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Philippines: GDP growth target attainable, says BSP
MANILA, Philippines — The government’s economic growth target this year remains achievable despite the surge in COVID infections due to the highly transmissible Omicron variant, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno.
In his keynote address during the inaugural meeting and induction of the 2022 board of the Management Association of the Philippines, Diokno said the Cabinet-level Development Budget Coordination Committee (DBCC) has set a seven to nine percent gross domestic product (GDP) growth target for 2022 and 2023.
“Our position is that, despite the recent virus variant, we will hit our projected growth of seven to nine percent. So the variant, as it turned out, is mild and less lethal. We’re early in the year right, so we hope that the variant will be gone by the middle of February or March,” Diokno said.
The BSP chief said during his weekly online press conference that the new variant is indeed more contagious but less virulent.
“We do not expect that to affect too much our forecast for this year of seven to nine percent growth. We are expecting that the problem will be solved maybe at the latest by March, that is the first quarter of the year. So we do not expect that as a major downer as far as the growth target is concerned,” Diokno said.
According to the BSP, the Philippine banking system sustained its solid footing as shown by the continued growth in assets, loans and deposits as well as ample capital, liquidity buffers and loan loss reserves amid the global health crisis.
Diokno said the industry’s assets grew by seven percent to P20.4 trillion as of end-November last year, funded by the 9.2 percent rise in deposits to P15.8 trillion.
“This indicates the continued trust and confidence of the public in the banking system. The strong performance of the banking system amid this crisis is due to its strong fundamentals supported by deep financial sector reforms,” Diokno said.
The BSP chief added the central bank’s timely and well-calibrated operational and prudential relief measures proved instrumental in helping banks cope with the impact of the pandemic.
The sector’s loan book rose by 4.3 percent in end-November last year on the back of favorable market outlook, rising vaccination coverage, and the BSP credit-related relief measures to further boost market confidence and encourage lending.
Diokno said the level of non-performing loans (NPLs) also remained manageable and within the BSP’s expectations, easing to 4.3 percent in November from 4.4 percent in October.
The implementation of Republic Act 115231 or the Financial Institutions Strategic Transfer (FIST) Act is expected to cut the level of soured loans of Philippine banks.
BSP Assistant Governor Lyn Javier said the Securities and Exchange Commission has approved the incorporation of three FIST corporations.
Likewise, the central bank has also received 11 master list applications of non-performing assets.
“We wish to highlight that the FIST Act is a standby facility if and when the increase in non-performing assets go beyond manageable levels,” Javier said.
Moreover, the BSP said banks maintained sufficient capital and liquidity buffers standing at 16.9 percent for universal and commercial banks as of end-September, well-above the 10 percent regulatory minimum required by the BSP and the eight percent by the Bank for International Settlements.
Source: https://www.philstar.com/business/2022/01/14/2153701/gdp-growth-target-attainable-says-bsp