Continued expansion of the domestic economy, sustained good fiscal policy, and an inflation-targeting central bank will help ensure the Philippines’ resiliency against systemic risks, according to the Bangko Sentral ng Pilipinas (BSP) governor.
BSP Governor Felipe Medalla made the remarks during the closing event of the International Conference on Financial Stability hosted by the central bank and the International Monetary Fund (IMF) on Tuesday.
He said measures to improve the strength of the country’s buffers against different economic challenges will also need cooperation from the private sector.
He explained that the domestic economy is able to recover fast from the recent pandemic due in part to the reduction of the central bank’s key policy rates, which was targeted to encourage more borrowings and ensure that economic activities remain up despite the pandemic.
He noted that domestic banks are also strong and have better ways of resolving debt.
If growth of the domestic economy and exports, among others, end lower-than-expected, he said “at least we should avoid a sudden stop.”
He also said that there are “not-so-good alternatives,” which include improvement of taxes.
“Monetary policy must do its job, but anyone who thinks monetary policy alone will solve it is fooling himself,” Medalla said. “The key here is ‘pain sharing.’”
“If monetary and fiscal policies improve, the economy improves significantly,” he added.
CURRENTPH NEWS SERVICE