benjamin e diokno : road to recovery - turning crisis into opportunities speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the manila times online forum, 29 june 2020. * * * manila times president and ceo dante “ klink ” ang, chief operating officer blanca mercado, other manila times officers and staff, members of the media, ladies and gentlemen. good afternoon and thank you for inviting me to this manila times online forum. i adopted your theme, “ road to recovery : turning crisis into opportunities ” as the title of my presentation today. we are three and a half months into the lockdown. cautiously but surely, we are getting back on our feet. even as the covid - 19 uncertainty continues, i am optimistic that we can overcome this crisis. let me share bsp ’ s views on growth and recovery after this pandemic. this is a snapshot of the terrain after the outbreak of covid - 19. the domestic financial markets were racked by heightened volatility following the outbreak of the covid - 19 pandemic. we saw a sharp decline in portfolio inflows in the first two months of 2020. the stock market index noted on march 19 its lowest year - to - date record since october 11, 2011. we have had serious exogenous shocks in the first quarter — the taal volcano eruption, uschina trade tensions, african swine fever. but nothing comes close to the covid - 19 pandemic that has brought the global economy to a halt. the confluence of these shocks resulted in the contraction of the economy by 0. 2 percent in the first quarter of 2020. this is the first negative real gdp growth since 1998 when the economy wrestled with el nino and the asian financial crisis. in its latest assessment, the development budget coordination committee forecasts a full - year contraction of – 2. 0 to – 3. 4 percent ( neda, 13 may 2020 ). on a positive note, the peso appears to buck the trend as most regional currencies have depreciated significantly against the us dollar. the peso is the least depreciated currency among its peers. we have hefty gross international reserves estimated at us $ 93. 3 billion in may. we forecast that the year - end gir will reach us $ 95 billion. despite the bleak global picture,

deal with to recover lost momentum because of this pandemic. let me expound on four critical structural reform imperatives that i believe are opportunities for growth that we should seize. first is the modernization of the country ’ s health system to ensure efficient public health infrastructure and resilient crisis preparedness framework. this would require giving incentives for the use of science and technology in health policy decision making. it would require overhauling of the healthcare supply chain management. the government must also initiate the formulation of a national preparedness and response framework for disease outbreaks and pandemics, taking into account coordination gaps across different levels of government. second is the need to upgrade the information and communication technology ( ict ) infrastructure system and processes. technology will play a pivotal role in reshaping the means of production and the delivery of goods and services in the post - covid world. digital technology will also be critical in enabling simpler and more efficient transactions with government agencies. business transactions such as online retail, online banking, online medical consultations, and digital payments will become a necessity. all these need to be supported by a safe and reliable digital infrastructure system with robust and dependable cybersecurity protection. 2 / 4 bis central bankers'speeches third is the modernization of philippine agriculture and the government ’ s supply chain management system with the aid of digital technologies. this will help ensure that food and other essential goods and services are available, accessible, and affordable. fourth is the development of a highly skilled and resilient workforce by strengthening the educational system, sustained upskilling, and adequate health protection to future - proof our workforce. in this way, the country ’ s productive capacity can benefit more strongly from its favorable demographics. the structural reform imperatives i have outlined are outside the ambit of bsp. yet they have profound impact on the realization of the bsp ’ s policy thrusts. against this backdrop, what else can the bsp do? the bsp ’ s policy space remains sufficient. the bsp has yet to exhaust the conventional monetary instruments in its toolkit to support the liquidity requirements of the economy, should conditions warrant. given the possibility of higher defaults and non - performing loans, there may be scope to offer more debt restructuring measures. we agree in principle with the goals of the proposed philippine economic stimulus act of 2020. the act seeks to ease the plight of workers, families and businesses who were adversely affected by the covid - 19 pandemic. it