• Step up structural reform – Tetangco urges govt

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    The government must take further steps in carrying out serious structural reforms to cushion the economy against imminent domestic and global risks, central bank governor Amando Tetangco Jr. said on Tuesday.

    In a speech at the Philippine Economic Briefing, Tetangco reminded members of the Cabinet of President Benigno Aquino 3rd that although the country has demonstrated a capability to implement critical reforms, the government should still be mindful that the operating environment is evolving, making it imperative for the leadership to move in step with the challenges posed by such changes.

    “Even as our fundamentals show strength and we have built buffers against external shocks, we remain cognizant that there are risks that could challenge this positive narrative,” Tetangco said.

    The Bangko Sentral ng Pilipinas (BSP) governor noted, for instance, the risk coming from uncertainty over the timing and magnitude of the United States Federal Reserve’s policy shift into a more normal mode of monetary and fiscal governance.

    Headwinds in various forms
    Tetangco said the headwind could take many forms such as: pressures on financial stability that could emanate from pricing of credit; sharp downward adjustments in prices of real and financial assets; and capital flow volatility that could reemerge as global investors react to news.

    “If these risks are not managed well and result in unwarranted tight financial conditions, fragilities in EME [emerging market economies]financial markets could be exposed. In turn, these could negatively feedback to the real economies of EMEs,” he warned.

    Tetangco said the headwind could take many forms such as: pressures on financial stability that could emanate from pricing of credit; sharp downward adjustments in prices of real and financial assets; and capital flow volatility that could reemerge as global investors react to news.

    “If these risks are not managed well and result in unwarranted tight financial conditions, fragilities in EME [emerging market economies]financial markets could be exposed. In turn, these could negatively feedback to the real economies of EMEs,” he warned.

    PH-specific risks
    For the domestic economy, Tetangco said the key challenges over the medium term are likely to relate mainly to addressing potential supply-side bottlenecks, bridging identified gaps in existing infrastructures, minimizing the impact of natural calamities, and promoting greater economic inclusion by generating more employment.

    For the domestic economy, Tetangco said the key challenges over the medium term are likely to relate mainly to addressing potential supply-side bottlenecks, bridging identified gaps in existing infrastructures, minimizing the impact of natural calamities, and promoting greater economic inclusion by generating more employment.

    The reform agenda of the government remains a ‘work in progress’ and the challenge now lies in sustaining the good performance and consolidating the country’s gains even in difficult times.

    “Our main priority is to achieve sustained, stronger, durable and more inclusive growth. This priority could be promoted by the three I’s—infrastructure, inclusiveness and institutions,” he said.

    The BSP governor said the Philippines seriously needs more infrastructure to enhance services to the people and improve the country’s attractiveness to foreign direct investments.

    In terms of inclusiveness of economic growth, the government must create an environment that not only enables more Filipinos to enjoy prosperity as the economy grows but also one where they can actively participate in making the economy grow, he said.

    “Indeed, durable economic growth is one that is inclusive. It must cast a wider employment net in a broader set of industries, while remaining entrepreneur-friendly,” he said.

    In a rather obtuse reference to corruption in government, Tetangco said the government must also foster responsible and responsive political and economic institutions that are anchored on ethical and transparent governance systems.

    In a rather obtuse reference to corruption in government,
    Tetangco said the government must also foster responsible and responsive political and economic institutions that are anchored on ethical and transparent governance systems.

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