Whole-of-gov’t approach vs. pandemic boosts economic recovery

The whole-of-government approach to address the impact of the coronavirus-induced pandemic has resulted positively as shown by the continued recovery of the Philippine economy, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.

During the Visayas-leg of the BSP lecture series on Thursday, Diokno said when the pandemic hit last year, the BSP implemented measures targeted to keep economic activities robust and to cushion the temporary disruptions in the financial markets.

“To support the immediate needs of the economy and preserve market confidence during this crisis, the BSP simultaneously deployed conventional and unconventional monetary policy tools to complement the efforts of the national government,” he said.

Primary to these measures is the 200-basis-point reduction in the central bank’s key policy rates, with the overnight reverse repurchase (RRP) facility down to record-low 2 percent.

This was made to encourage lending activities and ensure that economic activities will remain strong.

The BSP also cut banks’ reserve requirement ratio (RRR) by as much as 200 basis points to ensure that banks have ample liquidity to lend to its clients.

It also allowed banks’ lending to micro, small and medium enterprises (MSMEs) as temporary compliance to RRR for a certain period to help small business remain afloat during the pandemic.

Diokno said these measures are on top of the comprehensive set of regulatory measures expected to help fuel economic activities dampened by the pandemic.

“The BSP’s efforts to help safeguard livelihood, maintain order in the financial markets, and put the economy back on track are part of the whole-of-government approach in addressing the pandemic. These efforts are now yielding positive results,” he said.

Growth, as measured by gross domestic product (GDP), rose by 7.1 percent in the third quarter of the year, higher than year-ago’s -11.6 percent contraction but lower than the 12 percent in the second quarter of this year, which is the first expansion after five consecutives of negative prints.

Authorities said the domestic economy’s output in the third quarter this year is a “good turn-out” considering the two-week lockdown in the National Capital Region (NCR) last August to help curb another surge in coronavirus disease 2019 infections.

Growth in the first three quarters this year stood at 4.9 percent, the upper-end of the government’s 4 percent to 5-percent growth target for the year.

Aside from registering growth, Diokno said the domestic economy continues to post improvements in other areas such as the inflation rate, which remains elevated but on the decline, the ample financial system liquidity, and the external payments position.

“Consumer and business sentiments have improved. We have received affirmations and even an upgrade of our investment-grade credit ratings, which are votes of confidence in our ability to stage a strong recovery from the health crisis,” he added. (PNA)