Bangko Sentral ng Pilipinas Governor Benjamin Diokno. (File photo)
MANILA – Keep the faith.
This was what Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said vis-à-vis the impact of the coronavirus disease 2019 (Covid-19), which, he said, is not an economic crisis but a public health crisis.
In a statement released on Saturday, the central bank chief said: “There is no reason to believe that the Covid-19 crisis could severely cut the Philippine growth momentum.”
“The truth is that the economic fundamentals are on our side. Even under the worst possible scenario, the Philippines can still grow this year and in the medium term by about 6 percent,” he said.
Economic managers estimate that the economic impact of the virus on the economy this year may be around 0.3-1.0 percentage point, so they remain confident that the 6.5-7.5 percent growth target band remains achievable.
Diokno said there remains “ample fiscal and monetary space” and that the proportion of debt to domestic output “is low and falling.”
Rate of price increases is also within the government’s 2-4 percent target, he said.
Data from the Philippine Statistics Authority (PSA) show that inflation last February slipped to 2.6 percent from month-ago’s 2.9 percent, resulting in a 2.8 percent average in the first two months this year.
Diokno said the peso is “steady” and backed by the strong gross international reserves (GIR), which, preliminary central bank data show, has risen to USD87.61 billion as of last February.
He said the country “has a reliable and sustainable source of foreign exchange” citing inflows from overseas Filipino workers (OFWs), foreign direct investments (FDIs), and business process outsourcing (BPO) receipts.
He also said the domestic banking industry “is sound and adequately capitalized.”
“The economy is robust enough to withstand the Covid-19 public health crisis,” he said.
The central bank chief said the focus now “should be on how to delay the spread of the Covid-19 outbreak,” which is what the government is now undertaking through, among others, the community quarantine for Metro Manila, which local government units in several areas around the country have also adopted.
He cited that “irrational behavior of consumers (hoarding of masks, panic buying), investors (sharp fall of stock markets all over the world), and some banks (unusually heavy cash withdrawal from BSP) is based on fear, not fact.”
“But what is needed at these trying times is evidence-based, clear thinking,” he said, noting that, for one, the central bank’s policy-making Monetary Board “is ready to deploy any or all its policy tools, as appropriate, to address all challenges to our own financial markets and growth prospects.”
He said monetary officials have approved the grant of temporary and rediscounting relief measures for all BSP supervised financial institutions (BSFIs) to lessen the potential impact of the global pandemic on BSPFIs’ operations.” (PNA)
