The BSP will reduce policy support as the economy recovers, Diocono said

The Philippine central bank will consider the pace of economic recovery as it follows the normalization of monetary policy.

“Banco Central Ng Pilippinas (BSP) will remember that extraordinary measures will have to be taken again as the economy recovers and gradually returns to normal,” said BSP Governor Benjamin E. Diocono said in a speech at the Virtual Philippines Singapore Business Investment. Summit on Wednesday.

The timing and terms of the BSP’s exit strategy for its epidemic intervention will be governed by.flIn the medium term, the state of public health and the domestic and global risks to the economy, “he added.

Mr Diokno told Bloomberg on Monday that the central bank could consider raising policy interest rates at its June 23 meeting because the economy is likely to grow by 6-7%. fiFirst trimester

Economic data for the first quarter will be released on May 12.

BSP officials had earlier said they would assess the need for a rate hike in the second half of 2022.

Last month, the BSP kept policy rates at a record low, even if it increased them.flThe forecast for 2022 is outside the 4.3% target, as oil and commodity prices rise.

Mr Diokno has previously said he would like to see economic growth of four to six quarters in a row before adjusting the policy rate.

If the Philippine Gross Domestic Product (GDP) expands in the first quarter, it will mark the fourth quarter of economic growth after the epidemic-induced recession.

“Recent major economic developments have left us confusedfiIt depends on the country’s ability to sustain recovery in the near term, “said Mr Diokno.

“Growth will be supported by amendments to the 2022 National Budget, the Build, Build, Build Project, Corporate Recovery and Tax Incentives for Enterprise Act, as well as amendments to the Retail Trade Liberation Act, the Foreign Investment Act. And public service law, ”he added.

Mr Diokno acknowledged the uncertainties caused by the Russia-Ukraine war in terms of trade, investment and remittances, but emphasized the limited economic ties with the countries involved.

He said the country’s external position is still a source of strength for the economy.

“The country’s strong external accounts and structured foreign exchange inflows are expected to ease the financial constraints of a developed economy, as well as the potential negative effects of the headwind from the Ukraine-Russia conference.flict, ”he said.

Total international reserves valued at $ 108.5 billion at the end of March equivalent to 9.6 months of imports of goods and payments for services and initial income.

Mr Diokno said foreign debt was also relatively low at 27% of GDP by the end of 2021, up from about 60% in mid-2000.

The Philippine GDP will grow 5.7% in 2021 after a record 9.6% contraction in 2020. Economic managers expect GDP to grow 7-9% this year

Mr Diokno said policy interventions to support the economy during the epidemic had infected more than P2.2 trillion. fiFinancial arrangements. This is equivalent to about 11.1% of GDP.

Earlier this month, the BSP extended another P300-billion zero-interest loan to the national government in March, due from June 12. This is the sixth time the central bank has increased budget support to the national government.

The central bank’s head also significantly reduced purchases of government securities. – Loose Wendy T. Nobel