ASEAN KEY DESTINATIONS
Philippines central bank has enough liquidityTHE Bangko Sentral ng Pilipinas (BSP) said it has enough room to ease its policy stance to ensure economic growth will be sustained after the Aquino administration launched a multibillion-peso stimulus package aimed at cushioning the domestic impact of a slowdown in advanced economies.
BSP Gov. Amando Tetangco Jr. said the weakness in advanced economies weigh more on the Philippines and other emerging economies than previously anticipated, “especially in light of the protracted resolution of the European debt problem and the sluggish employment situation in the US.”
“Like other emerging market economies, the Philippines is not immune to what’s happening externally. But there is sufficient liquidity in the system, the exchange rate is stable, and our domestic inflation outlook continues to be manageable. These provide the environment that will help us sustain growth,” the central bank chief said.
He said the fiscal consolidation and strong performance of the two main revenue collecting agencies will give the national government “fiscal space” to provide the fiscal stimulus that Malacanang approved. “If the fiscal stimulus does its job, this should give the necessary push to keep our economic growth in a solid upward trajectory,” Tetangco said.
The government launched a P72-billion stimulus package to help achieve a revised economic growth target of 4.5 to 5.5 percent for 2011 from an earlier assumption of 5 percent to 6 percent.
“For our part, the BSP has policy flexibility. We will ensure that our policy stance remains supportive of economic growth,” Tetangco said.
He said inflation is less of a concern, after hitting 4.8 percent last month or a little below the full-year target of three to five percent.
The government is keeping its inflation target, as well as its foreign exchange assumption of P42 to P45 per dollar and Dubai crude oil price assumption of $90 to $110 per barrel.
“We will take all these developments into consideration during our policy meeting,” Tetangco said, referring to the Monetary Board’s meeting on Thursday. Given the shocks caused by the eurozone and US, as well as the lower inflation, the Monetary Board is unlikely to raise policy rates or reserve requirements for the rest of the year, economists had said.
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