Bangko Sentral ng Pilipinas Governor Eli Remolona (Photo courtesy of BSP website)

MANILA – Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. has underscored the strong backing the economy gets from the domestic banking system, a factor for Rating and Investment Information Inc.’s (R&I) affirmation of its "BBB+” rating on the country.

In a statement, Remolona said the domestic banking system continues to provide the funds needed by the continued expansion of the economy.

“Our Philippine banks have maintained more than adequate levels of capital and remained flush with liquidity. Unlike in previous crises, our banks are part of the solution rather than part of the problem,” he said.

BSP data show that as of May 2023, the sector’s total resources amounted to PHP28.528 trillion, up from the PHP26.463 trillion during the same period last year.

Aside from the affirmation of the country’s investment grade rating, the Japan-based debt rater also upgraded the rating outlook from "stable" to "positive."

Citing the R&I report released on Aug. 7, the BSP said the debt watcher also cited the country’s robust macroeconomic fundamentals, improvement of fiscal position, strong external payments position and the stable political environment.

BSP data show that as of the end-June this year, the country’s balance of payment (BOP) position, which is the sum of the country’s total transactions with the rest of the world, stood at USD2.26 billion, more than enough for 7.3 months’ worth of imports of goods and payments of services and primary income.

Aside from the external payments position, Remolona also reiterated monetary authorities’ forecast that monthly inflation would decelerate to within the government’s 2 to 4 percent target band within the last quarter of this year.

Last July, the rate of price increases slowed for the sixth consecutive month to 4.7 percent from month-ago’s 5.4 percent, bringing the seven-month average to 6.8 percent.

“Nonetheless, if upside risks persist, the BSP is prepared to resume monetary policy tightening as necessary to anchor inflation expectations and safeguard the BSP’s price stability objective,” Remolona added. (PNA)