the needs of the filipino people and help them achieve their aspirations in life. while the ongoing crisis has subjected us to extraordinary challenges, it has also given us the opportunity to accelerate our efforts in bringing the bsp closer to the filipino people. through digitalization, we help create opportunities for them to improve their lives and participate in the formal sectors of the macroeconomy and the financial system. this way, we also promote financial inclusion, as digital payments help consumers confidently engage in economic activities with ease and security. in fact, in a report titled “ global microscope 2020 : the role of financial inclusion in the covid - 19 response ” by the research arm of the economist group, the bsp was recognized for its initiatives to mitigate the adverse economic impact of the current global health emergency. in closing, i would like to highlight three strengths that we are pitting against the trio of shocks we are facing : • first, we continue to maintain strong macroeconomic fundamentals. together with carefully thought - out public health responses and an efficient rolling out of the vaccination program, these will carry the philippine economy toward sustainable recovery. monetary policy will remain accommodative until domestic demand and overall macroeconomic activity recovers, keeping in mind our price and financial stability objectives. • second, targeted fiscal support remains central to the covid - 19 response during the pandemic, and these are meant to minimize any permanent scars on the philippine economy. • and third, we reiterate our continued support for structural reforms that are aimed at raising the country ’ s competitiveness and helping transform the financial landscape so that it is future - ready 3 / 4 bis central bankers'speeches through digitalization and green finance. in this time of the pandemic, we realize more than ever before that the production of objective and comprehensive research and the promotion of the research culture in the bsp is important.