BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the strong economic foundation of the country before the pandemic has insulated it from further negative effects stemming from the global health crisis.
In a recent speaking engagement, Diokno underscored the importance of strengthening economic fundamentals during periods of relative stability to develop buffers in times of crisis.
Diokno said the Philippines is “a good example” of this economy with sound fundamentals when the Covid-19 health crisis struck.
According to the Governor, the economy entered the pandemic with healthy external accounts and hefty gross international reserves, which helped maintain relative order in the financial markets amid the crisis.
“The Philippine economy is much stronger now than before. Right now, our foreign debt is 30 percent foreign and 70 percent domestic, and we have hefty gross international reserves,” Diokno said.
Recent BSP data showed that the country’s gross international reserves (GIR) level settled to $106.76 billion as of end-April this year from the end-March level of $107.31 billion.
The country’s April GIR is the lowest it has been since September last year, when the country’s dollar defenses hit $106.596 billion.
The country’s GIR is the level of foreign exchange holdings that is being managed by the central bank during a given period. The GIR is a crucial component of the economy as it is often used to manage the country’s foreign exchange rate against excess volatility.
Diokno also pointed out that the country’s strong fundamentals were built through decades of continued implementation of structural reforms and sound macroeconomic management.
To ensure full economic recovery and maintain this long-term economic potential, Diokno said the country would have to implement recent hard-won economic reforms, such as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law and the amendments to the Foreign Investments Act, Public Services Act and Retail Trade Liberalization Act.
Earlier this month, Fitch Solutions—the research arm of the Fitch Group—said they expect the current administration as a “continuity candidate,” as economic reforms and foreign policies are “most similar” to the outgoing Duterte administration.