BSP Governor Benjamin Diokno
MANILA – The Philippines remains a good investment destination despite the impact of the pandemic due to the economy’s improved fundamentals, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.
In his speech during the virtual 2nd Philippines-Singapore Business and Investment Summit on Friday, Diokno reiterated that the economy entered the pandemic in a position of strength and the central bank has implemented several measures to lessen the pandemic’s impact on livelihoods and the economy.
He said these measures, which include a total of 200 basis points reduction in the BSP’s key policy rates, up to 200 basis points cut in banks’ reserve requirement ratio, and the liquidity boost for the government through repurchase agreements and cash advances, have injected into the financial system PHP2 trillion in liquidity.
With economies reeling from the effects of the pandemic, Diokno said “now is the right time to talk about disengagement strategies because the world, the Philippines included, is in the recovery phase.”
He said the Philippines is a “smart investment destination,” citing such factors as debt watchers’ decisions to keep their Stable outlook on the domestic economy despite downgrades for some other countries.
“Debt watchers are one in saying that the Philippines has strong pre-crisis fundamentals, has robust medium-term growth prospects, and is inclined to return to its fiscal consolidation path post-Covid,” Diokno said.
For this year, he said the economy is expected to recover and post a growth of 6.5 percent to 7.5 percent, and to register improvements in imports and exports, remittances, and foreign direct investments.
“External accounts remain healthy, with hefty gross international reserves and surpluses in the current account and the balance of payments,” he added.
Diokno said reform measures are continuously being pursued, with Congress passing, among others, the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which will reduce corporate income tax from 30 percent to 20 percent and rationalize fiscal incentives.
The domestic banking system also remains well-capitalized and debts of financial institutions remain manageable and “far from levels seen in the aftermath of the Asian financial crisis,” he said.
With all these factors, Diokno said the country’s macroeconomic fundamentals “remain sound and our medium-term growth prospects are bright.”
“The reform momentum will help fuel the Philippines’ recovery, address structural issues, and continue to enhance the Philippines’ competitiveness as a leading investment destination,” he added. (PNA)
