Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno reiterated on Wednesday, April 27, that the monetary policy space will continue to support the economy by balancing inflation and growth outlook to ensure the Philippines’ continued favorable location as an investment site.

Diokno, who has announced that the Monetary Board will likely adjust policy rates by the second half of 2022 and possibly by June, said they are mindful that with a recovering economy, BSP's anti-pandemic policies will gradually return to normal and “the extraordinary measures will need to be scaled back.” Maintaining a low policy rate of two percent since November 2020 is a key factor to BSP’s anti-pandemic response. This may change come June, Diokno told Bloomberg TV recently.

“The timing and conditions of BSP’s exit strategy for its pandemic interventions will continue to be guided by the inflation and growth outlook over the medium term, the state of public health, and domestic and global risks to the economy,” he said during the 3rd Philippine-Singapore Business and Investment Summit on Wednesday.

Diokno invited investors from Singapore to “continue working with us as we move into the next chapters of our economic development.”

“At the height of the pandemic, we didn’t sit idly by and wait for the virus to recede. Instead, we pushed for game changing reforms. We continued to invest in physical infrastructure and human capital. All these are meant to improve the Philippines’ competitiveness, boost its productive capacity, and make it an even more attractive investment destination,” he added.

During the summit, BSP Deputy Governor Francisco G. Dakila Jr. said there have been important indications since the second half of 2021 that the economy is on its way to a sustained recovery, post-pandemic. Last year, local GDP rebounded by 5.7 percent and it is projected to expand between seven percent to nine percent in 2022.

Dakila noted that financial system liquidity remains ample, bank lending has improved and structural inflows into the economy remain strong. The BSP’s infusion of some P2.2 trillion liquidity into the financial system helped shore up investor confidence during the pandemic.

“(The) economy is poised for a recovery and it is a good time to come in as you will be able to get into the investment opportunities that are open,” he told Singaporean investors during the forum. “There will be a stronger recovery this year and in the near term,” he added.

Dakila also said that the sufficient monetary and fiscal space provide enough support to “withstand” any crisis such as the still ongoing pandemic and geopolitical tensions.

He pointed out that the road to recovery is a “bumpy one” but the government is commited to “do all necessary actions” to manage challenges.

Meantime, Diokno said the economy is back in fighting form and ready to receive new foreign investors.

"This is due in part to the wide range of monetary and regulatory relief measures implemented by the BSP, which complemented the massive relief efforts of the national government (NG)," he said. These measures include the following: cuts in the policy rates and banks’ reserve requirements to help stimulate credit activities; time-bound liquidity support to the NG to help fund its pandemic response programs; and relief measures for banks to strengthen the financial system's stability and ensure the public's continued access to financial services.

Last year, of the $10.5 billion foreign direct investments that were registered by the BSP, Singapore contributed $761 million. This was higher compared to $237 million in 2020.

Singapore is also a major source of overseas Filipinos’ remittances and accounted for seven percent of total remittances in 2021.