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11

Report on Economic and Financial Developments

EXECUTIVE SUMMARY 1

A. REAL SECTOR

AGGREGATE SUPPLY AND DEMAND 12

LABOR AND EMPLOYMENT 14

B. FISCAL SECTOR

NATIONAL GOVERNMENT CASH OPERATIONS 16

C. MONETARY SECTOR

PRICES 18

DOMESTIC LIQUIDITY 21

DOMESTIC INTEREST RATES 22

MONETARY POLICY DEVELOPMENTS 25

D. FINANCIAL SECTOR

BANKING SYSTEM 27

BANKING POLICIES 33

CAPITAL MARKET REFORMS 33

STOCK MARKET 34

BOND MARKET 36

CREDIT RISK ASSESSMENT 39

PAYMENTS AND SETTLEMENTS SYSTEM 44

E. EXTERNAL SECTOR

BALANCE OF PAYMENTS 45

INTERNATIONAL RESERVES 61

EXCHANGE RATE 62

EXTERNAL DEBT 64

FOREIGN INTEREST RATES 67

GLOBAL ECONOMIC DEVELOPMENTS 69

F. FINANCIAL CONDITION OF THE BSP

BALANCE SHEET 72

INCOME STATEMENT 73

G. CHALLENGES AND FUTURE POLICY DIRECTIONS 74

ANNEXES 79

STATISTICAL TABLES

1

First Quarter 2013

EXECUTIVE SUMMARY

A. Key Economic Developments

The Philippine economy grew at a faster clip

of 7.8 percent in Q1 2013 despite a

challenging global environment. Growth was

broad-based as it drew from the solid

performance of all the three major

production sectors, led by industry sector. On

the expenditure side, higher capital formation

(led by construction) coupled with increased

public and household spending supported the

country’s growth momentum.

The rapid economic expansion was bolstered

by solid macroeconomic fundamentals.

Headline inflation remained near to low end

of the target range of 4 ± 1 percent for 2013,

as the increase in food inflation was offset by

the decline of non-food inflation given lower

electricity rates and the reduction in the

prices of domestic petroleum products.

Similarly, the growth in domestic liquidity or

M3 provided support to the sustained rise of

economic activity. The increase in M3

reflected the robust expansion in net

domestic assets (NDA) arising from the

sustained growth in bank lending to the

private sector.

Meanwhile, the BSP maintained its key policy

rates during the quarter based on the

authorities’ assessment that the inflation

environment continued to be manageable,

with risks to the inflation outlook seen to be

evenly balanced. The BSP, however, reduced

the interest rates on the special deposit

account (SDA) facility to 2.5 percent

regardless of tenor effective 14 March 2013.

The reduction in the SDA rates is consistent

with the BSP’s efforts to fine-tune the

operations of its monetary policy tools to

enhance their effectiveness in promoting

price and financial stability as well as to align

them with international central banking

practices.

The cash operations of the National

Government (NG) yielded a deficit as a result

of increased spending for infrastructure and

other capital outlays. The deficit was higher

than the level posted in the same period in

2012 but was still lower than the

programmed level for the review quarter.

Investor sentiment was boosted largely by

the country's sound macroeconomic

fundamentals as well as the recent upgrade of

rating to investment grade. As a result, the

2

First Quarter 2013

equities market rallied to a new high with the

Philippine Stock Exchange index (PSEi) closing

at 7,071 index points by end-March 2013.

Meanwhile, the persistent downsides risks in

the global outlook caused the country’s

sovereign bond spreads to exhibit mixed

trends.

The Philippine banking system remained

strong amid the challenging global economic

environment. Asset quality continued to

improve, while capital adequacy ratios

remained above international standards. As

of end-September 2012, the universal and

commercial banks’ (U/KBs) average capital

adequacy ratio (CAR) stood at 18.0 percent

and 19.0 percent on solo and consolidated

bases, which were both higher than last

year’s 16.4 percent and 17.4 percent,

respectively.

The economy also continued to gain support

from the external sector’s favorable position.

The balance of payments (BOP) surplus in

Q1 2013 increased to US$1.5 billion from

US$1.2 billion in the comparable period a

year ago.

Meanwhile, the country’s gross international

reserves (GIR) continued to grow to a level

sufficient to cover 11.9 months worth of

imports of goods and payments of services

and income. The peso also continued to

strengthen on the back of steady inflows of

foreign exchange (FX) from overseas

remittances, business process outsourcing

(BPO) receipts, and foreign direct and

portfolio investments.

The Philippine economy grows at a solid

pace. Real Gross Domestic Product (GDP)

grew by 7.8 percent, significantly higher than

the 6.5 percent growth recorded during the

comparable period last year. All three major

production sectors recorded solid output

growth during the quarter, with industry

contributing the highest growth. On the

expenditure side, increased capital formation

(led by construction), coupled with higher

government and household spending

supported overall growth. The country’s real

Gross National Income (GNI) rose by

7.1 percent during the review quarter from

5.7 percent in the same period in 2012.

Likewise, net primary income grew at a faster

pace of 3.2 percent compared to 1.9 percent

in the same period a year ago.

Labor market conditions improve slightly.

Based on the results of the January 2013

Labor Force Survey (LFS) of the National

Statistics Office (NSO), the unemployment

3

First Quarter 2013

rate declined slightly to 7.1 percent from the

7.2 percent posted in the same period in

2012. Employment in the agriculture

contracted by 4.7 percent. This could be

attributed partly to the series of destructive

typhoons that affected not only areas in

Mindanao but also those in Luzon and

Visayas. Meanwhile, employment in the

industry and services sectors recorded

increases at 6.0 percent and 4.3 percent,

respectively. The ratio of underemployed to

total employed persons increased at

20.9 percent during the review period

compared to the 18.8 percent posted in the

same period in 2012.

NG cash operations yield a higher deficit.

The cash operations of the NG yielded a

deficit of P66.5 billion in Q1 2013, about

twice the deficit recorded in the same period

of 2012. However, it was lower than the

programmed deficit of P73.9 billion for the

review quarter. Total revenues for the review

period reached P364.3 billion, higher than the

year-ago level of P361.0 billion due mainly to

improved collections by the Bureau of

Internal Revenue (BIR). Meanwhile, total

expenditures amounted to P430.8 billion,

9.1 percent higher than the P394.9 billion

expenditures incurred a year ago, although

this amount is 4.8 percent lower than the

P452.7 billion programmed expenditures for

the quarter. The growth in expenditures can

be attributed mainly to increased

infrastructure spending and capital outlays.

Inflation increases slightly. Year-on-year

(y-o-y) headline inflation increased slightly to

3.2 percent in Q1 2013 from 2.9 percent in

the previous quarter and 3.1 percent a year

ago. However, headline inflation remained

well within the Government’s target range of

4 ± 1 percent for 2013. The slight uptick in

headline inflation was due mainly to higher

food prices, notably rice, meat, and

vegetables, as well as higher prices of

alcoholic beverages and tobacco products

following the implementation of Republic Act

(RA) No. 10351 which raised the excise tax on

alcohol and tobacco products in January

2013. Non-food inflation, on the other hand,

decelerated given lower electricity rates and

the reduction in the prices of domestic

petroleum products. Core inflation, which

excludes some food and energy items to

measure generalized price pressures, rose to

3.8 percent in Q1 2013 from 3.4 percent in

the previous quarter and 3.5 percent a year

ago.

Domestic liquidity expands further. Demand

for money or M3 grew by 13.3 percent y-o-y

4

First Quarter 2013

as of end-March 2013, faster than the

10.6 percent growth as of end-December

2012. The increase in M3 was driven by the

expansion in net domestic assets (NDA) by

25.3 percent y-o-y in March 2013, owing

largely to the sustained increase in net

domestic credits, particularly to the private

sector. Meanwhile, the growth of net foreign

assets (NFA) decreased anew by 0.8 percent

y-o-y in March 2013 after contracting slightly

by 0.1 percent in December 2012. The NFA of

banks contracted as banks’ foreign liabilities

continued to increase given higher

placements and deposits made by foreign

banks with their local branches and other

banks, while their foreign assets decreased

due to the decline in loan receivables.

The BSP maintains key policy rates but cuts

SDA rates. During the policy meetings of the

Monetary Board (MB) on 24 January and

14 March 2013, the monetary authorities

decided to maintain key policy interest rates

at 3.50 percent for the overnight borrowing

or reverse repurchase (RRP) facility and

5.50 percent for the overnight lending or

repurchase (RP) facility. The MB policy rate

decisions were based on its assessment that

the inflation environment over the policy

horizon was likely to remain manageable. The

interest rate on the BSP RRP was also kept at

3.50 percent regardless of tenor. The reserve

requirement ratios were kept steady, as well.

Meanwhile, the BSP reduced the interest

rates on the SDA facility by 50 bps each

during its policy meetings in January and

March 2013. By 14 March 2013, the SDA rate

was set at 2.5 percent regardless of tenor.

The reduction in the SDA rates is consistent

with the BSP’s efforts to fine-tune the

operations of its monetary policy tools to

enhance their effectiveness in promoting

price and financial stability as well as to align

them with international central banking

practices. Amid manageable liquidity growth

and a benign inflation environment, the

operational refinements in the SDA were

expected to enhance the ability of the BSP to

ensure that liquidity remains in line with

funding requirements of the economy amid

the continued inflow of FX to the economy.

Domestic market interest rates decline.

Yields on government securities in both

primary and secondary markets decreased

during the quarter on the back of positive

market sentiment, buoyed by a manageable

inflation outlook, ample liquidity, sustained

economic growth, and recent upgrade to

investment grade rating for the Philippines by

a major credit rating agency.

5

First Quarter 2013

The Philippine banking system remains

sound and stable. The Philippine banking

system remained resilient amid the subdued

global economic environment. Banks’ core

balance sheets were marked by steady

growth in assets, deposit base, and capital

accounts. Asset quality also continued to

improve, while capital adequacy ratios

remained above international standards. The

total resources of the banking system rose by

9.3 percent to P8.4 trillion as of

end-December 2012 due largely to the

growth in loans, securities, and equities,

which are indicative of the public’s continued

trust in the banking system. Commercial

banks' outstanding loans continued to grow

steadily at double-digit growth rate at

14.7 percen y-o-y by end-March 2013.

Meanwhile, the non-performing loans (NPL)

ratio of the banking system sustained its

downward path, easing to 2.5 percent as of

end-December 2012 from 2.8 percent in the

same period in 2011, reflecting banks’

continuing initiatives to improve asset quality

along with prudent lending regulations.

Meanwhile, the banking system’s capital

adequacy ratio (CAR) remained above

standards at 17.6 percent as of

end-December 2011, as banks either

increased their retained earnings or issued

capital instruments to match the rise in their

risk-weighted assets in line with increased

lending activity.

The equities market rallies to a new high. In

Q1 2013, the PSEi rose by 15.9 percent q-o-q

or by 33.5 percent y-o-y to average

6,434.0 index points. This was due largely to

investors’ optimism over the outlook for the

Philippine economy. Overseas, signs of the

strengthening US recovery and the more

aggressive monetary easing by the Bank of

Japan also helped improve risk sentiment and

buoyed demand for local shares. However,

investors’ risk appetite were partly tempered

by profit-taking amidst growing concern that

local valuations are already expensive and

renewed worries over the euro zone debt

crisis following the Cyprus banking crisis.

The risk premia on the country’s debt papers

exhibit mixed trend. Reflecting the persistent

downside risks to the global outlook, the

country’s debt spreads exhibited mixed

trends in the first quarter of 2013. The

EMBI+Philippine spreads, or the additional

yield investors demand to hold Philippine

debt securities over US Treasuries, widened

to 136 basis points (bps) from the previous

quarter’s average of 122 bps. On the other

hand, the credit default swap (CDS) spread, or

6

First Quarter 2013

the cost of insuring the country’s 5-year

sovereign bonds against default, was almost

stable to average 102 bps during the quarter.

The country’s CDS spreads also dropped

below 100 bps to its year’s low of 93.5 bps on

8 March 2013. Compared to neighboring

economies, the Philippine CDS traded lower

than Indonesia’s average of 140 bps and

traded closer to Thailand’s 92 bps and

Malaysia’s 82 bps. The credit rating upgrade

received from Fitch Ratings on 27 March 2013

did not translate into a significant tightening

of Philippine debt spreads. This reflected that

expectations for a rating upgrade have

already been priced-in by market participants,

limiting the scope for further gains.

BOP position registers a higher surplus. The

country’s BOP in Q1 2013 registered a surplus

of US$1.5 billion, higher compared to the

US$1.2 billion in the same period a year ago.

The improvement in the country’s external

payments position was underpinned by the

robust performance of the current account,

particularly the higher surplus in the services

and secondary income accounts as well as the

lower deficit in the goods and primary income

accounts. Meanwhile, the financial account

recorded lower net borrowings by residents

from the rest of world on account mainly of

the higher net repayment of liabilities in the

other investment account combined with the

decline in the net incurrence of liabilities in

the direct investment account.

International reserves continued to rise. The

country’s GIR reached US$84.0 billion as of

end-March 2013, 15.4 percent higher than in

the previous year. At this level, the GIR was

sufficient to cover 11.9 months worth of

imports of goods and payments of services

and income. The corresponding reserve

adequacy ratios at this GIR level were

9.9 times the country’s short-term external

debt based on original maturity and 6.3 times

based on residual maturity. Inflows from the

FX operations and investment income of the

BSP as well as foreign currency deposits by

the NG contributed to the increase in the GIR

level. However, these inflows were partly

offset by FX outflows, such as payments for

maturing FX obligations by the NG and foreign

currency withdrawals by a government–

owned and –controlled corporation.

Debt ratios remain at comfortable levels. As

of end-March 2013, the outstanding

BSP-approved/registered external debt

stood at US$59.0 billion, down by

US$1.3 billion or 2.1 percent from the

end-December 2012 level of US$60.3 billion.

On a y-o-y basis, the debt stock fell by

7

First Quarter 2013

US$2.6 billion (or 4.2 percent) from the

end-March 2012 level of US$61.6 billion.

The q-o-q decline in the debt stock was

attributed to the downward FX revaluation

adjustments due largely to the strengthening

of the US dollar against the Japanese yen and

as well as net repayments (US$282.0 million).

These were partially offset by increased

investments by non-residents in Philippine

debt papers (US$421.0 million) due to

sustained investor confidence in the country

coupled with a dearth of attractive

investment instruments.

Meanwhile, the y-o-y decline was due to

negative FX revaluation adjustments

(US$2.0 billion) and increase in residents’

investments in Philippine debt papers

(US$727.0 million).

The country’s external debt to GNI ratio

sustained its improving trend, easing further

to 19.1 percent as of end-March 2013 from

the ratio of 20.2 percent at end-December

2012 and 22.5 percent recorded at

end-March 2012. Similarly, the external

debt-to-GDP improved to 22.8 percent during

the review period from 24.1 percent a quarter

ago and 26.9 percent a year ago.

The peso continues to strengthen. The peso

averaged at P40.70/US$1, appreciating by

1.2 percent from the previous quarter’s

average of P41.19/US$1. The domestic

economy’s resiliency, along with the broadly

strengthening global recovery underpinned

by continued policy accomodation by various

central banks, and steady FX inflows from

overseas Filipino remittances and business

process outsourcing (BPO) supported the

gains of the peso.

The global economy weakens. Global

economic activity weakened in Q1 2013

weighed down by the soft economic activity

in advanced economies and prolonged period

of slow growth in the euro area and Japan.

The euro area’s GDP further deteriorated by

0.1 percent from the 0.9 percent decline in

Q4 2012. Tough austerity measures imposed

by debt-ridden governments have been

undermining domestic consumption in the

region.

Economic activity in Japan likewise weakened

in Q1 2013, with GDP growing only by

0.2 percent from the last quarter’s

0.5 percent due to lower capital spending.

Nonetheless, Japan’s economy is expected to

resume its moderate recovery supported by

8

First Quarter 2013

aggressive monetary easing, stimulus

spending and the expected pick-up in global

growth.

The US GDP growth rate accelerated slightly

to 1.8 percent in Q1 2013 from the previous

quarter’s 1.7 percent. This growth was driven

by positive contributions from personal

consumption expenditures, private inventory

investment, residential fixed investment, and

nonresidential fixed investment, which partly

offset the negative contributions from

government spending.

Among the newly-industrialized economies

(NIEs) in Asia, countries such as Hong Kong

and South Korea grew by the same rate as in

the previous quarter, at 2.8 percent and

1.5 percent, respectively. Meanwhile, China’s

GDP slightly slowed down to 7.7 percent in

Q1 2013 compared to 7.9 percent in the

previous quarter. The weak government

spending on infrastructure projects, such as

urban subways, and the frail moves of the

central bank to boost liquidity in the banking

system weighed down on China’s GDP

growth.

B. Challenges and Policy Directions

While the global economy is seen to broadly

strengthen through 2013, persistent

downside risks continue to weigh on the

overall world economic outlook. In particular,

the effects of ongoing financial sector

adjustments in the euro area and fiscal

consolidation in the US could continue to

dampen international trade flows, weaken

market sentiment, and raise volatility in

financial markets. In addition, Japan’s

monetary policy easing, aimed at stimulating

its economy, could have important global

trade dynamics implications. Meanwhile, the

recent signs of improvement in the US

economy could lead to possible capital flow

reversals from emerging economies. The

biggest challenge for policymakers, especially

those in emerging economies, is to provide

sufficient buffers against adverse external

developments while moderating the build-up

of domestic imbalances. In particular, the

challenge of managing large capital flows is

likely to lead to continuing exchange rate

pressures in many emerging economies.

For the Philippines, keeping the economy on a

steady growth course would require policies

largely aimed at nurturing domestic sources

of growth to help compensate for any

9

First Quarter 2013

weaknesses in external demand. In this

regard, close coordination between fiscal and

monetary policies will help ensure that the

macroeconomic environment remains

supportive of sustainable and balanced

growth.

The favorable fiscal position of the NG

provides it with sufficient policy space to

support projects that will continue to

stimulate aggregate demand. Growth could

further accelerate once the various

infrastructure projects move forward.

Furthermore, continuing social spending

programs for health, education, housing,

employment, and conditional cash transfers,

as well as initiatives for financial inclusion and

consumer protection, shall help promote

inclusive and sustainable growth.

For its part, the BSP remains committed to its

mandate of safeguarding price stability and

ensuring a macroeconomic environment

conducive to growth. With a broadly benign

inflation outlook, the BSP deems its policy

stance appropriate. Latest baseline forecasts

indicate that the future inflation path remains

in line with the target for 2013-2014,

supported by firmly anchored inflation

expectations. The risks surrounding the

inflation projections also continue to be

broadly balanced. Downside risks to the

inflation outlook center on the uncertainty

over the strength of the global economy and

its effects on global commodity prices,

particularly oil. In addition, the firmness of

the peso could temper imported inflation.

However, additional petitions for utility rate

adjustments, with likely power rates increase

in Mindanao, and the impact of sustained FX

inflows on domestic liquidity growth could

exert upside pressures on inflation and would

thus need to be monitored closely.

Of particular challenge moving forward is the

continued surge in capital inflows to the

country, which has pushed up the peso

further against the US dollar. In addition, the

recent credit rating upgrades given by Fitch

Ratings and Standard and Poor’s as well as

market expectations of a further credit rating

upgrades by other credit rating agencies for

the Philippines could attract further foreign

capital, posing risks to inflation and financial

stability. Against this backdrop, the BSP

stands ready to employ, from its menu of

policy instruments, measures that will help

ensure that the benefits of capital flows are

maximized while warding off the potential

destabilizing impact of volatile capital flows

on price and financial stability. The BSP will

also continue to maintain a market-

10

First Quarter 2013

determined exchange rate, while guarding

against speculative flows that could

contribute to the peso’s volatility and

undermine the inflation target.

Amid downside risks to global economic

prospects on the horizon, contingency

measures are in place to ensure adequate

liquidity in the financial system should capital

flows reverse course. The BSP will maintain a

comfortable level of international reserves to

serve as added insurance against external

shocks.

However, guarding against destabilizing

financial market imbalances arising from

capital inflow surges imposes a cost on the

BSP. In this regard, efforts are also being

undertaken to reinforce the BSP’s capacity to

manage these risks effectively. The full

capitalization of the BSP is being pursued to

enhance its financial position and help ease

the constraints posed by balance sheet

weaknesses and operating losses. This is

complemented by a number of proposed

amendments to the BSP Charter, including:

(1) increasing the BSP’s authorized capital

from P50.0 billion to a higher level

commensurate with the expansion in the size

of the economy and the financial system;

(2) setting up of a formal arrangement on the

sharing of gains and losses by the NG and the

BSP; (3) restoring the BSP’s ability to issue its

own debt securities to enable it to siphon

excess money supply from circulation;

(4) allowing the BSP to set up reserves to

absorb losses from FX fluctuations; and

(5) granting of tax exemption to the BSP.

In the area of banking regulation and

supervision, the BSP will sustain the reform

momentum with a view to strengthen the

resilience of the banking system against

shocks as well as to enhance its role as a

catalyst for durable long-term economic

growth. Toward this end, the BSP continues

to enhance its monitoring of financial market

developments as it also continues to put in

place measures to strengthen the capacity of

the banking system to endure shocks,

including the adoption of expanded reporting

standards for real estate exposures as well as

the Basel III capital adequacy standards

beginning January 2014. Likewise, the BSP

continues to take the lead in promoting

financial inclusiveness with programs and

reforms aimed at promoting greater access to

financial services.

The BSP also remains proactive in ensuring

the credibility of the payments and

settlements system with the continued

11

First Quarter 2013

enhancement of its processes in accordance

with international best practices.

Finally, amid the increasing

interconnectedness of global financial

markets, the BSP will remain an active

participant in regional and international

cooperation programs and fora, in order to

reap the benefits of collaborative

engagement.

12

MAIN REPORT

A. Real Sector

Aggregate Supply and Demand

Philippine economy continued to exhibit vibrant growth in

the first quarter of 2013. Real Gross Domestic Product

(GDP) accelerated by 7.8 percent in Q1 2013, faster than

the 6.5 percent growth posted a year ago. On the supply

side, economic growth was broad-based supported by all

three sectors – industry, services and agriculture sectors.

On the demand side, growth was propelled by strong

capital formation and government as well as private

consumption expenditures.

GDP by industry

The services sector remained the key source of growth for

the Philippine economy during the quarter in review after

contributing 3.9 percentage points to real GDP growth.

Growth in this sector was at 7.0 percent in the first

quarter of 2013, albeit lower than the 8.4 percent posted

in the previous year. Contributing largely to the services

sector’s sustained growth during the review quarter was

the 13.9 percent expansion on the financial

intermediation sub-sector supported by strong business

and consumer confidence as well as low interest rates

which continued to support bank lending activities. Other

major contributors to the services sector’s growth were

The Philippine economy sustains

robust growth

Services continue to drive output

expansion

Real Gross Domestic Product andReal Gross National Incomeannual growth rates in percent

0

2

4

6

8

10

12

14

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Real GDP Real GNI

20112010 2012 2013

Real GDP, By Industry annual growth rates in percent

-3

0

3

6

9

12

15

18

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Agriculture, Fishery and Forestry Industry Services

20112010 2012 2013

13

public administration and defense (8.0 percent); other

services (7.6 percent), which include tourism-related

activities (recreational, cultural and sporting activities);

and real estate, renting and business activities

(6.3 percent), which includes the buoyant business

process outsourcing sector.

Closely following is the industry sector which contributed

3.5 percentage points to the real GDP growth during the

review quarter. The industry sector growth of

10.9 percent in Q1 2013 was more than twice the 5.3

percent growth it posted in the same period last year. The

major contributors of the growth in the sector were

sustained double-digit growth in the construction sub-

sector (32.5 percent) supported by continued expansion

in both public and private construction; and the strong

performance of the manufacturing sub-sector

(9.7 percent) driven by the strong domestic demand for

food manufactures.

The agriculture, hunting, forestry and fishing (AHFF)

sector also posted positive contribution of 0.4 percentage

point to the real GDP growth during the first quarter of

2013. The sector performed well with a 3.3 percent

growth after growing by 1.1 percent last year. Overall

agricultural output was supported by the expansion in

crop production (which accounts for 52.0 percent of total

output of AHFF) by 3.5 percent; and strong rebound of

the fisheries production (5.5 percent), from contraction in

the past quarters.

14

GDP by expenditure

On the expenditure side, Philippine economic growth,

which has traditionally been driven by robust private

consumption, also found strong support from the robust

expansion of capital formation (47.7 percent) and

increased government spending (13.2 percent). The

strong growth of the capital formation account was

largely driven by the continued expansion of construction

activities, both public and private. Meanwhile, the robust

government consumption during the review quarter was

propelled by higher public spending due to increase

disbursements to finance the social welfare programs of

the government as well as the requirements of the

4th tranche of the Salary Standardization Law III (SSL3).

Overall, the economic growth during the first quarter of

2013 was propelled by the rise in infrastructure activities,

higher business and consumer confidence, favorable

interest rates, stable inflation, sustained tourism arrivals,

and continued bright prospect on the Philippine economy.

Labor and Employment

Based on the results of the January 2013 Labor Force

Survey (LFS) of the National Statistics Office (NSO), the

unemployment rate declined slightly to 7.1 percent in the

first quarter of 2013 from 7.2 percent registered in the

same period of 2012 (Table 2).

Labor market conditions improve

slightly

15

The level of employed persons rose by 1.6 percent during

the review quarter, lower than the 2.9 percent growth

recorded in the comparable period in 2012. The lower

growth in the level of employment was due mainly to the

decline in employment in the agriculture sector

(-4.7 percent). This could be attributed partly to the

series of destructive typhoons that affected not only areas

in Mindanao but also those in Luzon and Visayas.

Meanwhile, employment in the industry and services

sector recorded increases at 6.0 percent and 4.3 percent,

respectively. Of the 37.9 million total employed persons,

54.1 percent were employed in the services sector, while

the agriculture and industry sectors employed

30.4 percent and 15.5 percent, respectively. The ratio of

the underemployed to total employed persons increased

to 20.9 percent during the quarter in review, from the

18.8 percent posted in the same quarter in 2012. Of the

7.9 million underemployed persons, the services sector

accounted for 42.3 percent, while the underemployed in

the agriculture and industry sectors was placed at

41.8 percent and 15.9 percent of the total, respectively.

Classified by status of employment, employment rate

increased among wage and salary workers (10.9 percent

from 3.7 percent) and employers in own-family operated

farm or business (1.9 percent from -0.2 percent). By

contrast, employment levels posted large decreases

among self-employed workers (-8.1 percent from

0.6 percent) and workers without pay in own-family

6.0

6.5

7.0

7.5

8.0

8.5

17

18

19

20

21

22

23

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Underemployment Rate (RHS)

Unemployment Rate (LHS)

Unemployment and Underemployment Ratesin percent

20112010 2012 2013

16

operated farm or business (-17.5 percent from

5.8 percent).1

B. Fiscal Sector

National Government Cash Operations

The cash operations of the national government (NG)

yielded a deficit of P66.5 billion in Q1 2013. This level is

about twice the P33.9 billion deficit recorded in the same

period in 2012. However, it is lower than the

programmed deficit of P73.9 billion for the review

quarter.

Total revenues for the review period reached

P364.3 billion, higher than the year-ago level of

P361.0 billion due mainly to improved collections by the

Bureau of Internal Revenue (BIR). The Q1 2013 revenue

level is 3.8 percent lower than the target level for the

quarter of P378.8 billion. Tax collections, which

constituted 86.9 percent of total revenues, amounted to

P316.7 billion, 4.8 percent higher than the year-ago level

but 6.3 percent lower than the programmed tax revenue

during the review period. Likewise, non-tax revenues,

including grants, which consisted mainly of collections

made by the Bureau of the Treasury (BTr), declined by

1 An employer is a person working in his own business, farm, profession or trade who has one or more regular paid employees, including paid family

members. Unpaid family workers include persons who worked without pay on own family-operated activities. Domestic helpers, family drivers and other

household helpers who assist in the family-operated business, regardless of time spent in this activity, are not hired employees in the

enterprise/business. A retail store operator who is wholly assisted in the operation of his store by unpaid relatives living with him and who employs

carpenters to construct a new building for his store (with store operator supervising the work) is not an employer. However, if an operator happens to be

the owner or partner of a big firm which has its own construction unit to take care of its needs, the operator is an employer.

(Source: http://www.bles.dole.gov.ph/)

NG cash operations yield a deficit

-150

-75

0

75

150

225

300

375

450

525

600

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Revenues Expenditures Surplus/(Deficit)

2010

Cash Operations of the National Governmentin billion pesos

2011 2012 2013

Surplus/(Deficit): Actual vs. ProgramSurplus/(Deficit): Actual vs. Programin billion pesos

-150

-135

-120

-105

-90

-75

-60

-45

-30

-15

0

15

30

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Actual Program

2010 2011 2012 2013

17

18.9 percent from the year-ago level. However, non-tax

revenue exceeded by 16.3 percent the programmed level

for the review period.

Meanwhile, total expenditures reached P430.8 billion in

Q1 2013, 9.1 percent higher than the P394.9 billion

expenditures incurred a year ago, although this amount is

4.8 percent lower than the P452.7 billion programmed

expenditures for the quarter. The bulk of expenditures

was channeled to infrastructure spending and capital

outlays.

The NG’s net financing for the first quarter of 2013

amounted to P-0.8 billion, significantly lower than the

year ago level of P162.5 billion for the review quarter.

The net financing was sourced mainly from net domestic

borrowings amounting to P48.5 billion. Meanwhile, the

NG recorded external obligations amounting to

P-49.3 billion in the review quarter. The net financing was

based on a gross financing mix ratio of 97:3, in favor of

domestic sourcing.

Moving forward, the NG will continue to pursue fiscal

consolidation in the medium term by supporting

legislative initiatives to raise revenues and widen the tax

base while pursuing parallel efforts to reinforce tax

administration and ensure an efficient expenditure

management program.

18

C. Monetary Sector

Prices

Year-on-year (y-o-y) headline inflation increased to

3.2 percent in Q1 2013 from the quarter-ago and year-ago

rates of 2.9 percent and 3.1 percent, respectively.

The uptick in headline inflation was due mainly to higher

food prices, notably rice, meat, and vegetables, as well as

higher prices of alcoholic beverages and tobacco

products. Non-food inflation, on the other hand,

decelerated given lower electricity rates and the

reduction in the prices of domestic petroleum products.

On a quarter-on-quarter (q-o-q) basis, headline inflation

increased to 0.7 percent in Q1 2013 from 0.2 percent in

Q4 2012.

Core inflation, which excludes some food and energy

items to measure generalized price pressures, rose to

3.8 percent in Q1 2013 from 3.4 percent in the previous

quarter and 3.5 percent a year ago. However, two out of

three alternative measures of core inflation estimated by

the BSP fell in Q1 2013 relative to the rates registered in

the previous quarter. In particular, the trimmed mean and

weighted median measures declined to 3.0 percent and

2.7 percent, respectively, from the previous quarter’s

3.1 percent and 3.0 percent. The net of volatile items

Inflation increases due to higher

prices of food items, alcoholic

beverages, and tobacco products

Core inflation also rises

Inflation Rate (2006=100)Inflation Rate (2006=100)in percent

2

3

4

5

6

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Philippines NCR Areas Outside the NCR

2010 2011 2012 2013

Alternative Core Inflation MeasuresAlternative Core Inflation Measuresquarterly averages of yearquarterly averages of year--onon--year changeyear change

Official Core Inflation Trimmed Mean 1 Weighted Mean 2 Net of Volatile Items 3

2011 4.3 3.8 3.1 3.6

Q1 4.0 3.3 2.9 3.7

Q2 4.3 4.0 3.1 3.7

Q3 4.4 4.0 3.2 3.5

Q4 4.5 3.8 3.1 3.6

2012 3.7 3.1 3.0 3.4

Q1 3.5 3.0 2.6 3.0

Q2 3.7 3.0 3.2 3.3

Q3 4.1 3.3 3.2 3.9

Q4 3.4 3.1 3.0 3.4

2013

Q1 3.8 3.0 2.7 3.81 The trimmed mean represents the average inflation rate of the (weighted) middle 70 percent in a lowest-to-highest ranking of year-on-year inflation rates for all CPI components.2 The weighted median represents the middle inflation rate (corresponding to a cumulative CPI weight of 50 percent) in a lowest-to-highest ranking of year-on-year inflation rates.3 The net of volatile items method excludes the following items: educational services, fruits and vegetables, personal services, rentals, recreational services, rice, and corn. The series

has been recomputed using a new methodology that is aligned with NSO’s method of computing the official core inflation, which re-weights remaining items to comprise 100

percent of the core basket after excluding non-core items. The previous methodology retained the weights of volatile items in the CPI basket while keeping their indices constant at

100.0 from month to month.

Source: NSO and BSP estimates

19

measure, meanwhile, increased to 3.8 percent from

3.4 percent in Q4 2012.

Food inflation increased to 2.7 percent in Q1 2013

compared to the quarter- and year-ago rates of

2.2 percent and 1.9 percent, respectively. Tight domestic

supply conditions, triggered by weather-related

production disruptions, led to higher retail prices of key

food items, particularly rice, meat, and vegetables. The

inflation rate of rice, meat, and vegetables went up to

1.7 percent, 1.8 percent, and 0.2 percent, respectively,

from the quarter-ago rates of 1.6 percent, 1.5 percent,

and -3.6 percent.

Similarly, alcoholic beverages and tobacco inflation went

up to 25.9 percent from 5.0 percent in the previous

quarter following the implementation of Republic Act (RA)

No. 10351 which raised the excise tax on alcohol and

tobacco products in January 2013.

Non-food inflation slowed down to 2.8 percent during the

review quarter from 3.4 percent in the previous quarter

and 3.9 percent a year ago. Lower inflation for electricity,

gas and other fuels, and transport supported the decline

in non-food inflation. In particular, from 3.6 percent in

Q4 2012, electricity, gas and other fuels inflation

decelerated to 0.9 percent in Q1 2013 due to lower

electricity charges and liquefied petroleum gas (LPG)

prices. Similarly, transport inflation went down to

Higher prices of rice, meat, and

vegetables drive up food inflation

Slower price increases for electricity,

gas, and other fuels contribute to the

reduction in non-food inflation

Food and NonFood and Non--Food Inflation (2006=100)Food Inflation (2006=100)in percent

1

2

3

4

5

6

7

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Headline Inflation

Food Inflation

Non-Food Inflation

2010 2011 2012 2013

20

0.9 percent from 1.5 percent in the previous quarter due

to slower price increases for gasoline and diesel.

In terms of geographical location, the headline inflation

rate for Metro Manila (MM) edged lower to 2.2 percent

from both its quarter-ago and year-ago rate of

2.8 percent. Meanwhile, inflation rate in areas outside

Metro Manila (AOMM) climbed to 3.5 percent compared

to its quarter-ago and year-ago rates of 3.0 percent and

3.2 percent, respectively.

In MM, food inflation increased to 2.5 percent in Q1 2013

from 1.6 percent in the previous quarter given higher

retail prices of rice, fruits, vegetables, and sugar. By

contrast, non-food inflation slowed down to 1.9 percent

from 3.1 percent in Q4 2012 due largely to lower inflation

for housing, water, electricity, gas and other fuels, and

transport.

In AOMM, food inflation went up to 2.7 percent from

2.4 percent in Q4 2012 due mainly to the increase in

prices of key food items, particularly rice, corn, meat, and

vegetables. Non-food inflation however, fell to

3.1 percent in Q1 2013 from 3.4 percent in the previous

quarter given slower price increases for housing, water,

electricity, gas and other fuels, and transport.

On a q-o-q basis, headline inflation in MM and AOMM

increased to 0.2 percent and 0.9 percent, respectively, in

Inflation exhibits mixed trends in

MM and in AOMM

Inflation Rate (2006=100)Inflation Rate (2006=100)in percent

2

3

4

5

6

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Philippines NCR Areas Outside the NCR

2010 2011 2012 2013

21

Q1 2013 from -0.1 percent and 0.3 percent in the previous

quarter.

Domestic Liquidity 2

Demand for money or M3 grew by 13.3 percent y-o-y as

of end-March 2013 to reach P5.1 trillion. This growth was

faster than the 10.6 percent expansion as of

end-December 2012 (Table 5).

The increase in M3 was driven by the 25.3 percent y-o-y

expansion in net domestic assets (NDA) in March 2013,

owing largely to the sustained increase in net domestic

credits. Net domestic credits, in turn, increased by

15.6 percent y-o-y. Credits extended to the private sector

grew by 15.9 percent, consistent with robust lending

activity by commercial banks. Likewise, credits to the

public sector rose by 15.0 percent.

Meanwhile, net foreign assets (NFA) decreased anew by

0.8 percent y-o-y in March 2013 after contracting slightly

by 0.1 percent in December 2012. The BSP’s international

reserves rose further due mainly to robust foreign

exchange inflows from overseas remittances, portfolio

investments, and BPO receipts. However, the NFA of

banks contracted further as banks’ foreign liabilities

continued to increase given higher placements and

deposits made by foreign banks with their local branches

2 The indicators used for money supply are: M1 (or narrow money), comprised of currency in circulation and demand deposits; M2, composed of M1 plus

savings and time deposits (quasi-money); M3, consisting of M2 plus deposit substitutes; and M4, consisting of M3 plus foreign currency deposits.

Domestic liquidity expands further

M4: Domestic Liquidity and FCDsM4: Domestic Liquidity and FCDsvalue in billion pesos; share in percent

M3

84%

FCDs

16%

M3

82%

FCDs

18%

end-March 2013end-March 2012

Particulars

Levels (in billion pesos) Growth Rates (%)

Mar

2013

Dec

2012

Mar

2012Q-on-Q Y-on-Y

Domestic Liquidity (M3) 5,139.1 5,171.7 4,535.9 -0.6 13.3

of which:

Net Foreign Assets (NFA) 3,219.3 3,246.7 3,245.4 -0.8 -0.8

Net Domestic Assets (NDA) 2,970.5 2,973.9 2,370.1 -0.1 25.3

of which:

Public sector credit 1,566.9 1,336.9 1,362.2 17.2 15.0

Private sector credit 4,017.7 3,993.8 3,466.7 0.6 15.9

Domestic Liquidity (M3)Domestic Liquidity (M3)

22

and other banks, while their foreign assets decreased due

to the decline in loan receivables.

Following the rise in M3, M4, a broader concept of

domestic liquidity which comprises M3 and foreign

currency deposits of residents, grew by 10.5 percent y-o-y

in March 2013 from 8.5 percent in December 2012.

Domestic Interest Rates

The average 91-day, 182-day and 364-day Treasury bill

(T-bill) rates in the primary market decreased markedly in

the first quarter by 29 basis points (bps), 38 bps and

13 bps, respectively, due to strong investor demand for

government securities (GS) given the country’s sound

macroeconomic fundamentals. In addition, the high level

of liquidity in the financial system likewise supported the

decline in T-bill rates.

Similarly, secondary market yields of GS for all maturities

declined as of end-March 2013 compared to their

end-December 2012 rates, supported by positive investor

sentiments, low inflation environment and ample market

liquidity. The reductions in the Special Deposit Account

(SDA) rate in January and March as well as the country’s

upgrade to investment grade rating by Fitch Ratings, also

contributed to the decline in interest rates in the

secondary market. Rates declined by a range of 8 bps

(3-month) to 215 bps (20-year).

Yield of short-term secondary T-bills

falls

Domestic market interest rates

decline

Yield Curve for Government SecuritiesYield Curve for Government Securitiesin percent

0

1

2

3

4

5

6

7

3 mo 6 mo 1 yr 2 yr 3 yr 4 yr 5 yr 7 yr 10 yr 20 yr 25 yr

Q1 2012 Q2 2012 Q3 2012

Q4 2012 Q1 2013

23

Consistent with the trend in interest rates of GS, market

interest rates decreased during the review quarter. Time

deposit rates, Manila reference rates, bank lending rates,

and savings deposit rates declined by 56 bps, 44 bps,

40 bps, and 15 bps, respectively.

The Monetary Board (MB) kept the BSP’s key policy rates

at 3.50 percent for the overnight borrowing or reverse

repurchase (RRP) facility and 5.50 percent for the

overnight lending or repurchase (RP) facility during its

policy meetings in the first quarter. However, the MB

decided to cut SDA rate by a cumulative total of 100 bps

across all tenors as part of the BSP’s efforts to rationalize

the SDA. The MB’s decision to maintain the policy rates

was based on its assessment that inflation environment

continues to be benign and inflation expectations are

firmly anchored. Meanwhile, the MB noted that the

reduction in the SDA rate is consistent with the BSP’s

continuing efforts to fine-tune the operations of its

monetary policy tools.

The differentials between domestic and United States

(US) interest rates, gross and net of tax, continued to

narrow in the review period relative to the previous

quarter. The larger decline in the domestic interest rate

relative to the foreign interest rates led to a negative after

tax differential between the RP 91-day T-bill rate and the

US 90-day T-bill rate and a wider negative after-tax

differential between the RP 91-day T-bill rate and the US

90-day London Interbank Offered Rate (LIBOR). The

average 91-day RP T-bill rate went down by 26 bps from

24

the previous quarter, while the average US 90-day T-bill

rate and US 90-day LIBOR decreased by 5 bps and 3 bps,

respectively. The decline in US interest rates was driven

largely by the release of favorable economic reports

during the quarter, such as the higher US manufacturing

data in February 2013, unemployment rate which fell to

its lowest in February 2013 since December 2008, the

lower-than-expected US trade deficit, and the increase in

factory orders to 3.0 percent in February 2013 from

1.9 percent in January 2013. The 1 February 2013 US Fed

announcement to continue its bond-buying program and

keep its policy rate at near zero until the unemployment

rate falls to 6.5 percent also contributed to the further

decline in the US interest rates.

The positive differential between the BSP's policy interest

rate (overnight borrowing or RRP rate) and the US federal

funds target rate was unchanged at 325 bps as of

end-March 2013, as the policy settings for both central

banks were kept steady. Adjusted for the risk premium,

the spread between the two policy rates declined further

to 216 bps in end-March 2013 from 232 bps in

end-December 2012. This development may be traced to

the 16-bp rise in the risk premium given the

0.21 percentage point (ppt) increase in the 10-year RP

yield relative to the 0.05 ppt rise in the 10-year US yield.

Interest rate differentials remain

unchanged

25

Monetary Policy Developments

During its policy meetings on 24 January and 14 March

2013, the BSP decided to maintain its key policy interest

rates at 3.50 percent for the overnight borrowing or RRP

facility and 5.50 percent for the overnight lending or RP

facility. The interest rate on the BSP RRP was also set to

3.50 percent regardless of tenor. The reserve requirement

ratios were kept steady as well.

The MB’s policy rate decisions were based on its

assessment that the inflation environment over the policy

horizon was likely to remain manageable. Latest baseline

forecasts continued to track the lower half of the

4 ± 1 percent target range for 2013 and 2014. Inflation

expectations also continued to be firmly anchored.

Furthermore, the risks to the inflation outlook were

deemed to be evenly balanced. Although global economic

activity has gained traction, lingering fiscal and financial

market stresses in the advanced economies continued to

dampen the broad outlook, thereby mitigating upward

pressures on commodity prices. Meanwhile, pending

domestic power rate adjustments and potentially stronger

domestic liquidity growth due to expectations of steady

foreign capital inflows posed the upside risks to the

inflation outlook.

Meanwhile, the BSP reduced the interest rates on the SDA

facility by 50 bps each during its policy meetings in

January and March 2013. By end-March 2013, the SDA

BSP maintains key policy rates

BSP reduces SDA rates

26

rate was set at 2.5 percent regardless of tenor. Previously,

the SDA is priced at a premium over the overnight RRP.

The reduction in the SDA rates is consistent with the BSP’s

efforts to fine-tune the operations of its monetary policy

tools to enhance their effectiveness in promoting price

and financial stability as well as to align them with

international central banking practice. Amid manageable

liquidity growth and a benign inflation environment, the

operational refinement in the SDA facility was expected to

enhance the ability of the BSP to ensure that liquidity

remains in line with funding requirements of the economy

amid the continued inflow of foreign exchange (FX) to the

economy.

D. Financial Sector

The Philippine banking system remained resilient amid

the lackluster global environment. Banks’ core balance

sheets were marked by a steady growth in assets, deposit

base and capital accounts. Asset quality continued to

improve and capital adequacy ratios remained at par with

international standards.

The banking system remains resilient

27

Performance of the Banking System

Market Size

The number of banking institutions (head offices) fell to

696 as of end-December 2012 from the quarter- and year-

ago levels of 705 and 726, respectively, indicating

continued consolidation of banks as well as the exit of

weaker players in the banking system (Table 7). By

banking classification, banks (head offices) consisted of

37 universal and commercial banks (U/KBs), 70 thrift

banks (TBs), and 589 rural banks (RBs). Meanwhile, the

operating network (including branches) of the banking

system increased to 9,410 in Q4 2012 from 9,301 in

Q3 2012 and 9,050 during the same period last year, due

mainly to the increase in the branches/agencies of U/KBs.

The total resources of the banking system rose by

9.3 percent to P8.4 trillion as of end-December 2012 from

the quarter- and year-ago levels of P7.9 trillion and

P7.6 trillion, respectively (Table 8). The increase could be

traced to the growth in loans, securities and other

equities indicative of the public’s continued trust in the

banking system. U/KBs accounted for nearly 90.0 percent

of the total resources of the banking system.

Number of banks declines but

operating network continues to expand

28

Savings Mobilization

Savings and time deposits remained the primary sources

of funds for banks. Banks’ total deposits3 as of end-March

2013 amounted to P4.5 trillion, 13.4 percent higher than

the year-ago level of P4.0 trillion. The continued growth in

deposits reflected depositors’ sustained confidence in the

banking system. Savings deposits registered a

14.9 percent growth and continued to account for nearly

half of the funding base of banks. Meanwhile, demand

deposits expanded y-o-y by 12.1 percent and time

deposits increased by 11.6 percent from the level posted

a year ago.

Bank Lending Operations

Outstanding loans of commercial banks, net of banks' RRP

placements with the BSP as of end-December 2012, grew

by 14.2 percent y-o-y but declined by 0.8 percent

compared to the level in the previous quarter. Likewise,

outstanding loans of commercial banks, inclusive of RRPs,

expanded by 14.7 percent and 0.1 percent y-o-y and

q-o-q, respectively. Commercial banks' loans continued to

grow steadily at double-digit growth rates since January

2011. Robust credit expansion supported the domestic

economy in the midst of subdued global growth.

Loans for production activities, which comprised more

than four-fifths of commercial banks’ total loan portfolio,

3 This refers to the total peso-denominated deposits of the banking system.

Bank lending continues to grow

Deposit Liabilities of BanksDeposit Liabilities of Banksin billion pesos

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar

Demand Savings Time

2010 2011 2012 2013

Loans Outstanding of Commercial Banks (Gross of Loans Outstanding of Commercial Banks (Gross of RRPsRRPs))in trillion pesos

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

3.6

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q12010 2011 2012 2013

Savings and time deposits continue

to increase

29

posted a 14.2 percent growth. However, the expansion

was lower than the 19.3 percent y-o-y growth registered

during the same period last year. The growth of

production loans was driven mainly by increased lending

to mining and quarrying (48.6 percent); construction

(48.5 percent); health and social work (39.2 percent);

financial intermediation (28.8 percent); and real estate

renting and business services (25.2 percent). Similarly, the

growth in consumer loans also increased to 10.8 percent,

reflecting the rapid rise in lending across all types of

consumer loans.

Credit Card Receivables

The combined credit card receivables (CCRs) of U/KBs and

TBs as of end-June 2012, inclusive of credit card

subsidiaries, rose by nearly 13.0 percent to P136.6 billion

relative to last year’s level, further boosting the growth in

household consumption. CCRs also went up by

3.6 percent compared to the level at the end of the

previous quarter. Meanwhile, the ratio of CCRs to the

total loan portfolio (TLP) slightly dipped to 3.7 percent

from 3.8 percent compared to the previous quarter. The

non-performing CCRs of U/KBs and TBs, inclusive of credit

card subsidiaries, increased by 3.1 percent to P15.1 billion

from last quarter’s P14.6 billion. As to loan quality, the

ratio of non-performing CCRs to total CCRs slightly

decreased to 11.0 percent from the previous quarter’s

11.1 percent, as the growth in non-performing CCRs was

outpaced by the total increment in CCRs. Nevertheless,

Credit card receivables continue to

increase

30

this quarter’s delinquency ratio was still better than the

12.8 percent recorded a year ago.

Auto Loans

The combined auto loans (ALs) of U/KBs and TBs, inclusive

of non-bank subsidiaries, increased by 4.0 percent to

P150.3 billion as of end-June 2012 from the previous

quarter’s P144.8 billion and by 17.2 percent from

P128.2 billion a year ago. Consumers’ continued

confidence in the economy as well as the aggressive

marketing strategies of banks and other car financing

firms sustained the rise in automobile purchases. The

proportion of total ALs to TLP, exclusive of interbank loans

(IBL), was slightly lower at 4.1 percent than previous

quarter’s ratio of 4.2 percent. In terms of loan quality,

ratios of non-performing ALs to total ALs increased slightly

to 4.4 percent from the previous quarter’s 4.3 percent

while the non-performing ALs to TLP remained unchanged

at 0.2 percent.

Residential Real Estate Loans

As of end-June 2012, the combined residential real estate

loans (RRELs) of U/KBs and TBs rose by 5.1 percent to

P244.4 billion from the previous quarter’s P232.6 billion,

and 23.2 percent higher than the previous year's

P198.4 billion. The continued bullishness in the real estate

market as indicated by the increase in the number of

projects unveiled by real estate developers as well as

Consumers’ continued confidence in the

economy helps sustain demand for

automobiles

Continued bullishness in the property

market supports real estate purchases

31

banks’ intensified promotional campaigns in terms of

offering lower interest rates, supported more real estate

purchases during the review period. The ratio of RRELs to

TLP remained steady at about 6.7 percent q-o-q. By

industry, U/KBs held a bigger slice of the total residential

real estate exposure at 57.4 percent (P140.3 billion) while

TBs accounted for the remaining 42.6 percent

(P104.1 billion). In terms of loan quality, the ratio of non-

performing RRELs to total RRELs of U/KBs and TBs eased

to 4.0 percent from the previous quarter’s 4.2 percent

and was better than the year ago’s 5.1 percent ratio.

Asset Quality and Capital Adequacy

The banking system’s asset quality, as measured by the

non-performing loans (NPL) ratio, sustained its downward

path, easing to 2.5 percent as of end-December 2012

from 2.8 percent in the comparable period in 2011 (Table

9). Banks’ initiatives to improve asset quality along with

prudent lending regulations helped bring the NPL ratio to

below its pre-Asian crisis level of around 3.5 percent. The

low NPL ratio reflected the 1.2 percent decline in the level

of NPLs combined with the 12.5 percent expansion in the

banking industry’s TLP. The NPL level dropped to

P104.9 billion at end-December 2012 from P106.2 billion

during the same period in 2011, while TLP expanded to

P4.2 trillion from P3.7 trillion during the same period last

year.

Asset quality continues to improve as NPL

ratio eases

Ratio of NonRatio of Non--Performing Loans to Total Loans of the Banking SystemPerforming Loans to Total Loans of the Banking Systemin percent

2.5

2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec2010 2011 2012

32

Nonetheless, the Philippine banking system’s NPL ratio of

2.5 percent is higher compared to Indonesia’s 1.8 percent,

Malaysia’s 2.0 percent, South Korea’s 0.5 percent and

Thailand’s 2.2 percent.4 The lower NPL ratios of Malaysia

and South Korea were attributed to the creation of

publicly-owned asset management companies (AMCs) in

these countries, which purchased the bulk of their NPLs, a

practice not resorted in the Philippines.

The loan exposures of banks remained adequately

covered as the banking system’s NPL coverage ratio

improved to 113.0 percent as of end-December 2012

from 103.7 percent in the preceding year. The ratio was

indicative of banks’ continued compliance with the loan-

loss provisioning requirements of the BSP to ensure

adequate buffers against unexpected losses.

As of end-September 2012, the U/KB’s average capital

adequacy ratio (CAR) stood at 18.0 percent and

19.0 percent on solo and consolidated bases, which were

both higher than last year’s 16.4 percent and 17.4

percent, respectively.

The industry raised its capital to support an increase in

assumed risks. Banks either retained earnings or issued

capital instruments to match the rise in their risk-

weighted assets (RWAs). RWAs rose due to the expansion

of trading book positions.

4

Sources: Various central bank websites, IMF and financial stability reports, Indonesia (commercial banks, Q4 2012); Malaysia (commercial banks,

Q4 2012); Thailand (banking system, Q1 2013); and Korea (banking system, Q4 2011).

Banks remain adequately capitalized

Capital Adequacy Ratio of the Banking SystemCapital Adequacy Ratio of the Banking Systemin percent

15.0

15.5

16.0

16.5

17.0

17.5

18.0

Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec

2009 2010 2011

33

The Philippine banking system’s CAR on a consolidated

basis at 17.6 percent was the same with Malaysia and

higher than those of Indonesia (17.3 percent), Thailand

(15.8 percent), and South Korea (14.0 percent).5

Banking Policies

Banking policies implemented during the quarter were

aimed at strengthening regulations and guidelines on:

1) single borrower's loan (SBL) limit; 2) minimum capital

and disclosure requirements in accordance with the Basel

III standards; 3) amendment to the regulations on

individual and aggregate ceilings on loans, other credit

accommodations and guarantees to directors, officers,

stockholders and their related interests (DOSRI);

4) required disclosures in the published balance sheet;

and 5) macro-prudential measure for handling non-

deliverable forwards involving the Philippine peso

(Annex A).

Capital Market Reforms

Capital market policy reforms continued to gain ground

during the period as the BSP and the private sector

adopted measures to develop further the Philippine

capital market. During the quarter, the reforms focused

more on promoting investor confidence, enhancing

transparency and corporate governance as well as

expanding products and markets (Annex B).

5 Sources: Various central bank websites, IMF and financial stability reports, Indonesia (commercial banks, Q4 2012); Thailand (banking system Q1 2013);

Malaysia (commercial banks, Q4 2012); and Korea (banking system, Q4 2011). Meanwhile, the Philippine banking system’s CAR is as of end-December

2011.

BSP continues to collaborate with

government agencies and private

sector in developing the capital

market

Banking policies implemented aim to

strengthen and enhance existing

regulations

34

Stock Market

During the period January to March 2013, the local stock

market was bullish, with the Philippine Stock Exchange

index (PSEi) rising by 15.9 percent q-o-q or by

33.5 percent y-o-y to average 6,434.0 index points.

Twenty-four fresh new highs were posted in the first

three months of the year, as the index passed the 6,200,

6,700 and 7,100 marks in January, February and March,

respectively. The index closed the period at 7,071.0 index

points, higher year-to-date by 17.8 percent.

Investors were bullish during the quarter, amidst

optimism over the outlook for Philippine economy,

market liquidity arising from two downward adjustments

made by the BSP in the SDA rate and expectations of a

credit rating upgrade. This upgrade materialized when

Fitch Rating raised the country’s rating to investment

grade status (BBB-) on 27 March 2013. Overseas, signs of

the US recovery strengthening and the more aggressive

monetary easing by the Bank of Japan also helped

improve demand for local shares. However, partly

tempering investors’ risk appetite were profit-taking

amidst growing concern that local valuations are too

expensive and renewed worries over the euro zone debt

crisis following the Cyprus banking crisis.

Mirroring the rally in the 30-stock composite index, total

stock market capitalization went up by 15.1 percent q-o-q

or by 28.3 percent y-o-y to reach P12.6 trillion in end-

Upbeat outlook for the Philippine

economy and credit rating upgrade

boost local bourse

Average PSEi*/

in index points

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q 3 Q4 Q1 Q2 Q3 Q4 Q1

2006 2007 2008 2009

*/ Average of the monthly closing index during the quarter

2010 2011 2012 2013

Stock market indicators reflect

generally bullish investor sentiments

35

March 2013. Daily value turnover similarly jumped by

29.9 percent relative to the previous quarter and by

30.3 percent from year-ago level to average P10.2 billion

during the quarter-in-review. Foreign investors’ optimism

over the outlook for local shares was also reflected in

their net foreign purchases amounting to P39.9 billion

from January thru March 2013, accounting for

49.8 percent of total transactions. Moreover, the

price-earnings ratio of listed issues continued to rise from

an average of 17.9 times in the last quarter of 2012 to

20.5 times in first three months of 2013, making

Philippine stocks one of the most expensive in the region.

Most stock markets in the region similarly advanced

during the quarter in review. Of the seven Asian-Pacific

national stock indices monitored, six rallied relative to the

previous quarter. The rally was led by the Philippines,

which rose by 15.8 percent q-o-q. This was followed by

Thailand (14.0 percent), China (11.7 percent), Indonesia

(6.9 percent), Singapore (6.4 percent) and Hong Kong

(5.8 percent). Only Malaysia posted a slight decline of

0.1 percent q-o-q due to pre-election jitters amidst

speculation that the impending polls will weaken the

ruling coalition’s grip on power.

Most stock markets in the region also

increase

Selected Asian Stock indicesSelected Asian Stock indicesin index points

0

2,0004,000

6,000

8,00010,000

12,000

14,000

16,00018,000

20,000

22,000

24,000

Indonesi

a

Singa

pore

Philippin

es

Hong

Kong

China

Mala

ysia

Thaila

nd

Q1 2012

Q4 2012

Q1 2013

36

Local Currency Bond Market

Size and Composition6

Local currency (LCY) bonds issued by both public and

private sectors amounted to P169.7 billion in the first

quarter of 2013, declining by 51.5 percent from the

P350.3 billion registered in the same period in 2012 and

down by 44.5 percent from the P305.7 billion posted in

the previous quarter.

Public sector issuances aggregated P154.0 billion,

declining by 46.8 percent than the previous quarter’s level

on the absence of Retail Treasury bond (RTBs) and

benchmark bond issuances. There was also no issuance

from government owned and controlled corporations

(GOCCs) during the period.

The private sector likewise decreased its issuance of LCY

bonds to P15.8 billion, a 2.9 percent decline from 4Q 2012

and a 42.7 percent drop on a y-o-y basis. Private

corporates opted to source some of its financing needs

from the international debt markets, taking advantage of

the low interest rate environment.

In terms of market share, the public sector comprised

91.0 percent of total bond issuances during the quarter

while the private sector accounted for the remaining

9.0 percent.

6 This refers to the peso-denominated bond issuances by both public and private sectors. Public sector issuances of LCY bonds include issuances in the

primary market and rollovers of maturing series which were issued by the BTr and GOCCs. This excludes issuances by the central bank.

Both public and private sectors issue

fewer LCY bonds

91%

9%

Local Currency Bond Issuances

(Jan -Mar 2013)

Public

Private

37

Bonds issued by the BTr accounted for the bulk of total

public issuances which were mostly in the form of Fixed-

Rate T-bonds and T-bills.

Meanwhile, issuances from the private sector consisted

largely of bonds and notes and certificates of deposits

with issuances accounted for mostly by firms in the real

estate sector.

Primary Market 7

The Bureau of the Treasury revised its schedule of

offerings during the quarter. Primary auctions for both

T-bills and T-bonds were reduced to once every month

from its previous bi-monthly schedule. However, offer

volumes were increased to P120.0 billion from the

P90.0 billion programmed in the previous quarter.

With the decision to hold fewer auctions and the ample

liquidity in the system, demand for T-bills and T-bonds

significantly climbed with investors tendering 3-6 times

more than that of the NG’s programmed borrowings for

both short- and long-dated securities. Total amount of

tenders reached P431.2 billion against NG’s offerings of

P120.0 billion.

The NG awarded in full its programmed borrowings for

T-bonds and even exceeded its award for T-bills by

7

The discussion includes primary market for government issuances only.

Ample liquidity in the system sustains

demand for T-bills and T-bonds

2013 Offerings Tenders Accepted Rejected Bids Bids

First Quarter 120.0 431.2 120.8 310.4T-bills 45.0 135.6 45.8 89.8

T-bonds 75.0 295.6 75.0 220.6

38

P800.0 million. The NG accepted P120.8 billion worth of

T-bills and T-bonds (against the programmed

P120.0 billion) while rejecting P310.4 billion bids to keep

the NG’s debt servicing costs manageable.

Investors were also seen preferring shorter dated T-bills

as yields for the 91- and 182-day securities fell more than

that of the 364-day debt instrument, declining to historic

lows of below 1 percent during the quarter. Expectations

that inflation will remain low alongside the ample liquidity

conditions from continued surge in capital flows from the

external market contributed in keeping rates at historic

low. There was also preference for longer dated T-bonds

as investors took advantage of the relatively high yields

offered by these bonds. Tenders for the 20-year bonds

were almost 5 times oversubscribed as compared to the

7-year bond with subscriptions at 3 times the offer

amount.

Secondary Market

The government’s decision to hold fewer auctions in the

first quarter likewise spurred investors to buy in the

secondary market. Trading of both government and

private corporate bonds rose to P2,906.8 billion, or up by

73.2 percent, q-o-q, and 40.0 percent on y-o-y basis.

The continued favorable macroeconomic environment in

the Philippines and the first investment grade rating

received from Fitch buoyed trading sentiment over the

Trading of both government and

corporate bonds at the secondary

market remains robust

-

500

1,000

1,500

2,000

2,500

3,000

3,500

1Q

20

05

3Q

20

05

1Q

20

06

3Q

20

06

1Q

20

07

3Q

20

07

1Q

20

08

3Q

20

08

1Q

20

09

3Q

20

09

1Q

20

10

3Q

20

10

1Q

20

11

3Q

20

11

1Q

20

12

3Q

20

12

1Q

20

13

Secondary Market Volume (In billion pesos)

Preference for shorter dated T-bills and

longer dated T-bonds keeps rates at

historic lows

39

country’s debt papers. The low interest rate environment

in the external market, with the US and Japan signaling

the use of more quantitative easing measures in the near

term, also prompted buying at the secondary market. The

cut in the BSP’s SDA rate in January and March likewise

contributed in the rise of trading volume at the fixed

income market as investors searched for alternative

investment instruments.

Foreign Currency Bond Market

The NG opted to refrain from borrowing in the

international debt market in the first quarter of 2013. The

preference was to source funds from domestic

borrowings, taking advantage of the ample liquidity in the

local capital market. The NG’s plan for 2013 is to source

20.0 percent of the government’s funding needs from

overseas lenders while the remaining 80.0 percent, from

local investors.

For the private sector, the Philippine oil refiner and

retailer Petron Corporation raised US$750.0 million from

the issuance of perpetual subordinated bonds in January

and March 2013. Both issuances were oversubscribed

with the proceeds to be used for capital expenditures.

Credit Risk Assessment

The Philippines secured its first investment grade rating

on 27 March 2013. Fitch Ratings upgraded the Philippines’

The NG refrains from borrowing offshore,

taking advantage of the ample liquidity

in the domestic capital market

The Philippines secures investment

grade rating

40

Long-Term Foreign Currency Issuer Default Rating (IDR) to

‘BBB-‘ from ‘BB+’. The Long-Term Local-Currency IDR has

been upgraded to ‘BBB’ from ‘BBB-‘. The outlook on both

ratings is stable. The agency has also upgraded the

Country Ceiling to ‘BBB’ from ‘BBB-‘ and the Short-Term

Foreign-Currency IDR to ‘F3’ from ‘B’.

The credit upgrade of the Philippines’ sovereign ratings

was due to the following factors: (1) The Philippines’

sovereign external balance sheet is considered strong

relative to ‘A’ range peers, let alone ‘BB’ and ‘BBB’

category medians; (2) The Philippine economy has been

resilient, expanding 6.6 percent in 2012 amid a weak

global economic backdrop; (3) Strong domestic demand

drove this outturn and improvements in fiscal

management have made general government debt

dynamics more resilient to shocks; (4) Strong economic

growth and moderate budget deficit have brought the

general government (GG) debt/GDP ratio in line with the

‘BBB’ median; (5) The sovereign has taken advantage of

generally favorable funding conditions to lengthen the

average maturity of GG debt to 10.7 years by end-2012

from 6.6 years at end-2008; (6) The foreign currency share

of GG debt has fallen to 47.0 percent from 3.0 percent

over the same period; favorable macroeconomic outturns

have been supported in Fitch’s view by a strong policy-

making framework; (7) The BSP’s inflation management

track record and proactive use of macro-prudential

measures to limit the potential emergence of

macroeconomic and financial imbalances; and (8) Inflation

Rating

Agency

Local

Currency

LT/ST

Foreign

Currency

LT/ST

Outlook

S&P BBB-/A3 BBB-/A3 Stable*

Moody’s Ba1/n.a. Ba1/n.a. Stable

Fitch BBB/n.a. BBB-/F3 Stable

Source: Reuters

*On 2 May 2013, S&P revised its ratings outlook for the Philippines to positive from stable

Philippine Sovereign Credit Ratings

as of March 2013

41

has been in line with ‘BBB‘ peers on average over the past

five years; governance standards, as measured in

international indices such as the World Bank’s (WB)

framework, remain weaker than ‘BBB’ range norms but

are not inconsistent with a ‘BBB-‘ rating as a number of

sovereigns in this rating category fare worse than the

Philippines; the country’s average income is low

(US$2,600.0 versus ‘BBB’ range median of US$10,300.0 in

2012), although this measure does not account directly

for the significant support to living standards from

remittance inflows; the country’s low fiscal revenue take

of 18.3 percent of GDP in 2012, compared with a ‘BBB’

range median of 32.3 percent. This limits the fiscal scope

to achieve the government’s passion of raising public

investment. The recent introduction of a “sin tax”, against

stiff political opposition, will likely lead to some increment

in revenues.

Meanwhile, on 2 May 2013, the Philippines received

another boost in credit rating from Standard and Poor’s

(S&P). The ratings on the Philippines was lifted to

‘BBB-/A-3’ from ‘BB+B’ with a stable outlook. The S&P,

just like Fitch Ratings, attributed the upgrade to the

country’s improved fiscal profile, declining reliance on

foreign currency debt, increased revenue collection, and

macroeconomic stability, among other factors.

42

Sovereign Spreads

The country’s debt spreads exhibited mixed trend in the

first quarter of 2013. The Emerging Markets Bond Index

(EMBI)+Philippine spreads, or the extra yield investors

demand to hold Philippine debt securities over US

Treasuries, widened to 136 bps from the previous

quarter’s average of 122 bps. On the other hand, the

credit default swap (CDS) spread, or the cost of insuring

the country’s 5-year sovereign bonds against default, was

almost stable to average 102 bps during the quarter. The

country’s CDS spreads also dropped below 100 bps to its

year’s low of 93.5 bps on 8 March 2013. Against those of

neighboring economies, the Philippine CDS traded lower

than Indonesia’s average of 140 bps and traded closer to

Thailand’s 92 bps and Malaysia’s 82 bps.

Debt spreads started the year on a narrowing trend as a

result of a deal that postponed the fiscal cliff issue in the

US for a few weeks, prompting markets to continue

buying emerging market bonds. More signs of global

economic recovery, with China reporting stronger-than-

expected December export growth, and the continued

inflow of capital into Asian financial markets also

supported the narrowing of spreads in the first weeks of

the year.

However, debt spreads started to widen by mid-January

on concerns over potential rise in prices emanating from

Japan’s plan to target 2.0 percent inflation and its ongoing

Debt spreads exhibit mixed trends

Emerging Markets Bond Index (EMBI) Spread

in basis points

0

100

200

300

400

500

EMBI+ Philippines

EMBI+Global

Emerging Markets Bond Index (EMBI) Spread

in basis points

0

50

100

150

200

250

300

350

CDS Philippines CDS Indonesia

CDS Thailand CDS Malaysia

43

asset purchase program. Widening pressures continued in

February on concerns over hot money flows towards the

Asian region. Lukewarm demand for fixed income

securities was observed as investors were seen preferring

the equities market which drove bond yields up and

widened spreads, respectively. Concerns over the

electoral impasse in Italy also expanded debt spreads as

Moody’s warned of contagion if a new government is not

formed quickly.

Towards the end of February, widening pressures abated

due to reports of better US home and consumer

confidence data. The unexpectedly strong US non-farm

payrolls and the subsequent decline in their

unemployment rate contributed in the easing of debt

spreads. The improving macroeconomic environment in

the world’s biggest economy translated into an increase in

US Treasury yields with US 10-year bonds breaching the

2.0 percent level. This boosted a “risk-on” trading of

bonds like ROPs, which, in turn, led to a decline in the

country’s bond yields and tightening in debt spreads.

The trend was not sustained as spreads started to climb

once again beginning mid March and continued towards

the end of the quarter. Cyprus bailout plans raised fears

that it could generate a contagion that would spread to

peripheral economies. Widening pressures continued

towards the rest of the month as the unfolding Cyprus

debt crisis re-ignited concerns about the region’s weak

44

banks, escalating concerns of Cyprus becoming the first

country to exit the euro zone.

At the domestic front, the reported increase in the

country’s budget deficit of P19.5 billion in 2012 versus the

previous year’s gap of P15.9 billion likewise added to the

expansion in debt spreads. Meanwhile, the credit rating

upgrade received from Fitch on 27 March did not

translate into a significant tightening of Philippine debt

spreads. This reflected that expectations for a rating

upgrade have already been priced-in by market

participants, limiting the scope for further gains.

Payments and Settlements System

In Q1 2013, the total volume of transactions that were

settled and processed in the Philippine Payments and

Settlements System (PhilPaSS) increased by 2.3 percent to

337,452 from the previous quarter’s level of 329,815. The

growth in the volume of transactions was due to the q-o-q

increase in the following: sales and purchases of

government securities via delivery-versus-payment (DvP)

(94.7 percent); tertiary transactions on GS via expanded

delivery-versus-payment (eDvP) (81.0 percent); and BSP

Cash Department transactions (35.7 percent).

Despite the growth in the total volume of transactions,

the total value of transactions recorded a q-o-q decline of

0.9 percent to P97.4 trillion. The decrease in the total

transaction value was due to the decline in the following

PhilPaSS transactions increase

PhilPass Transactions

2013 2012Growth Rates

(in %)

Q1 Q4 Q1 Q-o-Q Y-o-Y

Volume 337,452 329,815 344,491 2.3 -2.0

Value

(in trillion PhP)97.4 98.4 78.4 -0.9 24.3

Transaction Fees

(in million PhP)41.1 37.2 46.0 10.6 -10.7

Source: Payments and Settlements Office, Bangko Sentral ng Pilipinas

45

accounts: BSP Department of Loans and Credit

transactions (-78.6 percent); Electronic Cash Withdrawal

System (ECWS) transactions (-44.1 percent); Philippine

Clearing House Corporation (PCHC) transactions

(-10.7 percent); and BSP Treasury Department

transactions (-7.4 percent).

On a y-o-y basis, the value of transactions grew by

24.3 percent while the volume of transactions decreased

by 2.0 percent.

As a result of the increase in the volume of PhilPaSS

transactions in Q1 2013, the total revenues derived from

PhilPaSS operations reached P41.1 million, 10.6 percent

higher than the P37.2 million attained in the fourth

quarter of 2012. However, on a y-o-y basis, total revenues

decreased by 10.7 percent.

E. External Sector

Balance of Payments

The country’s balance of payments position yielded a

higher surplus in Q1 2013 at US$1.5 billion (equivalent to

2.4 percent of the country’s GDP compared to the

US$1.2 billion surplus in the comparable period a year

ago. The 23.5 percent improvement in the country’s

external payments position was underpinned by the

robust performance of the current account, particularly

the higher surplus in the services and secondary income

BOP position registers a higher surplus

Balance of Payments ( in million US$)

Growth

2013 2012 Rate (%)

Current Account 3439 393 775.1

Capital Account 23 25 -8.0

Financial Account -1489 -4821 69.1

Net Unclassified Items -3416 -3996 14.5

Overall BOP 1535 1243 23.5

Q1

46

accounts as well as the lower deficit in the goods and

primary income accounts.8 Meanwhile, the financial

account recorded lower net borrowings by residents from

the rest of world on account mainly of the higher net

repayment of liabilities in the other investment account

combined with the decline in the net incurrence of

liabilities in the direct investment account.

Current Account. The current account recorded a surplus

of US$3.4 billion (equivalent to 5.3 percent of GDP) in

Q1 2013, rising by more than eightfold compared to the

US$393 million surplus in the same period a year ago. This

appreciable uptrend was mainly due to higher net

receipts in the secondary income and services accounts,

combined with the reduced deficit in trade-in-goods and

the lower net payments of primary income.

Trade-in-Goods. The trade-in-goods deficit in Q1 2013

narrowed by 42.9 percent to US$2.7 billion compared to

the US$4.8 billion deficit registered in the same quarter a

year ago. The continued improvement in the trade-in-

goods deficit was a result of the 7.9 percent expansion in

goods exports and the contraction in goods imports by

8.2 percent. The growth in exports of goods was sustained

by strengthening external demand in the country’s major

trading partners, following encouraging signs of economic

recovery in the US and Japan and the fairly robust growth

in emerging countries.

8 Primary Income account (formerly the Income account) shows flows for the use of labor and financial resources between resident and non-resident

institutional units. Secondary Income account (formerly the Current Transfers account) shows current transfers, in cash or in kind for nothing in return,

between residents and non-residents.

Current account surplus rises

Trade-in-goods deficit narrows

considerably

47

Exports of Goods. Exports of goods continued to rebound

in Q1 2013, with export receipts reaching US$11.2 billion

compared to US$10.3 billion in the same quarter in 2012

(Table 2.1).9 The favorable outcome in the country’s

export performance was driven by improved external

demand for Philippine-made products from the country’s

major export markets, particularly Japan, South Korea, the

Netherlands, and the United Kingdom (UK). The

7.9 percent improvement in export performance was

attributed mainly to higher shipments across all major

commodity groups as follows:

� Manufactured products exports expanded by

5.1 percent to reach US$9.3 billion compared to

US$8.8 billion in the same quarter a year ago on

account of the upward trends in the following

commodities:

o Wood manufactures exports, amounting to

US$699.0 million, climbed by 49.4 percent due to

increased demand from Japan for builder’s joinery

and carpentry of wood, including French windows,

wooden frames for paintings, photographs and

mirrors, cases, boxes and crates, doors and

frames, other parquet panels, and tableware and

kitchenware of wood. This can be attributed to the

continuing reconstruction efforts in Japan. The

other major export markets for these wood

9 Based on BPM6 concept (excluding from the National Statistics Office (NSO) foreign trade statistics those goods that did not involve change in

ownership), e.g., consigned goods are deducted, in addition to the exclusion of returned/replacement goods, and temporarily imported goods. For

example, of the total electronics exports, 17 percent are on consignment basis.

Exports of goods continue to pick up

pace

Coconut3.9%

Other agro-based2.4%

M ineral products

4.7% Electronics40.3%

Garments3.4%M achinery

9.1%

Fruits & vegetables

3.1%

Others31.6%

Petro leum1.6%

Expo rts by M ajo r C o mmo dity Gro up Q1 2013

(P ercent Share)

Source: National Statistics Office (NSO)

48

products were the US, Germany and the

Netherlands.

o Processed food and beverages exports grew by

60.2 percent to US$527.0 million compared to

US$329.0 million a year ago, in view of higher

shipments of frozen fish fillets, powdered filled

milk, chewing gum, tuna in airtight containers and

frozen poultry mostly to countries in Asia, Europe,

and the US.

o Exports of chemicals recorded an increment of

72.6 percent to US$751.0 million owing to

increased demand from China for mixtures of

chemicals used in the manufacture of foodstuff,

artificial and prepared waxes, and other sulphides.

o Other manufactured products likewise registered

uptrend, including baby carriages, toys, games &

sporting goods (by 44.2 percent), iron & steel

(by 10.6 percent), furniture and fixtures

(by 31.6 percent), non-metallic mineral

manufactures (by 9.8 percent), and miscellaneous

manufactured articles (by 4.1 percent).

� Coconut products exports increased by 32.0 percent

to US$433.0 million due to the 32.2 percent increase

in sales of coconut oil on account of higher export

volume. Shipments of copra meal/cake posted a

considerable increase (by 425.0 percent) as a result of

higher export volume and price. The rise in coconut oil

exports since the start of the year was attributed to

higher domestic supply of copra and sustained

49

demand from traditional markets, mainly the US and

Europe, where 80.0 percent of the country’s coconut

oil production is exported.

� Sugar and products exports expanded to

US$109.0 million from US$48.0 million a year ago,

primarily on account of the notable increase in

exports of centrifugal and refined sugar

(by 145.0 percent) and molasses (by 66.7 percent) to

Japan, the US, and South Korea.

� Fruits and vegetables exports rose by 38.1 percent to

US$341.0 million due mainly to the continued strong

demand for bananas (by 83.2 percent). Bananas

remained the top exports in this major commodity

group, garnering more than 60.0 percent of total fruits

and vegetables exports. Improved shipments of

pineapple juice (by 8.3 percent), pineapple

concentrates (by 50.0 percent), and other fruits and

vegetables (by 35.1 percent) also contributed to the

double-digit growth of this commodity group.

� Other agro-based products exports increased by

28.6 percent to US$261.0 million on account largely of

the 13.2 percent growth in shipments of fresh or

preserved fish. Exports of unmanufactured tobacco,

natural rubber and other agro-based products likewise

registered increments during the quarter.

� Forest products exports climbed appreciably

(by 111.1 percent) due to higher world prices of

lumber at US$170.0/cubic meter from US$62.0/cubic

50

meter a year ago due to strong demand from log

buyers in the US, Canada and Asia. Higher shipments

of plywood also contributed to the uptrend in exports

of this commodity group.

� Mineral products exports improved by 6.8 percent to

US$520.0 million from US$487.0 million in the

comparable quarter a year ago due to increased

shipments of iron ore agglomerates (by 62.5 percent)

to leading export markets, namely, Japan, Thailand,

and South Korea.

� Petroleum products exports rose by 41.9 percent to

US$176.0 million, traced to improved shipments of

other fuel oils, naphtha reformates and other mineral

oil following higher demand in Hong Kong and

Malaysia.

By contrast, other manufactured products exports which

registered declines during the quarter in review were as

follows:

o Exports of electronics products (including other

electronics) fell by 11.8 percent to US$4.5 billion

compared to US$5.1 billion last year. Shipments of

electronics comprised about 48.0 percent of total

manufactured products exports during the

quarter. The downtrend was due mainly to the

contraction in shipments of semiconductors

(by 21.8 percent), electronic data processing

(by 75.2 percent) and telecommunication

51

(by 12.5 percent). Other electronics products such

as consumer electronics, communication radar

and medical/industrial instrumentation and other

electronics also registered declines. Meanwhile,

the growth drivers of electronics exports were

office equipment, automotive electronics and

control and instrumentation equipment. The

sluggish performance of semiconductors exports is

consistent with the global sales report of the

Semiconductor Industry Association (SIA) which

showed that year-to-year sales of semiconductors

in the US and Japan declined by 1.5 percent and

18.0 percent, respectively. As a result, total global

year-to-year sales across major markets, including

Europe and Asia Pacific registered only a modest

growth of less than 1.0 percent.10 It should be

noted, however, that the semiconductors’ book-

to-bill ratio has improved to more than unity since

January 2013, averaging at 1.1 in Q1 2013.11

o Exports of machinery and transport equipment

posted a modest decline of 2.7 percent to reach

US$1.0 billion due mainly to decreased shipments

of other unassembled fuel tanks, engine brackets,

parts and accessories of radiators and aluminum

radiators.

o Garments exports fell by less than one percent to

US$383.0 million on account of sluggish demand in

the US for trousers, bib and brace overalls,

10

The Semiconductor Industry Association (SIA) represents the US semiconductor industry, America's top export industry over the last five years and a

bellwether measurement of the state of the US economy. 11

Book-to-bill ratio, which is the ratio of three-month moving average bookings to three-month moving average shipments, normally has a three-month

lag in shipments.

52

breeches and shorts, shirts, dresses of synthetic

fiber, and jerseys, pullovers, cardigans and

waistcoats. The prevailing uncertainties in the

global economy have dampened growth prospects

in key garments suppliers particularly Bangladesh

and India whose major export markets are the US

and Europe.

o Exports of textile yarns/fabrics dropped by

4.4 percent to US$43.0 million due to lower

shipments of woven fabrics and artificial fibers to

export markets in Asia and Europe.

Imports of Goods. Imports of goods declined to

US$13.9 billion in Q1 2013 from the US$15.1 billion level

in the same quarter last year. The 8.2 percent contraction

was due to the lower importation across major

commodity groups, except consumer goods (Table 2).12

Capital goods imports dropped by 7.2 percent to

US$2.7 billion due largely to lower procurement of office

and EDP machines (by 28.1 percent), aircraft, ships &

boats (by 30.3 percent), and professional, scientific,

photographic equipment and optical goods

(by 13.9 percent). The downtrend posted in these

commodities more than offset the higher purchases

recorded in imports of power generating and specialized

machines (by 2.6 percent), telecommunication equipment

and electrical machines (by 2.5 percent), and land

transport equipment (by 3.9 percent).

12

Based on BPM6 concept (excluding from the National Statistics Office (NSO) foreign trade statistics those goods that did not involve change in

ownership), e.g., consigned goods are deducted, in addition to the exclusion of returned/replacement goods, and temporarily imported goods.

Imports of goods decline

Capital Goods19.6 %

Raw M ats.43.5 %

M inerals23.4 %

Consumer Goods13.4 %

Special Transactions

0.1 %

Impo rts by M ajo r C o mmo dity Gro up Q1 2013

(P ercent Share)

Source: National Statistics Office (NSO)

53

Similarly, imports of raw materials and intermediate

goods, aggregating US$5.9 billion, were lower by

2.3 percent, dragged down largely by the decreased

purchases of semi-processed raw materials, particularly

materials and accessories for the manufacture of

electrical equipment and chemicals. Raw materials for

electronics exports which comprised 40.4 percent of semi-

processed raw materials fell moderately by 1.7 percent

during the quarter owing to the uncertainty in the global

environment which affected the recovery of the

electronics industry. Imports of mineral fuels and

lubricants contracted by 17.9 percent to US$3.2 billion,

mainly due to the lower import volume of petroleum

crude even as import price rose during the quarter in

review. The volume of petroleum crude imports in

Q1 2013 declined by 44.1 percent from 24.3 million

barrels in Q1 2012 to 13.6 million barrels in Q1 2013.

Meanwhile, the import price of petroleum crude went up

by 10.0 percent from US$103.3/barrel in Q1 2012 to

US$113.7/barrel in Q1 2013.

Conversely, consumer goods imports registered an

uptrend of 6.9 percent to US$1.5 billion in Q1 2013 due

mainly to the increment in the procurement of both

durable goods (by 11.5 percent) and non-durable goods

(by 2.7 percent). The growth contributors in imports of

durable goods were passenger cars & motorized cycles,

home appliances and miscellaneous manufactures while

those in non-durable goods were other food & live

54

animals chiefly for food, beverages and tobacco

manufacture, and articles of apparel and accessories. The

modest increase in the purchases of non-durable goods

was caused by lower rice importation during the quarter

in review (by 89.3 percent) due mainly to the significant

drop in the import volume of rice (by 96.0 percent) to

only 4 thousand metric tons in Q1 2013 from 101 metric

tons in the same quarter last year. This was in line with

the government’s plan to reduce rice imports, with

prospects of better rice production, following the

program to attain rice sufficiency in 2013.

Trade-in-Services. Net services receipts totaled

US$1.8 billion in the first quarter of 2013, higher than the

US$1.5 billion net receipts posted in the comparable

quarter a year ago. The 18.8 percent increment was due

mainly to increased net receipts registered in

telecommunications, computer, information, travel, and

personal, cultural, and recreational services along with

decreased net payments in transport services (particularly

due to lower outlays for freight as a result of lower

imports of goods), charges for the use of

intellectual property, insurance and pension, financial,

and government goods and services.13 In addition, net

receipts in technical, trade-related, and other business

services, which comprised the bulk of business process

outsourcing (BPO)-related transactions, continued to

13

Based on BPM6, financial services consist of: a) explicitly charged and other financial services; and b) financial intermediation services indirectly

measured (FISIM). FISIM refers to margins between interest payable and reference rate on loans and deposits. Government goods and services

n.i.e. cover goods and services: a) supplied by and to embassies, military bases and international organizations; b) acquired from the host economy by

diplomats, consular staff, and military personnel located abroad and their dependents; and c) services supplied by and to governments and not included

in other categories of services.

Net receipts of services increase

55

boost the performance of the services account, with net

receipts amounting to US$2 billion (Table 3).14 The country

continued to be a global leader in voice services while it

expands into other sectors like software development, IT,

animation and game development, and heath care

information management.

Primary Income. Net payments in the primary income

account of US$103.0 million in Q1 2013 were lower

compared to US$657.0 million recorded in Q1 2012. The

considerable reduction in the net payments in primary

income (by 84.3 percent) stemmed mainly from lower net

outlays in investment income together with higher net

earnings of resident OF workers which rose by 5.7 percent

to reach US$1.6 billion. In particular, net dividends to

foreign direct and portfolio investors declined by

28.2 percent and 23.9 percent, respectively. Also

contributing to the improvement in the net payments in

the primary income account were lower net interest

payments on portfolio investments (by 3.4 percent) and

other investments (by 51.0 percent). As a result of the

decline in global interest rates, net interest payments by

the NG, and by private and public corporations on bonds

issued abroad declined by 6.8 percent and 38.5 percent,

respectively. Similarly, net interest payments on foreign

loans contracted by 30.6 percent and 51.1 percent,

respectively.

14

Total exports of BPO services amounted to US$3.1 billion in Q1 2013.

Income account posts lower net

payments

56

Secondary Income. Net receipts in the secondary income

account expanded by 3.5 percent to reach US$4.5 billion

compared to the year-ago level of US$4.3 billion. This was

due to the 4.2 percent uptrend in personal transfers

to US$4.2 billion during the quarter. Comprising about

98.0 percent of personal transfers, non-resident OF

workers’ remittances climbed by 3.4 percent from the

level in Q1 2012 to reach US$4.1 billion. Remittances

remained robust on account of sustained demand for

skilled Filipino workers overseas. The expanding

operations of remittance service providers across the

globe also facilitated a broader capture of remittances

through the formal channels.

Capital and Financial Account

Capital Account. The capital account registered

US$23.0 million net receipts in Q1 2013, slightly lower

than the US$25.0 million posted in the same quarter a

year ago. This developed as net receipts arising from

capital transfers to the NG declined during the period.

Financial Account. The financial account yielded net

borrowings by residents of US$1.5 billion in Q1 2013,

lower by 69.1 percent than the

US$4.8 billion recorded in the same period in 2012.15

Residents’ net incurrence of liabilities (US$2.2 billion)

exceeded their net acquisition of financial assets

15

Based on BPM6 concept, the overall balance in the financial account is termed as net lending/net borrowing. Net lending means that, in net terms, the

economy supplies funds to the rest of the world, taking into account acquisition and disposal of financial assets and incurrence and repayment of

liabilities. Net acquisition of financial assets and net incurrence of liabilities were previously referred to as residents’ investments abroad and non-

residents’ investments in the Philippines, respectively, based on BPM5 concept.

Net receipts in the capital account

decline moderately

Financial account shows net

borrowing by residents from the rest

of the world

Net receipts of secondary income

improve

57

(US$721.0 million). In particular, direct investments

registered lower net borrowing reflecting renewed

concerns over the weak recovery in the eurozone

following the financial difficulties faced by Cyprus.

Meanwhile, net borrowing in the portfolio investment

account increased in Q1 2013 compared to the same

period last year on the back of sustained investor

confidence over the country’s favorable economic

prospects. Other investments reversed to net lending

position in Q1 2013 from a net borrowing position in

Q1 2012.

Direct investment. The direct investment account

posted US$814.0 million net borrowing by residents

from the rest of the world in Q1 2013, lower by

9.4 percent than the level recorded in Q1 2012. The

lower net borrowing was driven mainly by the

8.5 percent decline in residents’ net incurrence of

liabilities (or foreign direct investments). In particular,

non-residents’ net equity capital investments during the

quarter reached US$729 million, lower by 22.2 percent

than the Q1 2012 level. On a gross basis, equity capital

placements were sourced primarily from Mexico, Japan,

Malaysia and the US and channeled to the following

sectors: a) manufacturing; b) water supply, sewerage,

waste management and remediation activities;

c) financial and insurance activities; d) arts,

entertainment and recreation; and e) real estate. Non-

residents’ reinvestment of earnings likewise declined by

26.3 percent while their placements in domestic debt

Direct investments register net

borrowing

58

instruments rose by 71.0 percent during the quarter.

Meanwhile, residents’ net acquisition of financial assets

declined by 7.0 percent during the period to settle at

US$489 million, driven mainly by the 46.6 percent drop

in domestic corporations’ investments in debt

instruments issued by foreign affiliates.

Portfolio investment. Net borrowings in the portfolio

investment account reached US$3.1 billion in

January-March 2013, more than double the

US$1.2 billion posted in the same period last year. In

particular, residents’ net withdrawal of financial assets

yielded US$771.0 million, a reversal of the

US$786.0 million net acquisition of financial assets in

Q1 2012. Meanwhile, residents’ net incurrence of

liabilities reached US$2.4 billion during the quarter,

higher by 15.6 percent. The following transactions

contributed to the net incurrence of liabilities in the

portfolio investment account during the period:

a) Net placements by non-residents in short-term

peso-denominated government securities (money

market instruments) issued by the NG

(US$850.0 million);

b) Non-residents’ net placements in equity securities

issued by local corporations (US$966.0 million);

c) Non-residents’ net placements in long-term debt

securities issued by local corporations

(US$806.0 million) and domestic deposit-taking

corporations (US$480.0 million); and

Portfolio investment account records

higher net borrowing

59

d) Residents’ net resale to non-residents through

secondary market trading of foreign

currency-denominated bonds issued by the NG

(US$467.0 million).

These were partially offset by the NG’s redemption of

long-term bonds (US$800.0 million) and peso-

denominated government securities (US$424.0 million)

issued to non-residents.

Meanwhile, the main sources of net disposal of financial

assets are the net withdrawal of placements in foreign

debt securities by domestic deposit-taking corporations

(US$630.0 million) and other domestic corporations

(US$148.0 million).

Financial derivatives. Financial derivatives yielded a net

loss of US$52.0 million in Q1 2013, a reversal of the

US$60.0 million net gain in the comparable period last

year due to higher net payments by resident investors

from cash settlements in financial derivatives during the

period.

Other investments. The other investment account

registered net lending by residents to the rest of the

world amounting to US$2.4 billion in Q1 2013, a

turnaround from the US$2.6 billion net borrowing

recorded in the same quarter last year. Residents’ net

acquisition of financial assets reached US$1.0 billion

during the review quarter, a reversal of the US$2.8

Trading in financial derivatives

registers net loss

Other investments reverse to net

borrowings from the rest of the world

60

billion net disposal of financial assets registered in the

same quarter last year. Meanwhile, net repayment of

liabilities stood at US$1.3 billion, more than eightfold the

US$156.0 million recorded last year.

The net repayment of liabilities in other investments

during the period stemmed from the following

transactions:

a) Non-residents’ net withdrawal of currency and

deposits in domestic deposit-taking corporations

(US$747.0 million);

b) Net repayment of long-term foreign loans by the NG

(US$425.0 million) and other domestic corporations

(US$213.0 million); and

c) Net repayment of trade credits and advances

extended by non-residents to domestic corporations

(US$360.0 million).

These were partly mitigated by the net incurrence of

other accounts payable by deposit-taking corporations

(US$425.0 million). Meanwhile, net acquisition of financial

assets in Q1 2013 was driven mainly by residents’ net

placements of currency and deposits in foreign banks

(US$455.0 million). This was partly offset, however, by

net repayments of foreign loans availed by local deposit-

taking corporations (US$250.0 million).

61

International Reserves

The country’s gross international reserves (GIR) continued

to grow but at a slower rate of 10.3 percent compared to

the year-ago increase of 15.4 percent, to reach

US$84.0 billion as of end-March 2013. The slowdown in

the rate of build-up of GIR could be attributed to declining

gold prices in the world market as well as diversification

strategies. The end-March GIR levels remain adequate to

cover 11.9 months worth of imports of goods and

payments of services and income. It is also equivalent to

9.9 times the country’s short-term external debt based on

original maturity and 6.3 times based on residual

maturity.

Inflows from the foreign exchange operations and

investment income of the BSP as well as foreign currency

deposits by the NG contributed to the increase in the GIR

level. These inflows were partly offset, however, by FX

outflows such as payments for maturing FX obligations by

the NG and foreign currency withdrawals by a

government–owned and –controlled corporation.

The bulk of the reserves, or about 85.0 percent of the

total GIR as of end-March, was held in foreign

investments. Meanwhile, 11.8 percent of total reserves

were in gold and the remaining 3.2 percent were the

combined holdings of Special Drawing Rights (SDRs), the

BSP’s reserve position in the International Monetary Fund

(IMF), and FX.

International reserves continue to

grow

Gross International ReservesGross International Reservesin million US Dollars

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar

2010 2011 2012 2013

62

In terms of currency composition, majority are held in US

dollars, comprising 78.2 percent of total GIR (excluding

gold) as of end-March. Meanwhile, 10.9 percent of the

reserves were denominate in yen, 4.6 percent in euro and

the remaining balance of 6.3 percent were in SDR and

other currencies.

Net international reserves (NIR), which refers to the

difference between the BSP’s GIR and total short-term

liabilities, was recorded at US$83.9 billion as of end-

March.

Exchange Rate

The peso continued to appreciate in the first quarter of

2013. The peso averaged stronger at P40.70/US$1,

appreciating by 1.2 percent relative to the fourth quarter

of 2012 average of P41.19/US$1. On a year-on-year basis,

the peso likewise appreciated by 5.8 percent from the

P43.05/US$1 average in the first quarter of 2012. The

peso was bouyed by the domestic economy’s resiliency,

along with the broadly strengthening global recovery. The

alleviation of downside risks (such as the fiscal

consolidation in the US and the on going financial sector

adjustments in the Eurozone) underpinned by continued

policy accomodation by various central banks likewise

supported the peso’s gains.

The peso continues to strengthen

(4.3)

(2.8)

(1.8)

(1.4)

0.3

0.6

0.8

1.3

4.3

-5 -4 -3 -2 -1 0 1 2 3 4 5

South Korean Won

New Taiwan Dollar

Singapore Dollar

Malaysian Ringgit

Chinese Yuan

Philippine Peso

Indonesian Rupiah

Indian Rupee

Thai Baht

AVERAGE REAL LENDING RATES - ASIAN COUNTRIES in percent

PERCENTAGE CHANGE OF SELECTED CURRENCIESClosing Prices: 27 March 2013 vs. 29 December 2012

63

In January 2013, the peso appreciated by 0.7 percent

compared to the December 2012 average of P41.01/US$1

as risk appetite for emerging market assets were

bolstered by the US congress measure to avert the US

Fiscal cliff and China’s stronger-than-expected growth in

2012.16 The peso sustained its appreciating trend in

February 2013, bouyed up by robust FX inflows from OF

remittances, export receipts, and FDI.17 However, the

peso traded lower the following month as the radical

bailout plan for Cyprus reignited concerns on the

Eurozone debt crisis.18

On a year-to-date basis, the peso appreciated against the

US dollar by 0.6 percent on 27 March 2013 as it closed at

P40.80/US$1, moving in tandem with the rest of the Asian

currencies except the Japanese yen, the South Korean

won, New Taiwan dollar, Singaporean dollar, and the

Malaysian ringgit, which depreciated vis-à-vis the US

dollar.19

On a real, trade-weighted basis, the peso lost external

price competitiveness against the basket of currencies of

major trading partners (MTPs) and competitor countries

in the broad series during the review quarter.20 These

developed due to the peso’s nominal appreciation relative

16

On 2 January 2013, US law makers have agreed on a compromise agreement wherein tax hikes will be implemented for individuals earning US$400,000

annually and households earnings US$ 450,000 annually while new limits will be implemented for wealthy Americans who use exemptions and

deductions to reduce taxes. Meanwhile, China’s economy grew by 7.8 percent for the whole year of 2012. 17

Personal remittances from overseas Filipinos (OFs) in December 2012 expanded by 9.7 percent year-on-year, the highest monthly growth registered in

2012, to reach US$2.2 billion. Meanwhile, foreign direct investments (FDI) registered net inflows of US$1.2 billion for January-November 2012, slightly

higher by 1.1 percent than the level posted in the comparable period of the previous year. 18

Reuters 19

Based on the last done deal in the afternoon. 20

The basket of the major trading partners is composed of the currencies of US, Japan, the Euro area and the United Kingdom. The broad basket of

competitor countries comprises the currencies of Singapore, South Korea, Taiwan, Malaysia, Thailand, Indonesia and Hong Kong while the narrow basket

is composed of the currencies of Indonesia, Malaysia and Thailand only.

64

to these baskets of currencies, leading to an increase in

the real effective exchange rate (REER) index of the peso

by 3.4 percent and 0.1 percent, respectively.21

Meanwhile, the peso gained external price

competitiveness against competitor countries in the

narrow series as the narrowing inflation differential

relative to this basket of currencies more than offset the

peso’s nominal appreciation, leading to a real

depreciation of the peso by 0.7 percent.

On a y-o-y basis, the peso lost external price

competitiveness against the basket of currencies of MTPs

and competitor countries in both the broad and narrow

series due mainly to the peso’s nominal appreciation. This

development led to a real appreciation of the peso

against the basket of currencies of MTPs and competitor

countries in both the narrow and broad series by

11.0 percent, 7.8 percent, and 9.6 percent, respectively.

External Debt

As of end-March 2013, the outstanding BSP-

approved/registered external debt stood at

US$59.0 billion, down by US$1.3 billion or 2.1 percent

from the end-December 2012 level of US$60.3 billion. On

a year-on-year basis, the debt stock decreased by

US$2.6 billion or 4.2 percent from the end-March 2012

level of US$61.6 billion.

21

The REER index represents the Nominal Effective Exchange Rate (NEER) index of the peso, adjusted for inflation rate differentials with the countries

whose currencies comprise the NEER index basket. A decrease in the REER index indicates some gain in the external price competitiveness of the peso,

while a significant increase indicates the opposite. The NEER index, meanwhile, represents the weighted average exchange rate of the peso vis-à-vis a

basket of foreign currencies.

External debt stays manageable

.

Short-term

US$9.8B

16.6%

Medium and long-

term

US$49.3B

83.4%

TOTAL: US$59.0 Billion

Philippine External Debt

As of end-March 2013

65

The decline in the debt stock in Q1 2013 was attributed

to negative FX revaluation adjustments (US$1.4 billion), as

the US dollar strengthened against other currencies,

particularly the Japanese yen, as well as net repayments

(US$282.0 million). These were partially offset by

increased investments by non-residents in Philippine debt

papers (US$421.0 million) due to sustained investor

confidence in the country coupled with a dearth of

attractive investment instruments.

Meanwhile, the y-o-y decline was due to negative FX

revaluation adjustments (US$2.0 billion) and increase in

residents’ investments in Philippine debt papers

(US$727.0 million).

Medium- to long-term (MLT) loans (with maturities longer

than one year) declined to US$49.3 billion (83.4 percent

of total external debt) from the end-December 2012 level

of US$51.9 billion (85.9 percent of total external debt).

On the other hand, short-term (ST) obligations (those with

original maturities of up to one year) increased to

US$9.8 billion in end-March 2013 (16.6 percent of total

external debt) from US$8.5 billion in the previous quarter

(14.1 percent of total external debt) due to higher inter-

bank borrowings.

MLT loans continued to dominate the country’s external

debt profile. The larger share of MLT accounts to total

66

external debt indicate that loan payments are spread out

over a longer period of time, resulting in a more

manageable level of debt servicing. The weighted average

maturity of 20.3 years for loans with original tenors of

more than one (1) year was slightly shorter than the 20.4

years recorded a quarter ago. This excluded the SDR

allocation22 from the International Monetary Fund

(US$1.3 billion) which is considered as permanent debt.

The country’s external debt to GNI ratio (a solvency

indicator) was estimated at 19.1 percent as of end-March

2013, lower than the ratio of 20.2 percent in

end-December 2012 and 22.5 percent obtained in end-

March 2012. Similarly, the external debt to GDP ratio was

estimated at 22.8 percent during the review period, lower

than the 24.1 percent a quarter ago and 26.9 percent

posted a year ago.

The debt service burden (DSB) ratio, which relates the

total principal and interest payments to the total exports

of goods and receipts from services and income (XGSI),

was estimated at 11.0 percent for the period ending

March 2013, higher than the 6.1 percent and 9.5 percent

in end-December 2012 and end-March 2012, respectively.

The ratio, which is a measure of the adequacy of the

country’s foreign exchange earnings to meet maturing

loan payments, has remained below the international

benchmark range of 20.0-25.0 percent.

22

SDR allocation from the IMF is excluded from the calculation of weighted average maturity of MLT accounts, being a permanent debt to be repaid only

in the event that the IMF SDR Department ceases to exist or the debtor country ceases to be a member of the IMF.

67

Foreign Interest Rates

Monetary policy in advanced economies remained

accommodative during the review period to support the

pace of economic recovery due to continued weakness in

labor market conditions, slowdown in spending, and

anemic bank lending growth.

In Q1 2013, the Federal Open Market Committee (FOMC)

maintained the target range for the federal funds at 0.0 to

0.25 percent and currently anticipates that this low range

for the federal funds rate will be appropriate as long as

the unemployment rate remains above 6.5 percent. In

addition, the FOMC decided to continue purchasing

additional agency mortgage-backed securities at a pace of

$40.0 billion per month. The FOMC will also purchase

longer-term Treasury securities after its program to

extend the average maturity of its holdings of Treasury

securities is completed at the end of the year, initially at a

pace of $45.0 billion per month. It will likewise maintain

its existing policy of reinvesting principal payments from

its holdings of agency debt and agency mortgage-backed

securities in agency mortgage-backed securities, and will

resume rolling over maturing Treasury securities at

auction. These actions are expected to maintain

downward pressure on longer-term interest rates,

support mortgage markets, and help to make broader

financial conditions more accommodative. 23 As the FOMC

23

Federal Reserve, FOMC Statements on 30 January 2013 and 20 March 2013 are available online at:

http://www.federalreserve.gov/newsevents/press/monetary/2013monetary.htm

Monetary policy in advance

economies remains accommodative

68

maintained its monetary policy stance, the US prime rate

and discount rate continued to average at 3.25 percent

and 0.75 percent, respectively, during the review period.24

Meanwhile, the U.S. federal funds rate decreased to

0.16 percent in the first quarter of 2013 from the

0.17 percent average reported in the previous quarter

(Table 16).

The Monetary Policy Committee (MPC) of the Bank of

England (BOE) also maintained its monetary policy

settings, keeping the official bank rate paid on commercial

bank reserves at 0.5 percent in the first quarter of 2013.

In addition, the MPC also decided to maintain the stock of

asset purchases financed by the issuance of central bank

reserves at £375 billion.25

Similarly, the Bank of Japan (BOJ) kept the

uncollateralized overnight call rate at around 0 to 0.1

percent. In achieving price stability target, the BOJ will

pursue aggressive monetary easing, through a virtually

zero interest rate policy and purchases of financial assets.

With respect to the Asset Purchase Program (APP), the

BOJ introduced a method of purchasing certain amount of

financial assets every month. The total amount of

monthly purchases is specified at about 13.0 trillion yen,

2.0 trillion yen of which are Japanese government bonds.

As a result, the total size of the APP will be increased by

24

The prime rate refers to the interest rate charged by banks to their most creditworthy customers. The discount rate refers to the rate charged by the

Federal Reserve Bank when it extends credit to depository institutions. 25

The previous change in the official bank rate was a reduction of 0.5 percentage points to 0.5 percent on 5 March 2009. A program of asset purchases

financed by the issuance of central bank reserves was initiated on 5 March 2009. The previous change in the size of that program was an increase of

£50 billion to a total of £375 billion on 5 July 2012.

69

about 10.0 trillion yen in 2014 and is expected to be

maintained thereafter.

The Governing Council of the European Central Bank

(ECB) kept the interest rates unchanged during its

10 January, 7 February, and 7 March meetings. The

interest rates on the main refinancing operations and on

the marginal lending facility and deposit facility remained

at 0.75 percent, 1.50 percent, and 0.0 percent,

respectively, at the end of first quarter 2013.26 The

Governing Council also decided to continue conducting its

main refinancing operations as fixed rate tender

procedures with full allotment for as long as necessary,

and at least until the end of the sixth maintenance period

of 2013 on 9 July 2013.

Meanwhile, the 90-day LIBOR and the 90-day Singapore

Interbank Offered Rate (SIBOR) decreased by 7.98 basis

points and 7.47 basis points, respectively, as global

financial markets remained liquid. The LIBOR averaged

0.2917 percent while the SIBOR stood at 0.2951 percent,

respectively, (Table 16).

Global Economic Developments

Global economic growth weakened in the first quarter of

2013 compared to the previous quarter due to the

protracted period of slow growth in the euro area and

Japan. Meanwhile, labor market conditions generally

26

The decisions of the Governing Council of the European Central Bank are available online at:

http://www.ecb.int/press/govcdec/mopo/2013/html/index.en.html

Global economic growth weakens

70

worsened except in the US. Inflation rates of advanced

economies were also generally lower while those of

emerging markets showed mixed trends.

World economic growth was weighed down by the soft

economic activity in mature economies in the first quarter

of 2013. The euro area’s GDP further deteriorated by

0.1 percent from the 0.9 percent decline in Q4 2012.

Tough austerity measures imposed by debt-ridden

governments have been undermining domestic

consumption in the region.

Economic activity in Japan likewise weakened in Q1 2013,

with GDP growing only by 0.2 percent from the last

quarter’s 0.5 percent due to lower capital spending.

Nonetheless, Japan’s economy is expected to resume its

moderate recovery supported by aggressive monetary

easing, stimulus spending and the expected pick-up in

global growth.

The US GDP growth rate accelerated slightly to 1.8

percent in Q1 2013 from the previous quarter’s 1.7

percent. This growth was driven by positive contributions

from personal consumption expenditures, private

inventory investment, residential fixed investment, and

nonresidential fixed investment, which partly offset the

negative contributions from government spending.

Among the newly-industrialized economies (NIEs) in Asia,

countries such as Hong Kong and South Korea grew by the

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

G3 US 2.0 1.3 2.6 1.7 1.8 2.3 1.9 1.7 1.9 1.7 8.3 8.2 8.0 7.8 7.7 Japan 3.4 4.0 0.3 0.5 0.2 0.4 0.1 -0.4 -0.2 -0.6 4.5 4.4 4.3 4.2 4.3 Euro area 0.1 -0.2 -0.6 -0.9 -1.0 2.6 2.5 2.5 2.3 1.8 10.9 11.3 11.5 11.8 12.0Asian NIEs Hong Kong 0.7 0.9 1.5 2.8 2.8 4.7 4.2 3.0 3.7 2.8 3.3 3.2 3.2 3.4 3.4 South Korea 2.8 2.4 1.6 1.5 1.5 2.5 2.4 1.6 1.7 1.4 3.4 3.3 3.1 3.0 3.3 Singapore 1.5 2.3 0.0 1.5 -0.6 5.4 5.2 4.2 4.0 4.0 2.1 2.1 2.0 1.9 1.8 China 8.1 7.6 7.4 7.9 7.7 3.4 3.4 2.0 2.2 2.5 4.1 4.1 4.1 4.1 4.1 India 5.3 5.5 5.3 4.5 4.8 7.2 7.2 7.9 7.2 6.9 9.4 9.4 n.a. n.a. n.aASEAN Indonesia 6.3 6.4 6.2 6.1 6.0 4.5 4.5 4.5 4.4 5.3 6.3 6.3 6.1 n.a. n.a. Malaysia 5.1 5.6 5.3 6.5 4.1 1.9 1.7 1.4 1.3 1.5 3.0 3.0 3.0 3.1 3.3 Philippines 6.3 6.0 7.2 6.8 7.8 3.0 2.9 3.5 2.9 3.2 7.2 7.2 6.9 7.0 7.1 Thailand 0.4 4.4 3.1 19.1 5.3 2.5 2.5 2.9 n.a. 1.5 0.7 0.7 0.6 0.5 0.7 Vietnam 4.0 4.7 4.7 5.0 5.4 10.5 10.5 5.6 7.0 6.9 2.3 1.9 2.1 n.a. n.a.

Real GDPCountry

Sources: Bloomberg; The Institute of International Finance, Inc.; Bureau of Economic Analysis; Bureau of Labor Statistics; Cabinet Office; European Central Bank; Hong Kong Administrative Region Government Portal; and Korea National Statistics

1/ Unemployment rate is the proportion (in percent) of the total number of unemployed to the total number of persons in the labor force.

Macroeconomic Indicators in Selected Economies, Q1 2013Year-on-year growth rates (in percent)

Unemployment1/Inflation

71

same rate as in the previous quarter, posting 2.8 percent

and 1.5 percent, respectively. Meanwhile, China’s GDP

slightly slowed down to 7.7 percent in Q1 2013 compared

to 7.9 percent in the previous quarter. The weak

government spending on infrastructure projects such as

urban subways, and the frail moves of the central bank to

boost liquidity in the banking system weighed down on

China’s GDP growth.

The average inflation rates of major advanced economies

in Q1 2013 decelerated. In the US, the inflation rate

slightly decreased to 1.7 percent in the first quarter of

2013 from 1.9 percent in the previous quarter. In Japan,

deflation persisted at -0.6 percent from last quarter’s

-0.2 percent. Likewise, in the euro area, the inflation rate

declined to 1.8 percent from 2.3 percent in the previous

quarter.

In the Asian region, inflation trends varied in the first

quarter of 2013. The inflation rate in China rose to

2.5 percent. In contrast, the inflation rates in Hong Kong,

South Korea and India declined to 2.8 percent,

1.4 percent, and 6.9 percent, respectively, from previous

quarter’s 3.7 percent, 1.7 percent, and 7.2 percent.

Global job market conditions generally worsened, except

in the US. The rate of unemployment in the US eased to

7.7 percent from 7.8 percent in the previous quarter

reflective of the mild GDP growth. In the euro area,

unemployment inched up further to 12.0 percent from

72

11.8 percent in the previous quarter. Meanwhile,

unemployment in Japan rose to 4.3 percent from

4.2 percent in the previous quarter. In the East Asian

region, unemployment rates likewise increased

marginally, except in South Korea.

F. Financial Condition of the BSP

Balance Sheet

Based on preliminary and unaudited financial statement

of the BSP for 2012, total assets reached P3,975.9 billion,

5.0 percent or P188.0 billion higher than the year-ago

level (Table 17). Relative to the end-September 2012

level, the amount was higher by 2.2 percent or

P86.2 billion. The BSP’s liabilities increased by

P263.5 billion or 7.2 percent y-o-y to P3,911.4 billion, and

by 2.5 percent relative to the end-September 2012 level.

Meanwhile, the BSP’s net worth slightly declined to

P64.5 billion compared to the year-ago level of

P140.0 billion, as the growth in liabilities was higher than

the growth in assets during the period. The amount was

also lower than the P74.6 billion posted at end-September

2012.

The y-o-y expansion in the BSPs’ assets was largely due to

the build-up of international reserves, which accounted

for around 86 percent of total assets. The P137.8 billion

expansion in international reserves was principally due to

the continued foreign exchange operations and

investment income of BSP as well as deposits by the NG of

BSP’s net worth declines

Balance Sheet of the BSP*In billion pesos

2012 2011

Dec Sep Dec

Assets 3,975.9 3,889.7 3,787.9

Liabilities 3,911.4 3,815.1 3,647.9

Networth 64.5 74.6 140.0

* Unaudited.

73

proceeds from bond issuances and other foreign

borrowings.

The BSP’s liabilities similarly increased during the review

period due mainly to higher deposits, as part of the BSP’s

continued liquidity management operations. In particular,

reserve deposits of banks and other financial institutions

registered an increase of P109.1 billion to P782.6 billion

from P673.5 billion posted a year ago. Meanwhile,

placements in the SDA facility decreased by P2.7 billion to

P1,640.1 billion from P1,642.7 billion registered a year

ago.

Income Statement

Based on preliminary and unaudited data, the BSP’s

financial position recorded a loss of P27.0 billion

during the fourth quarter of 2012 (Table 18). The loss was

primarily the result of lower revenues combined with the

P14.8 billion foreign exchange losses realized during the

period.

Total revenues amounted to P15.4 billion, lower than the

P18.9 billion posted during the same period last year.

Interest income, which comprised the primary source of

revenues, was down by 15.1 percent or P1.8 billion lower

than the previous year’s level. Meanwhile, miscellaneous

income also dropped by 25.2 percent or P1.7 billion lower

than the level posted during the same period a year ago.

BSP registers lower net loss

Income Statement of the BSP*In billion pesos

2012 2011

Q4 Q3 Q4

Revenue 15.376 15.279 18.871

Less: Expense 27.544 27.727 29.144

Equals Net Income Before

FX Gains/Loss (-) -12.168 -12.448 -10.273

Add/Less: Gains/Losses on FX Rate

Fluctuations -14.812 -17.311 0.436

Less: Provision for Income Tax 0.045 0 0.231

Equals: Net Income Available

for Distribution -27.025 -29.759 -10.068

* Unaudited.

74

Total expenditures amounted to P27.5 billion, P1.6 billion

lower than the level posted for the same period last year.

The y-o-y decrease in expenditures was due mainly to

lower interest expense, which fell by 14.2 percent, on

account of decreased interest payments on lower SDA

placements.

G. Challenges and Policy Directions

While the global economy is seen to broadly strengthen

through 2013, persistent downside risks continue to

weigh on the overall world economic outlook. In

particular, the effects of ongoing financial sector

adjustments in the euro area and fiscal consolidation in

the US could continue to dampen international trade

flows, weaken market sentiment, and raise volatility in

financial markets. In addition, Japan’s monetary policy

easing, aimed at stimulating its economy, could have

important global trade dynamics implications. Meanwhile,

the recent signs of improvement in the US economy could

lead to possible capital flow reversals from emerging

economies. The biggest challenge for policymakers,

especially those in emerging economies, is to provide

sufficient buffers against adverse external developments

while moderating the build-up of domestic imbalances. In

particular, the challenge of managing large capital flows is

likely to lead to continuing exchange rate pressures in

many emerging economies.

For the Philippines, keeping the economy on a steady

growth course would require policies largely aimed at

75

nurturing domestic sources of growth to help compensate

for any weaknesses in external demand. In this regard,

close coordination between fiscal and monetary policies

will help ensure that the macroeconomic environment

remains supportive of sustainable and balanced growth.

The favorable fiscal position of the NG provides it with

sufficient policy space to support projects that will

continue to stimulate aggregate demand. Growth could

further accelerate once the various infrastructure projects

move forward. Furthermore, continuing social spending

programs for health, education, housing, employment,

and conditional cash transfers, as well as initiatives for

financial inclusion and consumer protection, shall help

promote inclusive and sustainable growth.

For its part, the BSP remains committed to its mandate of

safeguarding price stability and ensuring a

macroeconomic environment conducive to growth. With

a broadly benign inflation outlook, the BSP deems its

policy stance appropriate. Latest baseline forecasts

indicate that the future inflation path remains in line with

the target for 2013-2014, supported by firmly anchored

inflation expectations. The risks surrounding the inflation

projections also continue to be broadly balanced.

Downside risks to the inflation outlook center on the

uncertainty over the strength of the global economy and

its effects on global commodity prices, particularly oil. In

addition, the firmness of the peso could temper imported

inflation. However, additional petitions for utility rate

76

adjustments, with likely power rates increase in

Mindanao, and the impact of sustained FX inflows on

domestic liquidity growth could exert upside pressures on

inflation and would thus need to be monitored closely.

Of particular challenge moving forward is the continued

surge in capital inflows to the country, which has pushed

up the peso further against the US dollar. In addition, the

recent credit rating upgrades given by Fitch Ratings and

Standard and Poor’s as well as market expectations of a

further credit rating upgrades by other credit rating

agencies for the Philippines could attract further foreign

capital, posing risks to inflation and financial stability.

Against this backdrop, the BSP stands ready to employ,

from its menu of policy instruments, measures that will

help ensure that the benefits of capital flows are

maximized while warding off the potential destabilizing

impact of volatile capital flows on price and financial

stability. The BSP will also continue to maintain a market-

determined exchange rate, while guarding against

speculative flows that could contribute to the peso’s

volatility and undermine the inflation target.

Amid downside risks to global economic prospects on the

horizon, contingency measures are in place to ensure

adequate liquidity in the financial system should capital

flows reverse course. The BSP will maintain a comfortable

level of international reserves to serve as added insurance

against external shocks.

77

However, guarding against destabilizing financial market

imbalances arising from capital inflow surges imposes a

cost on the BSP. In this regard, efforts are also being

undertaken to reinforce the BSP’s capacity to manage

these risks effectively. The full capitalization of the BSP is

being pursued to enhance its financial position and help

ease the constraints posed by balance sheet weaknesses

and operating losses. This is complemented by a number

of proposed amendments to the BSP Charter, including:

(1) increasing the BSP’s authorized capital from

P50.0 billion to a higher level commensurate with the

expansion in the size of the economy and the financial

system; (2) setting up of a formal arrangement on the

sharing of gains and losses by the NG and the BSP;

(3) restoring the BSP’s ability to issue its own debt

securities to enable it to siphon excess money supply from

circulation; (4) allowing the BSP to set up reserves to

absorb losses from FX fluctuations; and (5) granting of tax

exemption to the BSP.

In the area of banking regulation and supervision, the BSP

will sustain the reform momentum with a view to

strengthen the resilience of the banking system against

shocks as well as to enhance its role as a catalyst for

durable long-term economic growth. Toward this end, the

BSP continues to enhance its monitoring of financial

market developments as it also continues to put in place

measures to strengthen the capacity of the banking

system to endure shocks, including the adoption of

expanded reporting standards for real estate exposures as

78

well as the Basel III capital adequacy standards beginning

January 2014. Likewise, the BSP continues to take the lead

in promoting financial inclusiveness with programs and

reforms aimed at promoting greater access to financial

services.

The BSP also remains proactive in ensuring the credibility

of the payments and settlements system with the

continued enhancement of its processes in accordance

with international best practices.

Finally, amid the increasing interconnectedness of global

financial markets, the BSP will remain an active

participant in regional and international cooperation

programs and fora, in order to reap the benefits of

collaborative engagement.

79

Annex A

Banking Policies

Banking policies implemented during the quarter were aimed at strengthening regulations and

guidelines on: 1) single borrower's loan (SBL) limit; 2) minimum capital and disclosure requirements

in accordance with the Basel III standards; 3) amendment to the regulations on individual and

aggregate ceilings on loans, other credit accommodations and guarantees to directors, officers,

stockholders and their related interests (DOSRI); 4) required disclosures in the published balance

sheet; and 5) macro-prudential measure for handling non-deliverable forwards involving the

Philippine peso.

Amendment to Regulations on Single Borrower's Limit

The Monetary Board decided to extend for another three years the original three-year period allowing

a separate single borrower’s loan (SBL) limit of 25.0 percent of the net worth of the lending

bank/quasi-bank for loans, credit accommodations and guarantees granted for undertaking

infrastructure and/or development projects under the Public-Private Partnership (PPP) Program of

the government duly certified by the Secretary of Socio-Economic Planning.

The extension of another three years for the separate 25.0 percent SBL for PPP infrastructure and/or

development projects is expected to encourage the financial sector’s participation in the PPP Program

of the government, particularly with respect to the projects that are still in the pipeline. With the

extension, the window will be open until 28 December 2016. Loans, credit accommodations and

guarantees based on the contracted amount as of 28 December 2016 period shall not be increased

but may be reduced and once reduced, said exposures shall not be increased thereafter.

To strengthen the application of the SBL limit and the equity investment ceilings on underwriting

exposures of universal banks (UBs) and investment houses (IHs), the BSP also issued Circular No. 784

to tighten the holding period for not recognizing the risk exposure involve for any unsold portion of

80

the issue taken on by the said UB and IH for its own account as a result of its securities underwriting.

(Circular No. 779 dated 9 January 2013 and Circular No. 784 dated 25 January2013.)

Basel III Implementing Guidelines on Minimum Capital Requirements

The BSP approved the implementing guidelines on the revised risk-based capital adequacy framework

particularly on the minimum capital and disclosure requirements for the Philippine banking system in

accordance with the Basel III Standards. Basel III introduces a complex package of reforms designed to

improve the ability of bank capital to absorb losses, extend the coverage of financial risks and

strengthen the firewalls against periods of stress. Guidelines directed banks to be fully compliant by

January 2014. The rules introduce a capital conservation buffer of 2.5 percent for universal and

commercial banks made up of common equity Tier 1 or Common Equity Tier 1 (CET1) capital. Thrift

banks and rural banks will have its own set of Basel III guidelines but the set of requirements for

qualifying capital will be the same.

Stand alone thrift banks, rural banks, cooperative banks and quasi-banks, as well as their subsidiary

banks/quasi-banks shall continue to be subject to the existing applicable regulations on risk based

capital adequacy framework. However, capital instruments issued by said banks shall be subject to the

criteria for inclusion as qualifying capital provided in Annexes A to C and E to F of Appendix 63b/Q-46

of the Manual of Regulations for Banks (MORB)/ Manual of Regulations for Non-Bank Financial

Institutions (MORNBFI).

The capital adequacy ratio (CAR) requirement was retained at 10.0 percent. Ratios introduced under

Basel III are CET 1, which the BSP set at 6.0 percent, and Tier 1 capital, which was set at 7.5 percent.

“The risk-based capital ratio of a bank, expressed as a percentage of qualifying capital to risk weighted

assets, shall not be less than ten percent (10.0 percent) for both solo basis (head office plus branches)

and consolidated basis (parent bank plus subsidiary financial allied undertakings, but excluding

insurance companies). Other minimum capital ratios include CET1 capital ratios of 6.0 percent and

7.5 percent, respectively.”

81

Meanwhile, instrument issued as hybrid Tier 1 or lower Tier 2 capital will be recognized as regulatory

capital until 31 December 2015.

The BSP also approved the risk disclosure requirements on the loss absorbency features of Additional

Tier 1 and Tier 2 capital instruments eligible under the Basel III framework. The said requirements

uphold investor protection through enhanced disclosure transparency.

When marketing, selling and distributing Additional Tier 1 and Tier 2 instruments eligible as capital

under the Basel III framework, banks/quasi-banks must subject investors to a client suitability test and

provide appropriate Risk Disclosure for the issuance of Additional Tier 1 and Tier 2 capital instruments,

among others. (Circular No. 781 dated 15 January 2013 and Circular No. 786 dated 15 February 2013)

Amendment to the Regulations on Individual and Aggregate Ceilings on Loans, Other Credit

Accommodations and Guarantees to Directors, Officers, Stockholders and their Related Interests

The provisions of the MORB on exclusions from individual and aggregate ceilings on loans, other credit

accommodation and guarantees to DOSRI are amended by adding a new exclusion or adding item “d”

in subsection x330.1 as follows:

d. The portion of loans and other credit accommodations covered by guarantees of

international/regional institutions/multilateral financial institutions where the Philippine Government

is a member/shareholder, such as International Finance Corporation (IFC) and the Asian Development

Bank (ADB).

(Circular No. 785 dated 25 January 2013)

82

Amendments to Required Disclosures in the Published Balance Sheet

The BSP amended subsection x192.9 of the MORB on Publication/Posting of Balance Sheet (BS) as

follows:

Banks shall disclose the following information in the quarterly published/posted BS:

Solo BS (Head Office and Branches/Other Offices)

1. Gross total loan portfolio (TLP)

2. Specific allowance for credit losses on the TLP

3. Non-performing loans (NPLs)

a. Gross NPLs

b. Ratio of gross NPLs to gross TLP (in percent)

c. Net NPLs

d. Ratio of Net NPLs to gross TLP (in percent)

4. Classified loans and other risk assets, gross of allowance for credit losses

5. DOSRI loans and receivables, gross of allowance for credit losses

6. Ratio of DOSRI loans and receivables, gross of allowance for credit losses, to gross TLP (in percent)

7. Gross non-performing DOSRI loans and receivables

8. Ratio of Gross non-performing DOSRI loans and receivables to gross TLP (in percent)

9. Percent compliance with Magna Carta

a. 8 percent of Micro and Small Enterprises

b. 2 percent for Medium Enterprises

10. Return on Equity (ROE) (in percent)

11. CAR on Solo Basis, as prescribed under existing regulations

a. Total CAR (in percent)

b. Tier 1 CAR (in percent)

12. Deferred charges not yet written down; and

13. Unbooked allowance for credit losses on financial instruments received

83

Consolidated BS (parent bank and financial allied subsidiaries excluding subsidiary insurance

companies)

1. List of financial allied subsidiaries (excluding subsidiary insurance companies)

2. List of subsidiary insurance companies

3. CAR on consolidated basis, as prescribed under existing regulations

a. Total CAR (in percent)

b. Tier 1 CAR (in percent)

(Circular No. 788 dated 26 February 2013)

Macro-prudential Measure for Handling Non-Deliverable Forwards Involving the Philippine Peso

The BSP issued a Circular on macro-prudential measure for handling non-deliverable forwards (NDFs)

involving the Philippine peso.

To mitigate any potential build-up of systemic risks, bank’s total gross exposures to all forms of peso

NDF transactions, shall be limited to a fixed percentage of a bank’s capital base. Unless otherwise

amended, the said limit is 20 percent of unimpaired capital for domestic banks. Foreign bank branches

shall have a limit equal to 100 percent of their unimpaired capital.

Banks which are presently in excess of the NDF exposure limits shall be given two months from the

effectivity of Circular No. 790 to comply with the prescribed limits. However, banks with peso NDF

exposures at the time the Circular takes effect but do not have at least a Type 2 derivatives license are

not allowed to enter into further peso NDF exposures except to close out said positions. Banks must

demonstrate to the appropriate unit of the Supervision and Examination Sector that transactions

under this situation are meant to square existing positions directly.

84

The provisions in the Manual of Regulations on Foreign Exchange Transactions requiring prior BSP

clearance for forward contracts involving sale of foreign exchange to non-residents with no full

delivery of principal, including cancellations, rollovers/renewals, were deleted. (Circular No. 790 dated

6 March 2013)

85

Annex B

Capital Market Reforms

Promoting investor confidence

The Philippine Stock Exchange (PSE) revised the composition of the Philippine Stock Exchange Index

(PSEi) along with the other sector indices based on the previously approved criteria. To qualify for the

PSEi, companies are required to meet a free float level of at least 12.0 percent, must be among the top

25.0 percent by median daily value per month for at least nine out of 12 months, and should be

included in the top 30 based on full market capitalization. To be included in the sector indices,

companies must rank among the top 50.0 percent in terms of median daily value per month in eight

out of the 12 month period in review.

Enhancing transparency and corporate governance

The Bangko Sentral ng Pilipinas (BSP) has initiated disclosure requirements for debt instruments issued

by banks which qualify as Basel III-eligible capital. The move is a pro-active stance to strengthen

investor protection in light of the so-called loss absorbency feature. Under the Basel III framework,

debt instruments that are treated as part of bank capital must have a provision that requires such

instruments, at the option of the relevant authority, to either be written off or converted into

common equity upon the occurrence of trigger events. This puts these instruments on equal footing as

traditional bank equity as far as the ability to absorb losses from operations. Banks issuing securities

with the loss absorbency feature must issue a risk disclosure statement which outlines to potential

investors the financial risks involved with investing in the security as well as the processes that must

be followed once the thresholds are breached. Investors must sign off on the risk disclosure statement

to signify categorically that the investor has read the disclosure and understands the investment risks

involved.

86

Expanding products and markets

In a strong bid to boost participation in the Philippine stock market, the PSE proposed to establish a

Direct Market Access (DMA) in the local bourse to investors. The DMA is an arrangement whereby a

trading participant's client is permitted to enter orders to buy or sell securities directly into the PSE

trading system for queuing and matching without any manual intervention by the trading participant.

The DMA is being offered in various markets such as Malaysia, Singapore and Hong Kong. The set of

rules governing the provisions of DMA services shall be subject to further review by the PSE.

The Securities and Exchange Commission (SEC) has formally notified the PSE of the partial approval of

the PSE Rules on Exchange Traded Funds (ETFs). The SEC has approved the general provisions, listing

and disclosure proposals of the PSE but is still evaluating the rules governing market making for ETFs.

An ETF is a passively managed fund, similar to a mutual fund that tracks an index but is traded on a

stock exchange similar to stocks. It is an open-end investment company that continuously issues and

redeems its shares of stock in creation units in exchange for the delivery of a basket of securities

representing an index whose performance the ETF endeavors to track.

LIST OF STATISTICAL TABLES FOR THE 2013 FIRST QUARTER LTP

1 Gross National Income and Gross Domestic Product by Industrial Origin

1a Gross National Income and Gross Domestic Product by Expenditure Shares

2 Selected Labor, Employment and Wage Indicators

3 Cash Operations of the National Government

4 Consumer Price Index in the Philippines

4a Consumer Price Index in the National Capital Region

4b Consumer Price Index in Areas Outside the National Capital Region

5 Monetary Indicators (DCS Concept)

6 Selected Domestic Interest Rates

7 Number of Financial Institutions

8 Total Resources of the Financial System

9 Ratios of Non-Performing Loans and Loan Loss Provisions to Total Loans of the Banking System

10 Stock Market Transactions

11 Balance of Payments

11a Exports by Major Commodity Group

11b Imports by Major Commodity Group

12 International Reserves of the Bangko Sentral ng Pilipinas

13 Exchange Rates of the Peso (Peso per Unit of Foreign Currency)

13a Exchange Rates of the Peso (Unit of Foreign Currency per Peso)

13b Effective Exchange Rate Indices of the Peso

14 Total External Debt

15 Selected Foreign Debt Service Indicators

16 Selected Foreign Interest Rates

17 Balance Sheet of the Bangko Sentral ng Pilipinas

18 Income Statement of the Bangko Sentral ng Pilipinas

1 GROSS NATIONAL INCOME AND GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN

for periods indicated

in million pesos, at constant 2000 prices

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Agriculture, Hunting, Forestry and Fishing 163,629 148,896 149,181 200,959 170,615 160,915 152,195 196,110 172,560 161,887 158,826 205,664 178,340 4.3 8.1 2.0 -2.4 1.1 0.6 4.4 4.9 3.3

Industry 425,567 489,793 447,055 497,101 454,771 481,033 446,150 511,302 478,924 508,847 477,887 556,965 530,994 6.9 -1.8 -0.2 2.9 5.3 5.8 7.1 8.9 10.9

Mining and Quarrying 13,903 23,580 13,448 14,968 18,380 25,606 13,993 12,530 18,074 27,258 13,829 12,885 15,003 32.2 8.6 4.1 -16.3 -1.7 6.5 -1.2 2.8 -17.0

Manufacturing 298,652 306,874 299,709 359,288 322,771 324,637 305,692 371,230 342,235 338,489 323,524 391,463 375,385 8.1 5.8 2.0 3.3 6.0 4.3 5.8 5.5 9.7

Construction 65,566 106,296 78,972 74,986 66,471 78,501 70,616 78,283 67,467 87,624 83,158 101,671 89,411 1.4 -26.1 -10.6 4.4 1.5 11.6 17.8 29.9 32.5

2012 2013

Annual Change (%)

2010 2011 2012 2013 2011

Electricity, Gas and Water Supply 47,445 53,043 54,926 47,859 47,148 52,289 55,850 49,260 51,148 55,475 57,375 50,946 51,195 -0.6 -1.4 1.7 2.9 8.5 6.1 2.7 3.4 0.1

Services 743,844 814,702 783,995 836,818 768,594 857,966 823,874 885,474 833,337 923,948 889,910 942,916 891,676 3.3 5.3 5.1 5.8 8.4 7.7 8.0 6.5 7.0

Transportation, Storage and

Communication 106,538 112,714 94,479 114,035 111,052 117,449 98,831 118,694 121,777 128,328 108,129 123,860 126,022 4.2 4.2 4.6 4.1 9.7 9.3 9.4 4.4 3.5

Trade and Repair of Motor Vehicles,

Motorcycles, Personal & Household Goods 206,308 226,459 244,719 271,256 212,164 232,115 255,680 280,555 228,701 250,135 276,518 299,037 241,578 2.8 2.5 4.5 3.4 7.8 7.8 8.2 6.6 5.6

Financial Intermediation 87,058 97,838 92,692 97,127 92,597 109,185 94,012 98,575 100,641 116,821 102,054 107,271 114,596 6.4 11.6 1.4 1.5 8.7 7.0 8.6 8.8 13.9

R. Estate, Renting and Business Activities 139,097 153,607 150,320 145,922 146,521 165,120 162,086 164,518 157,962 178,418 174,796 175,254 167,882 5.3 7.5 7.8 12.7 7.8 8.1 7.8 6.5 6.3

Public Administration & Defense;

Compulsory Social Security 62,788 71,919 63,427 56,953 58,970 75,012 66,105 59,875 61,601 77,831 71,620 64,782 66,541 -6.1 4.3 4.2 5.1 4.5 3.8 8.3 8.2 8.0

Other Services 142,055 152,165 138,357 151,524 147,289 159,085 147,161 163,256 162,654 172,415 156,792 172,711 175,058 3.7 4.5 6.4 7.7 10.4 8.4 6.5 5.8 7.6

Gross Domestic Product 1,333,040 1,453,390 1,380,231 1,534,877 1,393,979 1,499,915 1,422,219 1,592,887 1,484,821 1,594,682 1,526,622 1,705,545 1,601,010 4.6 3.2 3.0 3.8 6.5 6.3 7.3 7.1 7.8

Net Primary Income 291,467 293,900 276,855 287,377 283,592 280,797 267,291 299,268 289,052 302,187 286,249 307,387 298,355 -2.7 -4.5 -3.5 4.1 1.9 7.6 7.1 2.7 3.2

Gross National Income 1,624,507 1,747,290 1,657,086 1,822,254 1,677,571 1,780,711 1,689,510 1,892,155 1,773,874 1,896,869 1,812,871 2,012,932 1,899,364 3.3 1.9 2.0 3.8 5.7 6.5 7.3 6.4 7.1

Total may not add up due to rounding.

Source : National Statistical Coordination Board

Note: Data on Real GDP and its components are based on 2000 prices. The use of terminology Gross National Income (GNI) in place of Gross National Product (GNP) has been adopted in the revised/rebased Philippine System of National Accounts (PSNA) in accordance with the 1993/1998 System of National Accounts prescribed by the United Nations.

2 SELECTED LABOR, EMPLOYMENT AND WAGE INDICATORS

2013p

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Employment Status 1

Labor Force (in thousands) 38,828 38,512 38,946 39,287 39,210 39,691 39,928 41,194 40,226 40,644 40,427 40,431 40,834

Employed 36,001 35,413 36,237 36,488 36,293 36,820 37,106 38,550 37,334 37,841 37,584 37,668 37,940

Unemployed 2,827 3,099 2,709 2,799 2,917 2,871 2,822 2,644 2,892 2,803 2,842 2,763 2,894

Underemployed 7,107 6,297 6,502 7,141 7,055 7,127 7,095 7,381 7,018 7,312 8,546 7,158 7,934

Labor Force Participation Rate (%) 64.5 63.6 63.9 64.2 63.7 64.2 64.3 66.3 64.2 64.7 64.0 63.9 64.1

Employment Rate (%) 92.7 92.0 93.0 92.9 92.6 92.8 92.9 93.6 92.8 93.1 93.0 93.2 92.9

Unemployment Rate (%) 7.3 8.0 7.0 7.1 7.4 7.2 7.1 6.4 7.2 6.9 7.0 6.8 7.1

Underemployment Rate (%) 19.7 17.8 17.9 19.6 19.4 19.4 19.1 19.1 18.8 19.3 22.7 19.0 20.9

Overseas Employment (Deployed) 388,495 385,072 399,061 298,198 419,503 460,457 431,493 376,378 466,927p

455,733p

416,029p

332,471p ..

Land-based 301,417 303,686 306,042 212,531 323,700 378,491 335,792 280,744 360,456 369,274 329,380 269,867 ..

Sea-based 87,078 81,386 93,019 85,667 95,803 81,966 95,701 95,634 106,471 86,459 86,649 62,604 ..

Strikes

Number of New Strikes 1 3 1 3 1 0 1 0 0 0 1 2 ..

Number of Workers Involved 1,800 387 47 800 128 0 3,700 0 0 0 20 189 ..

Nominal Daily Wage Rates (in pesos)

National Capital Region

Agricultural

Plantation 345.00 345.00 367.00 367.00 367.00 389.00 389.00 389.00 389.00 409.00 409.00 419.00 419.00a

Non-Plantation 345.00 345.00 367.00 367.00 367.00 389.00 389.00 389.00 389.00 409.00 409.00 419.00 419.00a

Non-Agricultural 382.00 382.00 404.00 404.00 404.00 426.00 426.00 426.00 426.00 426.00 446.00 456.00 456.00a

Real Daily Wage Rates (in pesos), 2006=100

National Capital Region

Agricultural

Plantation 298.96 297.67 315.56 309.97 306.09 320.43 320.96 318.85 316.00 329.57 325.90 334.13 333.86a

Non-Plantation 298.96 297.67 315.56 309.97 307.04 315.76 321.14 318.68 316.00 329.57 325.90 334.13 333.86a

Non-Agricultural 331.02 329.59 347.38 341.22 336.95 350.91 351.49 349.18 346.06 359.39 355.38 363.64 363.35a

Notes:

1 Starting with January 2007 LFS round, the population projections based on the 2000 Census of Population was adopted to generate the labor force statistics per NSCB Resolution No. 1 Series of 2005

¨ Data not availablep

preliminarya

As of March 2013

Numbers may not add up due to rounding.

Sources of data: Bureau of Labor and Employment Statistics (BLES), Philippine Overseas Employment Administration (POEA), National Statistics Office (NSO), National Wages and Productivity Commission (NWPC), and National Conciliation and Mediation Board (NCMB)

2010 2011 2012p

3 CASH OPERATIONS OF THE NATIONAL GOVERNMENT

for periods indicated

in billion pesos

2013 2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1

Program

Revenues 323.1 358.6 335.4 342.9 361.0 399.9 358.0 416.0 364.3 378.8

Tax 265.7 327.8 297.9 310.7 302.3 369.7 324.9 364.3 316.7 337.9

Non-tax 57.4 30.8 37.5 32.1 58.7 30.3 33.2 51.7 47.6 40.9

Expenditures 349.3 349.6 371.2 487.6 394.9 400.4 427.6 554.9 430.8 452.7

Interest Payments 90.7 43.8 87.9 56.6 98.5 51.5 95.2 67.6 98.3 109.3

Equity — 0.1 0.2 12.6 0.0 0.9 0.0 20.4 0.2 0.8

Net Lending 2.4 9.9 2.8 2.9 3.2 8.5 10.4 5.4 -8.1 -0.2

Subsidy 7.1 7.1 4.9 34.6 5.6 7.1 5.7 24.2 4.2 11.1

Allotment to LGUs 76.4 78.8 74.9 85.0 71.0 78.4 74.1 74.9 80.3 60.5

Tax Expenditures 8.1 2.9 2.3 12.6 7.3 7.6 3.4 14.1 0.6 3.3

Others 164.6 207.0 198.1 283.4 209.3 246.4 238.7 348.3 255.2 267.9

Surplus/Deficit (-) -26.2 9.0 -35.8 -144.8 -33.9 -0.5 -69.6 -138.9 -66.5 -73.9

Financing 1

-64.0 87.3 -13.6 105.5 162.5 12.2 91.2 272.3 -0.8 -9.0

External Borrowings 54.4 -5.8 11.8 -9.2 66.8 -5.7 -10.4 19.3 -49.3 -49.0

Domestic Borrowings -118.4 93.1 -25.3 114.7 95.7 17.9 101.6 253.0 48.5 40.0

Total Change in Cash: Deposit/Withdrawal (-) 77.6 241.6 -307.3 -91.6 164.7 -23.9 -45.5 196.5 -182.2 -144.6

Budgetary -90.2 96.3 -49.3 -39.2 128.6 11.7 21.7 133.4 -67.3 -82.9

Non-Budgetary Accounts 2

167.8 145.3 -257.9 -52.3 36.1 -35.6 -67.1 63.1 -114.9 -61.7

1 Availment less repayment

2 Refers to accounts not included in the NG budget, e.g., sale, purchase or redemption of government securities, but included in the cash operations report to

show the complete relations in the movements of the cash accounts.

Note: Details may not add up to total due to rounding off

Source: Bureau of the Treasury

20122011

4 CONSUMER PRICE INDEX IN THE PHILIPPINES (2000=100)

for periods indicated

(2006=100)

Quarterly Average

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ALL ITEMS 119.0 120.0 120.9 121.9 124.3 126.0 126.7 127.6 128.2 129.7 131.1 131.3 132.3

FOOD AND NON-ALCHOLIC BEVERAGES 128.0 128.3 129.8 131.7 135.2 136.2 136.7 138.1 137.9 138.8 140.9 141.3 141.6

FOOD ITEMS 128.9 129.2 130.8 132.8 136.5 137.4 137.9 139.4 139.1 139.9 142.1 142.6 142.8

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 115.6 116.1 116.6 117.3 120.0 122.3 123.7 124.6 125.8 128.4 129.7 130.8 158.4

NON-FOOD 113.2 114.7 115.2 115.5 117.3 119.3 120.3 120.8 121.9 123.7 124.8 124.8 125.3

CLOTHING AND FOOTWEAR 112.9 113.6 114.7 115.4 116.5 117.8 119.3 119.9 120.9 123.7 125.3 125.9 126.8

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 112.3 115.0 115.2 115.3 117.7 120.6 121.1 121.7 123.4 125.9 127.2 126.5 126.9

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 112.9 113.9 114.3 114.8 115.6 116.6 117.3 117.6 118.2 120.6 122.4 123.2 124.0

HEALTH 119.1 119.7 121.0 121.7 122.8 123.8 125.0 125.5 126.2 127.8 128.9 129.4 130.3

TRANSPORT 115.2 115.9 116.0 116.7 120.0 123.5 124.0 124.1 125.2 126.3 125.5 125.9 126.3

COMMUNICATION 92.6 92.6 92.7 92.6 92.5 92.4 92.4 92.2 92.2 92.5 92.6 92.6 92.7

RECREATION AND CULTURE 104.7 105.1 105.5 105.6 105.8 106.5 107.2 107.4 108.3 109.3 110.1 110.2 110.7

EDUCATION 121.6 123.1 126.3 126.7 126.8 128.7 132.7 132.8 132.9 134.8 138.7 138.7 138.7

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 115.1 115.8 116.3 116.7 117.9 119.0 119.9 120.4 121.5 123.0 123.8 124.2 125.0

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ALL ITEMS 1.1 0.9 0.7 0.8 2.0 1.3 0.6 0.7 0.5 1.1 1.1 0.2 0.7

FOOD AND NON-ALCHOLIC BEVERAGES 0.8 0.3 1.2 1.5 2.7 0.7 0.3 1.0 -0.1 0.6 1.5 0.3 0.2

FOOD ITEMS 0.9 0.3 1.2 1.6 2.7 0.7 0.4 1.1 -0.2 0.6 1.5 0.3 0.2

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 1.1 0.5 0.4 0.6 2.3 1.9 1.1 0.7 1.0 2.1 1.0 0.8 21.2

NON-FOOD 1.3 1.4 0.4 0.2 1.6 1.7 0.8 0.4 0.9 1.5 0.8 0.1 0.3

CLOTHING AND FOOTWEAR 0.9 0.6 0.9 0.6 1.0 1.1 1.2 0.5 0.8 2.3 1.3 0.4 0.7

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 2.1 2.5 0.1 0.1 2.1 2.4 0.4 0.5 1.4 2.0 1.0 -0.6 0.3

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 0.9 0.8 0.4 0.4 0.7 0.9 0.6 0.3 0.5 2.0 1.5 0.7 0.6

HEALTH 1.6 0.5 1.1 0.6 0.9 0.8 1.0 0.4 0.5 1.3 0.8 0.4 0.7

TRANSPORT 1.2 0.6 0.1 0.6 2.9 2.9 0.4 0.1 0.9 0.9 -0.6 0.3 0.3

COMMUNICATION -1.2 0.1 0.1 -0.1 -0.1 -0.1 0.0 -0.1 -0.1 0.3 0.1 0.0 0.1

RECREATION AND CULTURE -0.3 0.4 0.3 0.1 0.2 0.7 0.6 0.2 0.9 0.9 0.7 0.1 0.5

EDUCATION 0.5 1.2 2.6 0.3 0.1 1.5 3.1 0.1 0.1 1.5 2.9 0.0 0.0

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 0.9 0.6 0.4 0.3 1.0 1.0 0.7 0.4 1.0 1.2 0.7 0.3 0.6

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ALL ITEMS 3.9 3.8 3.9 3.5 4.5 4.9 4.8 4.7 3.1 2.9 3.5 2.9 3.2

FOOD AND NON-ALCHOLIC BEVERAGES 4.4 3.5 4.2 3.8 5.7 6.2 5.3 4.8 2.0 1.9 3.1 2.3 2.7

FOOD ITEMS 4.5 3.6 4.4 4.0 5.9 6.3 5.4 4.9 1.9 1.8 3.0 2.2 2.7

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 3.6 3.0 2.7 2.6 3.8 5.3 6.1 6.2 4.8 5.0 4.9 5.0 25.9

NON-FOOD 3.6 4.1 3.8 3.3 3.7 4.0 4.4 4.6 3.9 3.7 3.7 3.3 2.8

CLOTHING AND FOOTWEAR 2.3 2.4 2.8 3.1 3.2 3.7 4.0 3.9 3.7 5.0 5.1 5.0 4.9

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 4.2 5.9 5.6 4.8 4.9 4.8 5.2 5.6 4.8 4.4 5.0 3.9 2.8

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 2.4 2.6 2.6 2.5 2.4 2.4 2.6 2.5 2.3 3.4 4.4 4.8 4.9

HEALTH 3.9 3.8 3.7 3.7 3.0 3.4 3.3 3.2 2.8 3.3 3.1 3.1 3.3

TRANSPORT 5.7 4.4 2.4 2.5 4.2 6.6 6.9 6.4 4.3 2.2 1.2 1.5 0.9

COMMUNICATION -1.0 -1.0 -1.0 -1.1 -0.1 -0.3 -0.4 -0.4 -0.4 0.1 0.3 0.4 0.6

RECREATION AND CULTURE 0.7 0.6 0.6 0.5 1.1 1.3 1.6 1.7 2.4 2.6 2.7 2.6 2.2

EDUCATION 4.2 4.3 4.5 4.7 4.3 4.6 5.1 4.8 4.8 4.8 4.5 4.4 4.4

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 2.7 2.7 2.6 2.3 2.4 2.7 3.1 3.2 3.1 3.3 3.3 3.2 2.8

Source of basic data: National Statistics Office

2 0 1 1

2 0 1 1

2 0 1 1

Year-on-Year Change (in percent)

2 0 1 2

2 0 1 2

2 0 1 2

2 0 1 0

2 0 1 0

Quarter-on-Quarter Change (in percent)

2 0 1 0

4a CONSUMER PRICE INDEX IN METRO MANILA (2000=100)

for periods indicated

(2006=100)

Quarterly Average

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ALL ITEMS 114.8 116.0 116.7 117.6 119.5 120.9 121.2 122.1 122.9 123.7 125.6 125.4 125.7

FOOD AND NON-ALCHOLIC BEVERAGES 124.1 123.4 124.9 128.6 130.3 130.6 130.5 132.9 131.6 132.0 135.3 135.2 134.9

FOOD ITEMS 124.9 124.2 125.7 129.7 131.5 131.7 131.6 134.2 132.7 133.0 136.5 136.3 135.9

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 115.0 115.5 115.8 116.3 117.6 118.9 119.1 119.5 120.4 122.5 124.2 126.5 140.3

NON-FOOD 110.9 113.0 113.3 113.1 115.2 117.0 117.4 117.7 119.4 120.3 121.7 121.4 121.7

CLOTHING AND FOOTWEAR 114.7 115.5 117.3 117.9 118.7 118.9 121.2 121.3 123.1 126.6 129.8 130.4 131.1

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 111.2 115.4 114.9 114.0 116.6 119.2 119.3 120.0 121.8 122.9 124.5 123.4 123.5

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 109.7 111.0 111.4 111.8 112.1 112.2 112.3 112.4 112.7 114.1 117.7 119.2 120.5

HEALTH 121.7 122.0 124.7 125.0 126.7 127.0 128.8 129.0 130.0 130.8 132.4 132.6 134.5

TRANSPORT 106.4 106.9 106.3 107.2 110.8 114.3 114.0 113.7 114.9 114.4 113.8 114.3 114.2

COMMUNICATION 93.7 93.7 93.9 93.8 93.6 93.4 93.3 93.2 93.1 93.7 93.9 93.9 93.9

RECREATION AND CULTURE 105.8 106.7 107.2 107.4 107.5 107.4 107.3 107.3 110.2 111.1 112.5 112.5 113.1

EDUCATION 125.9 127.5 130.6 130.6 130.6 132.2 135.5 135.5 135.5 137.0 140.0 140.0 140.0

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 111.7 111.8 112.9 113.0 114.8 115.9 116.3 116.5 119.5 119.9 120.7 120.7 120.9

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ALL ITEMS 1.0 1.1 0.5 0.8 1.6 1.1 0.2 0.7 0.7 0.7 1.5 -0.1 0.2

FOOD AND NON-ALCHOLIC BEVERAGES -0.7 -0.6 1.2 3.0 1.3 0.2 -0.1 1.8 -1.0 0.4 2.5 -0.1 -0.3

FOOD ITEMS -0.8 -0.6 1.2 3.2 1.4 0.2 -0.1 1.9 -1.1 0.3 2.6 -0.1 -0.3

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 0.9 0.4 0.3 0.5 1.1 1.1 0.2 0.3 0.8 1.7 1.4 1.8 10.9

NON-FOOD 1.8 1.9 0.2 -0.2 1.8 1.6 0.4 0.3 1.4 0.8 1.1 -0.2 0.2

CLOTHING AND FOOTWEAR 1.2 0.7 1.6 0.5 0.7 0.2 1.9 0.1 1.4 2.9 2.5 0.4 0.6

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 3.6 3.8 -0.5 -0.8 2.3 2.2 0.1 0.6 1.5 0.9 1.3 -0.9 0.1

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 0.4 1.2 0.4 0.3 0.3 0.1 0.1 0.1 0.2 1.2 3.2 1.2 1.1

HEALTH 1.5 0.2 2.3 0.2 1.4 0.3 1.4 0.2 0.7 0.6 1.2 0.2 1.4

TRANSPORT 2.0 0.4 -0.6 0.8 3.4 3.1 -0.2 -0.3 1.0 -0.5 -0.5 0.5 -0.1

COMMUNICATION -1.3 0.0 0.2 -0.2 -0.2 -0.1 -0.2 -0.1 0.0 0.6 0.2 0.0 0.0

RECREATION AND CULTURE -0.6 0.8 0.5 0.1 0.1 -0.1 -0.1 0.0 2.7 0.8 1.3 0.1 0.5

EDUCATION 0.1 1.2 2.5 0.0 0.0 1.3 2.5 0.0 0.0 1.1 2.2 0.0 0.0

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 0.1 0.1 1.0 0.1 1.6 1.0 0.3 0.2 2.6 0.4 0.6 0.0 0.1

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ALL ITEMS 3.6 3.7 3.9 3.5 4.1 4.2 3.9 3.8 2.8 2.4 3.7 2.8 2.2

FOOD AND NON-ALCHOLIC BEVERAGES 3.6 2.2 2.8 2.8 5.0 5.8 4.5 3.3 1.0 1.1 3.7 1.8 2.5

FOOD ITEMS 3.8 2.3 2.9 2.9 5.3 6.1 4.7 3.4 0.9 1.0 3.7 1.6 2.5

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 3.0 2.4 2.0 2.1 2.3 2.9 2.9 2.7 2.4 3.1 4.3 5.9 16.5

NON-FOOD 3.5 4.4 4.4 3.8 3.8 3.5 3.6 4.1 3.7 2.9 3.7 3.1 1.9

CLOTHING AND FOOTWEAR 2.6 3.0 3.7 4.0 3.5 3.0 3.4 2.9 3.7 6.5 7.1 7.4 6.6

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 4.9 7.8 7.8 6.2 4.9 3.2 3.9 5.3 4.4 3.1 4.4 2.8 1.4

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 1.5 1.8 2.1 2.3 2.2 1.1 0.8 0.6 0.5 1.6 4.8 6.0 7.0

HEALTH 4.2 3.9 4.1 4.2 4.1 4.2 3.2 3.2 2.6 2.9 2.8 2.8 3.5

TRANSPORT 7.4 5.7 2.7 2.7 4.1 6.9 7.3 6.1 3.7 0.1 -0.2 0.5 -0.6

COMMUNICATION -1.5 -1.5 -1.2 -1.2 -0.1 -0.3 -0.7 -0.6 -0.5 0.3 0.7 0.8 0.8

RECREATION AND CULTURE 0.7 0.3 0.8 0.9 1.6 0.7 0.1 -0.1 2.5 3.4 4.8 4.9 2.6

EDUCATION 2.3 2.9 4.1 3.8 3.7 3.7 3.8 3.8 3.8 3.6 3.3 3.3 3.3

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 1.4 0.5 1.3 1.3 2.8 3.7 3.0 3.1 4.1 3.5 3.8 3.6 1.1

Source of basic data: National Statistics Office

2 0 1 0 2 0 1 2

2 0 1 2

2 0 1 2

2 0 1 1

Quarter-on-Quarter Change (in percent)

2 0 1 0 2 0 1 1

Year-on-Year Change (in percent)

2 0 1 0 2 0 1 1

4b CONSUMER PRICE INDEX IN AREAS OUTSIDE METRO MANILA(2000=100)

for periods indicated

(2006=100)

Quarterly Average

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ALL ITEMS 120.3 121.3 122.3 123.2 125.8 127.6 128.4 129.3 129.8 131.6 132.9 133.2 134.4

FOOD AND NON-ALCHOLIC BEVERAGES 128.8 129.4 130.9 132.4 136.3 137.4 138.0 139.2 139.3 140.2 142.1 142.7 143.1

FOOD ITEMS 129.7 130.3 131.8 133.5 137.5 138.6 139.2 140.5 140.4 141.4 143.3 143.9 144.2

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 115.7 116.2 116.8 117.5 120.4 123.0 124.7 125.6 126.8 129.6 130.8 131.6 162.1

NON-FOOD 114.0 115.2 115.8 116.4 118.1 120.3 121.5 122.0 122.8 125.1 125.7 126.1 126.7

CLOTHING AND FOOTWEAR 112.3 113.0 113.8 114.6 115.8 117.4 118.6 119.5 120.2 122.7 123.9 124.4 125.4

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 112.8 114.9 115.3 115.9 118.2 121.2 121.9 122.5 124.1 127.3 128.4 127.9 128.4

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 114.0 114.9 115.3 115.9 116.9 118.2 119.0 119.5 120.2 122.9 124.0 124.7 125.3

HEALTH 118.4 119.1 120.0 120.7 121.7 122.9 124.0 124.6 125.1 127.0 128.0 128.5 129.1

TRANSPORT 117.9 118.7 119.0 119.6 122.9 126.4 127.1 127.4 128.4 130.0 129.1 129.5 130.0

COMMUNICATION 92.1 92.2 92.2 92.1 92.0 92.0 92.0 91.8 91.8 91.9 92.0 92.0 92.1

RECREATION AND CULTURE 104.3 104.6 104.9 104.9 105.2 106.2 107.1 107.4 107.7 108.7 109.2 109.4 109.8

EDUCATION 120.3 121.8 125.0 125.6 125.7 127.7 131.9 132.0 132.1 134.2 138.3 138.3 138.3

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 116.6 117.6 117.8 118.2 119.2 120.3 121.4 122.1 122.5 124.3 125.2 125.8 126.8

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ALL ITEMS 1.1 0.9 0.8 0.8 2.1 1.4 0.7 0.7 0.4 1.4 1.0 0.3 0.9

FOOD AND NON-ALCHOLIC BEVERAGES 1.2 0.4 1.2 1.1 2.9 0.8 0.4 0.9 0.0 0.7 1.3 0.4 0.3

FOOD ITEMS 1.3 0.5 1.2 1.2 3.0 0.8 0.5 1.0 -0.1 0.7 1.3 0.4 0.2

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 1.2 0.5 0.5 0.7 2.5 2.1 1.4 0.7 1.0 2.2 0.9 0.6 23.1

NON-FOOD 1.1 1.1 0.5 0.5 1.5 1.9 1.0 0.4 0.7 1.8 0.5 0.4 0.4

CLOTHING AND FOOTWEAR 0.7 0.7 0.7 0.7 1.0 1.4 1.1 0.7 0.6 2.1 1.0 0.4 0.8

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 1.5 1.8 0.4 0.5 2.0 2.5 0.6 0.5 1.3 2.5 0.9 -0.4 0.4

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 1.0 0.7 0.4 0.5 0.9 1.1 0.7 0.4 0.6 2.2 0.9 0.5 0.5

HEALTH 1.6 0.6 0.7 0.6 0.8 1.0 0.9 0.5 0.4 1.5 0.7 0.4 0.5

TRANSPORT 1.0 0.7 0.3 0.5 2.7 2.9 0.5 0.2 0.8 1.2 -0.7 0.3 0.4

COMMUNICATION -1.1 0.1 0.0 -0.1 -0.1 0.0 0.0 -0.1 -0.1 0.1 0.1 0.0 0.1

RECREATION AND CULTURE -0.2 0.3 0.3 0.0 0.3 0.9 0.9 0.3 0.3 0.9 0.5 0.2 0.4

EDUCATION 0.6 1.3 2.7 0.4 0.1 1.6 3.3 0.1 0.1 1.6 3.1 0.0 0.0

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 1.2 0.9 0.1 0.4 0.8 0.9 0.9 0.5 0.3 1.5 0.8 0.5 0.8

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

ALL ITEMS 4.0 3.9 3.9 3.6 4.6 5.2 5.0 5.0 3.2 3.1 3.5 3.0 3.5

FOOD AND NON-ALCHOLIC BEVERAGES 4.5 3.8 4.5 4.0 5.8 6.2 5.4 5.2 2.2 2.1 3.0 2.5 2.7

FOOD ITEMS 4.7 3.9 4.6 4.2 6.0 6.4 5.6 5.3 2.2 2.0 2.9 2.4 2.7

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 3.7 3.1 2.9 2.8 4.1 5.8 6.8 6.8 5.3 5.4 4.9 4.8 27.8

NON-FOOD 3.6 3.9 3.4 3.1 3.6 4.4 4.9 4.8 4.0 4.0 3.4 3.4 3.1

CLOTHING AND FOOTWEAR 2.2 2.3 2.5 2.8 3.1 3.9 4.2 4.2 3.8 4.5 4.4 4.1 4.3

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 3.9 5.1 4.6 4.3 4.8 5.5 5.7 5.7 5.0 5.0 5.3 4.4 3.4

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 2.7 2.8 2.8 2.6 2.5 2.9 3.2 3.1 2.9 4.0 4.2 4.4 4.2

HEALTH 3.9 3.7 3.6 3.6 2.8 3.2 3.3 3.2 2.8 3.4 3.2 3.1 3.2

TRANSPORT 5.1 4.0 2.4 2.5 4.2 6.5 6.8 6.5 4.5 2.8 1.6 1.7 1.3

COMMUNICATION -0.7 -0.8 -0.8 -1.1 -0.1 -0.2 -0.3 -0.3 -0.2 -0.1 0.0 0.2 0.4

RECREATION AND CULTURE 0.8 0.7 0.5 0.4 0.9 1.5 2.1 2.4 2.4 2.3 1.9 1.8 1.9

EDUCATION 4.8 4.8 4.7 5.0 4.5 4.8 5.5 5.1 5.1 5.1 4.9 4.7 4.7

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 3.3 3.6 3.0 2.7 2.3 2.3 3.1 3.2 2.7 3.3 3.1 3.0 3.5

Source of basic data: National Statistics Office

Quarter-on-Quarter Change (in percent)

2 0 1 2

2 0 1 22 0 1 0

2 0 1 0 2 0 1 1

2 0 1 0

Year-on-Year Change (in percent)

2 0 1 2

2 0 1 1

2 0 1 1

5 MONETARY INDICATORS (DCS CONCEPT) P

as of periods indicated

in billion pesos

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

A. Liquidity

1. M4 (2+7) 5,326.5 5,473.4 5,371.8 5,680.3 5,546.6 5,755.5 5,694.0 6,162.9 6,127.6

2. M3 : Broad Money Liabilities (3+6) 4,293.8 4,423.8 4,356.5 4,674.3 4,535.9 4,738.2 4,682.1 5,171.7 5,139.1

3. M2 (4+5) 4,201.7 4,327.5 4,262.3 4,586.3 4,446.4 4,634.1 4,619.1 5,085.7 5,043.3

4. M1: Currency Outside Depository Corporations and Transferable Deposits (Narrow Money ) 1,319.0 1,323.6 1,347.6 1,492.4 1,470.1 1,448.7 1,455.6 1,603.5 1,654.7

Currency Outside Depository Corporations (Currency in Circulation) 431.8 428.1 433.5 518.6 475.7 466.2 468.3 557.5 540.6

Transferable Deposits (Demand Deposits) 887.3 895.4 914.1 973.9 994.4 982.5 987.3 1,046.0 1,114.1

5. Quasi-Money 2,882.7 3,004.0 2,914.7 3,093.9 2,976.3 3,185.4 3,163.5 3,482.2 3,388.6

Savings Deposits Savings Deposits 1,798.2 1,878.2 1,879.4 2,020.4 1,966.9 2,038.9 2,075.3 2,213.3 2,259.8

Time Deposits Time Deposits 1,084.5 1,125.8 1,035.3 1,073.5 1,009.4 1,146.6 1,088.1 1,268.9 1,128.8

6. Securities Other Than Shares Included in Broad Money (Deposit Substitutes) 92.0 96.3 94.2 87.9 89.4 104.1 63.0 86.0 95.8

7. Transferable & Other Deposits in Foreign Currency (FCDU Deposits-Residents) 1,032.7 1,049.5 1,015.4 1,006.1 1,010.8 1,017.2 1,012.0 991.2 988.5

8. Liabilities Excluded from Broad-Money (Other Liabilities) 50.4 51.3 53.1 65.4 68.9 67.5 41.5 57.7 62.3

Bills Payable 48.5 49.4 51.2 63.5 67.0 67.0 40.6 56.9 61.4

Restricted Deposits 1.9 1.9 1.9 1.9 1.9 0.5 0.8 0.8 0.8

B. Credits

1. Net Domestic Assets 2,473.5 2,485.5 2,164.5 2,494.6 2,370.1 2,629.5 2,433.0 2,973.9 2,970.5

Bangko Sentral ng Pilipinas -2,278.3 -2,436.5 -2,747.5 -2,635.9 -2,671.1 -2,630.4 -2,846.4 -2,713.4 -2,756.9

Other Depository Corporations 4,751.8 4,922.0 4,911.9 5,130.5 5,041.2 5,259.9 5,279.4 5,687.3 5,727.5

2. Net Claims on Residents (Net Domestic Credits) 4,292.2 4,430.5 4,532.9 4,945.4 4,828.9 5,048.3 5,075.7 5,330.8 5,584.6

By End-User

Net Claims on the Public Sector (Public Sector) 1,371.1 1,313.8 1,319.2 1,554.4 1,362.2 1,387.7 1,401.1 1,336.9 1,566.9

Claims on Other Sectors (Private Sector) 2,921.0 3,116.7 3,213.8 3,391.1 3,466.7 3,660.6 3,674.6 3,993.8 4,017.7

By Institution

Bangko Sentral ng Pilipinas 110.7 -10.0 8.3 241.3 -12.5 24.8 74.5 -51.8 104.8

Other Depository Corporations 4,181.5 4,440.5 4,524.7 4,704.2 4,841.5 5,023.5 5,001.2 5,382.6 5,479.8

3. Net Other Items -1,818.7 -1,945.0 -2,368.5 -2,450.8 -2,458.9 -2,418.8 -2,642.7 -2,356.8 -2,614.1

C. Net Foreign Assets 2,903.4 3,039.2 3,260.5 3,251.1 3,245.4 3,193.5 3,302.6 3,246.7 3,219.3

Bangko Sentral ng Pilipinas 2,843.0 2,971.6 3,272.3 3,287.5 3,250.0 3,200.7 3,406.5 3,426.9 3,418.0

Net International Reserves 2,863.6 2,991.8 3,292.0 3,307.1 3,268.0 3,218.4 3,423.3 3,443.5 3,434.6

Foreign Assets 2,864.2 2,991.9 3,292.5 3,307.2 3,268.5 3,218.5 3,423.8 3,443.6 3,435.1

Foreign Liabilities 0.6 0.2 0.6 0.1 0.6 0.1 0.5 0.1 0.5

Medium & Long-Term Foreign Liabilities 20.6 20.2 19.7 19.6 18.0 17.6 16.8 16.6 16.6

Other Depository Corporations 60.4 67.5 -11.8 -36.3 -4.5 -7.2 -103.9 -180.2 -198.6

Foreign Assets 659.3 639.8 667.8 599.1 618.4 632.1 620.7 593.2 572.0

Foreign Liabilities 598.9 572.2 679.6 635.4 622.9 639.3 724.6 773.4 770.7

PPreliminary

Note: Details may not add up to totals due to rounding.

Source : Bangko Sentral ng Pilipinas

20122011

6 SELECTED DOMESTIC INTEREST RATES

for periods indicated; in percent per annum

NOMINAL INTEREST RATES REAL INTEREST RATES 1/

2010 2011 2012 2013 2010 2011 2012 2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

1st

Qtr 2nd

Qtr 3rd

Qtr 4.0729

3.1 2.9 3.5 3 3.2

Interbank Call Loans 4.1707 4.2593 4.1819 4.2416 4.2491 4.6535 4.6849 4.6661 4.3456 4.1547 3.9554 3.6832 3.0555 0.2707 0.4593 0.2819 0.6416 -0.2509 -0.2465 -0.0151 -0.0339 1.2456 1.2547 0.4554 0.6832 -0.1445

Savings Deposits 1.6580 1.5640 1.5840 1.5940 1.5490 1.5920 1.7800 1.5580 1.5180 1.2940 1.2910 1.2640 1.1130 -2.2420 -2.2360 -2.3160 -2.0060 -2.9510 -3.3080 -2.9200 -3.1420 -1.5820 -1.6060 -2.2090 -1.7360 -2.0870

Time Deposits (All Maturities) 3.0610 2.9220 3.0050 2.9740 2.6150 2.8880 2.9120 2.9400 2.7420 2.8370 2.7740 2.9340 2.3730 -0.8390 -0.8780 -0.8950 -0.6260 -1.8850 -2.0120 -1.7880 -1.7600 -0.3580 -0.0630 -0.7260 -0.0660 -0.8270

Manila Reference Rates (All Maturities) 2

4.8125 4.8125 4.8750 4.8125 4.7500 4.6875 4.8750 4.8750 5.0625 4.9375 4.5625 3.4375 3.0000 0.9125 1.0125 0.9750 1.2125 0.2500 -0.2125 0.1750 0.1750 1.9625 2.0375 1.0625 0.4375 -0.2000

Lending Rates

8.9229 8.8744 8.8809 8.1141 7.5010 7.6660 7.9797 7.8408 7.9840 8.0219 7.8091 7.5378 7.1142 5.0229 5.0744 4.9809 4.5141 3.0010 2.7660 3.2797 3.1408 4.8840 5.1219 4.3091 4.5378 3.9142

6.8231 6.6932 6.6742 5.9971 5.3930 5.5488 5.8310 5.6983 5.6636 5.7576 5.5490 5.2894 4.8584 2.9231 2.8932 2.7742 2.3971 0.8930 0.6488 1.1310 0.9983 2.5636 2.8576 2.0490 2.2894 1.6584

7.8860 7.7420 7.6460 7.4080 6.8320 6.5550 7.0080 6.2200 6.0510 5.7040 5.4840 5.4550 5.8420 3.9860 3.9420 3.7460 3.8080 2.3320 1.6550 2.3080 1.5200 2.9510 2.8040 1.9840 2.4550 2.6420

Bangko Sentral Rates

6.0000 N.T. N.T. N.T. 6.0000 6.2500 6.5000 N.T. 6.5000 N.T. 5.7500 N.T. N.T. 2.1000 N.T. N.T. N.T. 1.5000 1.3500 1.8000 N.T. 3.4000 N.T. 2.2500 N.T. N.T.

N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T. N.T.

4.0000 4.0000 4.0000 4.0000 4.0227 4.4066 4.5000 4.5000 4.2205 4.0000 3.8192 3.5000 3.5000 0.1000 0.2000 0.1000 0.4000 -0.4773 -0.4934 -0.2000 -0.2000 1.1205 1.1000 0.3192 0.5000 0.3000

N.T. 4.0794 N.T. 4.1011 4.0625 4.5748 N.T. 4.5994 N.T. 4.0696 3.9512 3.6786 3.5850 N.T. 0.2794 N.T. 0.5011 -0.4375 -0.3252 N.T. -0.1006 N.T. 1.1696 0.4512 0.6786 0.3850

3.8333 4.0000 4.0000 4.0000 4.0140 4.4057 4.5000 4.5000 4.1997 4.0000 3.8310 3.5760 3.5000 -0.0667 0.2000 0.1000 0.4000 -0.4860 -0.4943 -0.2000 -0.2000 1.0997 1.1000 0.3310 0.5760 0.3000

Rate on Government Securities

Treasury Bills, All Maturities 4.2270 4.1550 4.3270 3.2130 2.3360 1.7700 1.7610 1.2920 2.2200 2.4400 1.9870 0.7160 0.4740 0.3270 0.3550 0.4270 -0.3870 -2.1640 -3.1300 -2.9390 -3.4080 -0.8800 -0.4600 -1.5130 -2.2840 -2.7260

3.9050 3.8710 3.9630 2.6260 1.1670 1.4550 1.4850 1.1480 1.8840 2.3340 1.4580 0.3450 0.0590 0.0050 0.0710 0.0630 -0.9740 -3.3330 -3.4450 -3.2150 -3.5520 -1.2160 -0.5660 -2.0420 -2.6550 -3.1410

4.1220 4.0900 4.2780 3.1420 2.0640 1.0830 1.8050 1.2690 2.2080 2.3080 1.8250 0.6790 0.3000 0.2220 0.2900 0.3780 -0.4580 -2.4360 -3.8170 -2.8950 -3.4310 -0.8920 -0.5920 -1.6750 -2.3210 -2.9000

4.5160 4.4850 4.5200 3.4490 2.9060 2.3820 1.8940 1.4150 2.6110 2.5310 2.2280 0.8270 0.7000 0.6160 0.6850 0.6200 -0.1510 -1.5940 -2.5180 -2.8060 -3.2850 -0.4890 -0.3690 -1.2720 -2.1730 -2.5000

Government Securities in the Secondary Market 5

2.6000 2.8000 3.6000 2.9000 3.2000

3 Months 3.9865 4.0865 4.1742 1.3192 1.2231 3.0731 2.9627 1.6581 2.5212 2.3812 0.8038 0.4865 0.4021 0.0865 0.4865 0.3742 -2.2808 -3.6769 -2.1269 -1.7373 -2.5419 -0.0788 -0.4188 -2.7962 -2.4135 -2.7979

6 Months 4.1396 4.3135 4.4135 1.8077 1.4158 3.1692 2.2231 1.7542 2.5327 2.4885 1.2042 0.7885 0.4677 0.2396 0.7135 0.6135 -1.7923 -3.4842 -2.0308 -2.4769 -2.4458 -0.0673 -0.3115 -2.3958 -2.1115 -2.7323

1-Year 4.4577 4.6996 4.6012 2.5192 2.4785 3.2842 1.7269 1.9715 3.1665 2.6419 1.6885 0.9885 0.8729 0.5577 1.0996 0.8012 -1.0808 -2.4215 -1.9158 -2.9731 -2.2285 0.5665 -0.1581 -1.9115 -1.9115 -2.3271

2-Years 4.8308 5.2769 5.0865 3.4846 4.5012 4.1362 3.0269 2.6673 3.3462 3.1385 2.7250 3.0577 2.5729 0.9308 1.6769 1.2865 -0.1154 -0.3988 -1.0638 -1.6731 -1.5327 0.7462 0.3385 -0.8750 0.1577 -0.6271

3-Years 5.2135 5.4923 5.1846 4.2288 5.2942 4.6146 3.8923 3.4423 3.8038 3.9135 3.9077 3.8258 2.8625 1.3135 1.8923 1.3846 0.6288 0.3942 -0.5854 -0.8077 -0.7577 1.2038 1.1135 0.3077 0.9258 -0.3375

4-Years 5.8962 5.9404 5.2538 4.5019 5.9615 5.0265 5.1235 4.7885 4.7596 4.6462 4.4692 3.9865 2.9792 1.9962 2.3404 1.4538 0.9019 1.0615 -0.1735 0.4235 0.5885 2.1596 1.8462 0.8692 1.0865 -0.2208

5-Years 6.4190 6.4058 5.4738 5.0308 6.0481 5.1865 5.5308 5.0823 4.8250 5.1058 4.7096 4.1058 3.0708 2.5190 2.8058 1.6738 1.4308 1.1481 -0.0135 0.8308 0.8823 2.2250 2.3058 1.1096 1.2058 -0.1292

7-Years 7.1862 7.2423 5.8519 5.3719 6.7165 5.8704 5.4519 5.2650 5.1462 5.1673 4.8462 4.1385 3.2937 3.2862 3.6423 2.0519 1.7719 1.8165 0.6704 0.7519 1.0650 2.5462 2.3673 1.2462 1.2385 0.0937

10-Years 8.0400 7.9291 6.2327 6.1000 7.2062 6.5585 6.2269 5.4135 5.7962 5.9192 4.8962 4.4000 3.5292 4.1400 4.3291 2.4327 2.5000 2.3062 1.3585 1.5269 1.2135 3.1962 3.1192 1.2962 1.5000 0.3292

20-Years 9.1077 8.8858 8.0981 8.1692 8.2308 8.2212 7.4750 6.5827 6.0072 6.0227 5.8487 5.9692 3.8146 5.2077 5.2858 4.2981 4.5692 3.3308 3.0212 2.7750 2.3827 3.4072 3.2227 2.2487 3.0692 0.6146

25-Years 9.2096 9.1365 8.1673 8.1727 8.0765 8.2000 7.6654 6.5731 6.4469 6.3827 6.0454 5.8962 4.1396 5.3096 5.5365 4.3673 4.5727 3.1765 3.0000 2.9654 2.3731 3.8469 3.5827 2.4454 2.9962 0.9396

1Nominal interest rate less inflation rate

2Refers to the New Manila Reference Rates based on combined transactions on time deposits and promissory notes of reporting commercial banks

3Refers to the weighted average interest rate of reporting commercial banks' interest incomes on their outstanding peso-denominated loans

4Weighted average of transacted rates

5End of Period

pPreliminary

N.T. - No transactions

Source: Bangko Sentral ng Pilipinas

364-Days

R/P (Term) 4

RR/P (Overnight) 4

RR/P (Term) 4

Rediscounting

91-Days

182-Days

Low

All Maturities 3

R/P (Overnight) 4

High

7 NUMBER OF FINANCIAL INSTITUTIONS 1

as of periods indicated

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Mar Jun Sep Dec March June September Dec

T o t a l 25,078 25,544 25,828 26,173 26,515 26,787 26,745 27,198

Head Offices 7,379 7,411 7,433 7,418 7,436 7,424 7,271 7,245

Branches/Agencies 17,699 18,133 18,395 18,755 19,079 19,363 19,474 19,953

Banks 8,870 8,915 8,965 9,050 9,186 9,207 9,301 9,410

Head Offices 746 739 730 726 723 712 705 696

Branches/Agencies 8,124 8,176 8,235 8,324 8,463 8,495 8,596 8,714

Universal and Commercial Banks 4,695 4,764 4,813 4,857 4,904 4,965 5,028 5,145

Head Offices 38 38 38 38 38 37 37 37

Branches/Agencies 4,657 4,726 4,775 4,819 4,866 4,928 4,991 5,108

Thrift Banks 1,419 1,381 1,394 1,491 1,545 1,522 1,545 1,619

Head Offices 73 72 70 71 71 69 69 70

Branches/Agencies 1,346 1,309 1,324 1,420 1,474 1,453 1,476 1,549

Savings and Mortgage Banks 894 854 887 979 1,007 1,003 1,020 1,052

Head Offices 28 27 27 28 28 28 28 28

Branches/Agencies 866 827 860 951 979 975 992 1,024

Private Development Banks 357 358 340 344 367 341 346 385

Head Offices 20 20 19 19 19 18 18 19

Branches/Agencies 337 338 321 325 348 323 328 366

Stock Savings and Loan Assns. 141 142 140 141 144 150 151 154

Head Offices 22 22 21 21 21 20 20 20

Branches/Agencies 119 120 119 120 123 130 131 134

Microfinance Banks 27 27 27 27 27 28 28 28

Head Offices 3 3 3 3 3 3 3 3

Branches/Agencies 24 24 24 24 24 25 25 25

Rural Banks 2,756 2,770 2,758 2,702 2,737 2,720 2,728 2,646

Head Offices 635 629 622 617 614 606 599 589

Branches/Agencies 2,121 2,141 2,136 2,085 2,123 2,114 2,129 2,057

(continued next page)

20122011

7 NUMBER OF FINANCIAL INSTITUTIONS 1

(Continuation)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Non-Banks 16,208 16,629 16,863 17,123 17,329 17,580 17,444 17,788

Head Offices 6,633 6,672 6,703 6,692 6,713 6,712 6,566 6,549

Branches/Agencies 9,575 9,957 10,160 10,431 10,616 10,868 10,878 11,239

Investment Houses 28 28 28 27 27 27 27 27

Head Offices 18 18 18 17 17 17 17 17

Branches/Agencies 10 10 10 10 10 10 10 10

Finance Companies 47 47 47 47 46 85 85 87

Head Offices 21 21 21 21 20 20 20 20

Branches/Agencies 26 26 26 26 26 65 65 67

Investment Companies 4 4 4 4 4 4 4 3

Head Offices 4 4 4 4 4 4 4 3

Branches/Agencies - - - - - - - -

Securities Dealers/Brokers 14 14 14 14 14 13 13 13

Head Offices 14 14 14 14 14 13 13 13

Branches/Agencies - - - - - - - -

Pawnshops 15,818 16,239 16,467 16,729 16,936 17,128 16,992 17,335

Head Offices 6,381 6,420 6,451 6,442 6,464 6,463 6,317 6,301

Branches/Agencies 9,437 9,819 10,016 10,287 10,472 10,665 10,675 11,034

Lending Investors 2 2 1 1 1 1 1 1

Head Offices 2 2 1 1 1 1 1 1

Branches/Agencies - - - - - - - -

Non-Stock Savings and Loan Assns. 167 167 174 174 174 195 195 195

Head Offices 69 69 70 70 70 71 71 71

Branches/Agencies 98 98 104 104 104 124 124 124

Private Insurance Companies 2

119 119 119 119 119 119 119 119

Head Offices 115 115 115 115 115 115 115 115

Branches/Agencies 4 4 4 4 4 4 4 4

Government Non-Banks 4 4 4 4 4 4 4 4

Head Offices 4 4 4 4 4 4 4 4

Branches/Agencies - - - - - - - -

Venture Capital Corporations - - - - - - - -

Head Offices - - - - - - - -

Branches/Agencies - - - - - - - -

Credit Card Companies 4 4 4 3 3 3 3 3

Head Offices 4 4 4 3 3 3 3 3

Branches/Agencies - - - - - - - -

Other Non-Bank with QBF 1 1 1 1 1 1 1 1

Head Offices 1 1 1 1 1 1 1 1

Branches/Agencies - - - - - - - -

1 Refers to the number of financial establishments which includes the head offices and branches; excludes the Bangko Sentral ng Pilipinas

Starting Q4 2009, data include other banking offices per Circular 505 and 624 dated 22 December 2005 and 13 October 2008, respectively.

(Other banking offices refer to any office or place of business in the Philippines other than the head office, branch or extension offfice, which primarily

engages in banking activities other than the acceptance of deposits and/or servicing of withdrawals thru tellers or other authorized personnel.)2

Covers only the head offices and their foreign branches._

zero or nil

Source: Bangko Sentral ng Pilipinas

20122011

8 TOTAL RESOURCES OF THE PHILIPPINE FINANCIAL SYSTEM 1

as of periods indicated

in billion pesos

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Mar Jun Sep Dec Mar June September December

T o t a l 8,958.8 9,208.5 9,286.8 9,645.6 9,509.0 9,770.2 9,968.2p

10,476.0p

Banks 7,119.6 7,314.2 7,360.6 7,643.4 7,464.3 7,671.5 7,864.4 8,355.8

Universal and Commercial Banks 2

6,350.5 6,548.1 6,598.1 6,833.0 6,668.0 6,877.6 7,054.3 7,486.7

Thrift Banks 2

587.5

581.5

576.9

623.6 608.6 606.2 622.4 681.6

Rural Banks 181.7 184.6 185.6 186.8 187.8 187.6 187.6a

187.6a

Non-Banks 3

1,839.1 1,894.3 1,926.2 2,002.2 2,044.7 2,098.7 2,103.9 2,120.1

1 Excludes the Bangko Sentral ng Pilipinas; amount includes allowance for probable losses

2 Based on the new Financial Reporting Package that was implemented beginning March 2008, asset is valued gross of amortization, depreciation and allowance

for probable losses; prior to 2008, data were based on the Consolidated Statement of Condition which valued asset gross of allowance for probable losses and

net of amortization and depreciation.3 Includes Investment Houses, Finance Companies, Investment Companies, Securities Dealers/Brokers, Pawnshops, Lending Investors, Non Stocks Savings

and Loan Associations, Venture Capital Corps., Credit Card Companies (which are under BSP supervision), and Private and Government Insurance

Companies (i.e., SSS and GSIS). a

As of end-June 2012p

Preliminary

Notes: Data on Non-Banks are based on Consolidated Statement of Condition (CSOC).

Data on Rural Banks are based on CSOC up to September 2010. Data from October 2010 onwards are based on FRP for some rural banks and

CSOC for other rural banks. Details may not add up to total due to rounding off.

Source: Bangko Sentral ng Pilipinas

(2)

2011

Institutions

2012

(3)

(1)

9 RATIO OF NON-PERFORMING LOANS (NPL) AND LOAN LOSS PROVISIONS

TO TOTAL LOANS OF THE BANKING SYSTEM

end-of-period

in percent

UBs &KBs TBs RBs Total UBs &KBs TBs RBs Total

2006

Mar 8.007 9.596 12.026 8.290 6.294 4.601 4.134 6.063

Jun 7.391 9.205 12.075 7.733 5.919 4.930 4.071 5.756

Sep 7.431 8.771 11.626 7.722 6.120 4.811 3.991 5.905

Dec 5.662 8.220 10.867 6.108 4.679 4.055 4.589 4.611

2007

Mar 5.275 7.267 10.924 5.704 4.285 3.667 3.879 4.199

Jun 5.208 7.864 10.568 5.720 4.370 3.969 3.679 4.297

Sep 5.191 7.461 9.859 5.637 4.604 3.712 3.393 4.451

Dec 4.448 6.846 9.820 4.929 4.151 3.235 3.579 4.025

2008

Mar 4.524 6.649 9.697 4.990 4.220 3.231 3.524 4.075

Jun 4.010 6.569 9.809 4.500 3.876 3.240 3.612 3.798

Sep 4.030 6.606 10.131 4.530 3.825 3.485 3.810 3.787

Dec 3.524 6.622 9.973 4.061 3.524 3.548 3.792 3.536

2009

Mar 3.562 7.685 10.689 4.227 3.537 3.754 4.023 3.575

Jun 3.360 7.467 10.754 4.039 3.438 3.939 4.136 3.514

Sep 3.249 8.436 10.585 4.024 3.615 4.201 4.100 3.691

Dec 2.969 7.272 10.414 3.640 3.335 3.760 4.052 3.401

2010

Mar 3.215 7.849 9.425 3.928 3.634 3.958 4.409 3.696

Jun 3.268 7.928 9.418 3.957 3.557 4.206 4.567 3.657

Sep 3.113 8.213 9.629 3.880 3.646 4.227 4.635 3.741

Dec 2.863 7.322 9.884 3.577 3.392 3.929 4.920 3.499

2011

Mar 2.986 7.306 10.105 3.718 3.594 4.693 5.096 3.769

Jun 2.446 6.183 10.190 3.101 3.087 3.648 5.107 3.214

Sep 2.460 6.228 9.968 3.112 3.043 3.736 5.175 3.189

Dec 2.233 5.721 10.138 2.848 2.821 3.374 5.106 2.952

2012p

Mar 2.361 5.823 10.463 3.007 2.950 3.842 5.367 3.128

Jun 2.058 4.972 10.632 2.650 2.808 3.557 5.663 2.981

Sep 2.050 5.422 10.624a

2.675 2.789 3.634 6.073a

2.982

Dec 1.866 5.337 10.624a

2.503 2.636 3.447 6.073a

2.827

pPreliminary

aRural banks' data as of end-September 2012

Source: SDC/DES

TOTAL LOAN PROVISIONS/TOTAL LOANSTOTAL NPL/TOTAL LOANS

10 STOCK MARKET TRANSACTIONS

volume in million shares, value in million pesos

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Volume 144561.7 232516.1 431850.7 247667.2 402134.6 152893.3 116967.0 371124.2 165037.1

Financials 649.8 629.8 1437.0 1407.0 1619.1 1153.4 991.1 1434.9 1816.0

Industrial 6459.5 5767.2 29367.4 7523.8 31502.6 13358.4 16362.0 81440.2 18622.2

Holding Firms 23546.0 11491.6 22863.9 10799.8 21750.9 7081.5 9092.3 143645.9 33659.4

Property 19404.6 13990.8 18584.9 12717.7 25507.1 18144.9 14136.5 18676.1 22018.6

Services 5078.6 4239.7 18563.1 16441.6 14404.0 10480.3 15809.8 44604.6 23393.8

Mining & Oil 89423.2 196397.0 341034.3 198775.4 307350.8 102674.8 60575.1 81321.3 65526.8

SME 0.1 0.0 0.2 1.9 0.1 0.0 0.2 1.3 0.3

Value 325016.4 336795.1 384522.4 376257.4 502081.1 445647.9 359916.2 464065.9 623481.1

Financials 31968.1 34907.8 49817.9 53460.4 74928.9 60289.2 51589.3 96175.3 101610.0

Industrial 100461.7 92832.9 107984.7 72814.8 114995.4 132721.2 69893.6 101501.5 125900.6

Holding Firms 74750.5 79750.3 63531.9 70700.1 106954.1 104977.4 87474.2 101072.6 167327.0

Property 39979.0 35069.7 39404.4 35773.0 58562.3 52982.6 65675.3 66954.9 108603.6

Services 53189.5 47266.2 44127.9 91303.8 78836.7 59063.5 67397.3 81771.9 91251.0

Mining & Oil 24667.6 46968.0 79655.1 52200.9 67803.3 35614.0 17885.4 16579.0 28786.2

SME 0.1 0.1 0.8 4.4 0.5 0.0 1.1 10.7 2.7

Composite Index (end of period) 4055.1 4291.2 3999.7 4372.0 5107.7 5246.4 5346.1 5812.7 6847.5

Sum of details may not add up to totals due to rounding.

Source : Philippine Stock Exchange

20122011

11 PHILIPPINES: BALANCE OF PAYMENTS

in million U.S. dollars

2013 p Y-o-Y

Q1 Q2 Q3 Q4 Q1 Growth (%)

Current Account 393 2276 2249 2208 3439 775.1

Export 21488 23470 23914 23504 22783 6.0

Import 21095 21194 21665 21296 19344 -8.3

Goods, Services, and Primary Income -3913 -2486 -2616 -3031 -1017 74.0

Export 17045 18592 18913 18108 18186 6.7

Import 20958 21078 21529 21139 19203 -8.4

Goods and Services -3256 -2540 -2244 -3260 -914 71.9

Export 15170 16657 16945 16112 16288 7.4

Import 18426 19197 19189 19372 17202 -6.6

Goods -4787 -2696 -3021 -4701 -2733 42.9

Credit: Exports 10339 12692 12262 10991 11152 7.9

Debit: Imports 15126 15388 15283 15692 13885 -8.2

Services 1531 156 777 1441 1819 18.8

Credit: Exports 4831 3965 4683 5121 5136 6.3

Debit: Imports 3300 3809 3906 3680 3317 0.5

Primary Income -657 54 -372 229 -103 84.3

Credit: Receipts 1875 1935 1968 1996 1898 1.2

Debit: Payments 2532 1881 2340 1767 2001 -21.0

Secondary Income 4306 4762 4865 5239 4456 3.5

Credit: Receipts 4443 4878 5001 5396 4597 3.5

Debit: Payments 137 116 136 157 141 2.9

Capital Account 25 30 33 48 23 -8.0

Credit: Receipts 28 33 40 51 28 0.0

Debit: Payments 3 3 7 3 5 66.7

Financial Account -4821 722 510 -2542 -1489 69.1

Net Acquisition of Financial Assets -1584 1075 3567 1076 721 145.5

Net Incurrence of Liabilities 3237 353 3057 3618 2210 -31.7

Direct Investment -898 80 -42 -92 -814 9.4

Net Acquisition of Financial Assets 526 629 317 373 489 -7.0

Net Incurrence of Liabilities 1424 549 359 465 1303 -8.5

Portfolio Investment -1248 -363 -61 -1851 -3123 -150.2

Net Acquisition of Financial Assets 786 -50 423 45 -771 -198.1

Net Incurrence of Liabilities 2034 313 484 1896 2352 15.6

Financial Derivatives -60 2 18 27 52 186.7

Net Acquisition of Financial Assets -125 -59 -56 -36 -46 63.2

Net Incurrence of Liabilities -65 -61 -74 -63 -98 -50.8

Other Investment -2615 1003 595 -626 2396 191.6

Net Acquisition of Financial Assets -2771 555 2883 694 1049 137.9

Net Incurrence of Liabilities -156 -448 2288 1320 -1347 -763.5

NET UNCLASSIFIED ITEMS -3996 -1511 2743 -1393 -3416 14.5

OVERALL BOP POSITION 1243 73 4515 3405 1535 23.5

Debit: Change in Reserve Assets 1253 62 4526 3394 1546 23.4

Credit: Change in Reserve Liabilities 10 -11 11 -11 11 10.0

Use of Fund Credits 0 0 0 0 0 0.0

Short-term 10 -11 11 -11 11 10.0

p - Preliminary

Technical Notes:

1. Balance of Payments Statistics from 2011 onwards are revised based on the IMF's Balance of Payments and International Investment

Position Manual, 6th Edition.

2. Financial Account, including Reserve Assets, is calculated as the sum of net acquisitions of financial assets less net incurrence of liabilities.

3. Balances in the current and capital accounts are derived by deducting debit entries from credit entries.

4. Balances in the financial account are derived by deducting net incurrence of liabilities from net acquisition of financial assets.

5. Negative values of Net Acquisition of Financial Assets indicate withdrawal/disposal of financial assets; negative values of Net

Incurrence of Liabilities indicate repayment of liabilities.

6. Overall BOP position is calculated as the change in the country's net international reserves (NIR), less non-economic transactions (revaluation

and gold monetization/demonetization). Alternatively, it can be derived by adding the current and capital account balances

less financial account plus net unclassified items.

7. Net unclassified items is an offsetting account to the overstatement or understatement in either receipts or payments of the recorded BOP

components vis-à-vis the overall BOP position.

8. Data on Deposit-taking corporations, except the central bank consist of transactions of commercial and thrift banks and offshore banking

units (OBUs).

2012

11a EXPORTS BY MAJOR COMMODITY GROUP

for periods indicated

volume in 000 metric tons; unit price in U.S.$/m.t.; fob value in million U.S. dollars; growth rates in percent

C o m m o d i t i e s Volume Price 4/

Value Volume Price 4/

Value Volume Price 4/

Value Volume Price 4/

Value Volume Price 4/

Value Volume Price Value

Coconut Products 328 378 322 336 433 32.0

Copra .. 1179 -- .. 1397 -- .. 538 -- .. 1166 -- .. 1069 -- 0.0 -9.3 0.0

Coconut Oil 171 1420 242 224 1313 294 217 1111 241 246 969 238 357 896 320 108.8 -36.9 32.2

Desiccated Coconut 26 2506 66 24 2203 54 12 3210 37 6 6519 39 4 10849 44 -84.6 332.9 -33.3

Copra Meal/Cake 61 205 12 112 195 22 152 250 38 122 409 50 136 459 63 123.0 123.9 425.0

Others 6 7 6 8 6 0.0

Sugar and Products 48 48 26 55 109 127.1

Centrifugal & Refined 76 533 40 81 557 45 45 516 9 .. 1090 -- 99 995 98 30.3 86.7 145.0

Molasses 70 93 6 6 122 1 12 143 2 36 344 12 34 280 10 -51.4 201.1 66.7

Others 1 2 1 43 1 0.0

Fruits and Vegetables 247 312 323 324 341 38.1

Canned Pineapple 54 984 53 51 1011 51 65 991 65 52 955 50 33 1020 34 -38.9 3.7 -35.8

Pineapple Juice 22 569 12 19 576 11 30 545 16 19 604 11 22 599 13 0.0 5.3 8.3

Pineapple Concentrates 6 1073 6 9 1295 12 7 1319 9 11 1411 16 7 1360 9 16.7 26.7 50.0

Bananas 431 262 113 636 250 159 693 262 181 886 218 193 694 298 207 61.0 13.7 83.2

Mangoes 5 741 4 8 798 7 4 851 3 1 1440 1 1 1270 1 -80.0 71.4 -75.0

Others 57 72 49 51 77 35.1

Other Agro-Based Products 203 222 184 197 261 28.6

Fish, Fresh or Preserved 25 4197 106 28 4373 122 21 4868 101 19 4779 90 22 5529 120 -12.0 31.7 13.2

Of which: Shrimps & Prawns 1 10880 9 1 9936 12 .. 10973 5 1 111 9 .. 137091 16 0.0 1160.0 77.8

Coffee, Raw, not Roasted .. 4607 -- .. 7088 -- 0 0 0 0 0 0 .. 0 -- 0.0 -100.0 0.0

Abaca Fibers 5 256 1 1 1382 2 3 612 2 1 715 1 2 777 1 -60.0 203.5 0.0

Tobacco,Unmanufactured 8 2627 21 7 2642 18 6 3040 17 6 3040 20 0 316715 30 -100.0 11956.1 42.9

Natural Rubber 8 1423 12 11 1418 15 10 1626 17 9 1929 18 9 2248 20 12.5 58.0 66.7

Ramie Fibers, Raw or Processed 0 0 0 .. 12947 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0

Seaweeds, Dried 5 2519 13 6 1331 8 3 1157 4 7 915 6 4 1833 7 -20.0 -27.2 -46.2

Rice 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0

Others 50 57 43 62 82 64.0

Forest Products 1/ 9 13 21 15 19 111.1

Logs .. 35 -- .. 38 -- 0 0 0 0 0 0 .. 38 -- 0.0 0.0 0.0

Lumber 92 62 6 103 62 6 78 102 8 119 74 9 76 170 13 -17.4 174.2 116.7

Plywood 3 901 2 4 758 3 3 971 3 3 831 3 2 1298 3 -33.3 44.1 50.0

Veneer Sheets/Corestocks 1 48 -- .. 10445 -- 1 189 -- 0 0 0 .. 8760 .. 0.0 18150.0 0.0

Others 1 3 2 -- 0 -100.0

Mineral Products 487 579 522 677 520 6.8

Copper Concentrates 53 1249 66 57 1055 60 38 1565 59 20 744 15 19 1753 34 -64.2 40.4 -48.5

Copper Metal 22 7648 165 1 8379 8 10 7529 72 32 8087 260 12 7981 95 -45.5 4.4 -42.4

Gold 2/ 19 1699 32 413 143 59 5 1530 8 6 1680 10 .. 1478 1 0.0 -13.0 -96.9

Iron Ore Agglomerates 720 23 16 811 31 25 930 28 26 715 26 19 950 27 26 31.9 17.4 62.5

Chromium Ore 41 50 2 30 93 3 31 73 2 19 66 1 19 166 3 -53.7 232.0 50.0

Nickel 0 0 0 0 0 0.0

Others 206 425 354 373 361 75.2

Petroleum Products 124 85 66 190 176 41.9

Manufactures 8819 11014 10781 9152 9267 5.1

Electronic Products 3/ 4696 4419 4399 4317 3902 -16.2

Other electronics 430 684 716 602 585 36.0

Garments 3/ 384 405 299 311 383 -0.4

Textile Yarns/Fabrics 45 45 41 40 43 -4.4

Footwear 3 3 4 5 4 33.3

Travel Goods and Handbags 22 10 6 23 29 31.8

Wood Manufactures 468 416 617 659 699 49.4

Furniture & Fixtures 38 55 42 45 50 31.6

Chemicals 435 630 471 407 751 72.6

Non-Metallic Mineral Manufactures 41 37 34 33 45 9.8

Machinery & Transport Equipment 1036 1559 1757 963 1008 -2.7

Processed Food and Beverages 329 337 303 478 527 60.2

Iron & Steel 47 78 70 58 52 10.6

Baby Carr., Toys, Games & Sporting Goods 43 57 67 71 62 44.2

Basketwork, Wickerwork, & Other

Articles of Plaiting Materials 13 12 6 11 14 7.7

Misc. Manufactured Articles, n.e.s. 122 585 702 125 127 4.1

Others 3/ 666 1682 1359 1007 986 40.0

Special Transactions 3/ 58 20 2 12 3 -94.9

TOTAL EXPORTS 3/ 10323 12671 12247 10958 11128 7.8

Coverage adjustments 3/ 16 22 15 33 24 50.0

TOTAL EXPORTS, BPM6 10339 12693 12262 10991 11152 7.9

.. Less than one thousand metric tons 1/ - Volume in 000 cubic meters; unit price in US$/cu.m.

-- Less than one million US$ 2/ - Volume in 000 troy ounces; unit price in US$/oz t.

p - Preliminary 3/ Excludes value of goods that do not involve change in ownership such as consigned, returned/replacement,

and temporarily exported goods

Note: Components may not add up to total due to rounding. 4/ Prices are derived from the NSO's Foreign Trade Statistics (value/volume), except for gold which is derived

using the IMF's commodity price data sheet.

Q2 Q3 Q4

Growth Rates

Q1 2013Q1

2012 p/

Q1

2013 p/

11b IMPORTS BY MAJOR COMMODITY GROUP

for periods indicated volume in 000 metric tons; unit price

1/ in U.S.$/mt; f.o.b. value in million U.S. dollars; growth rates in percent

Volume Price Value Volume Price Value Volume Price Value Volume Price Value Volume Price Value Volume Price Value

Capital Goods 2863 2959 2672 3254 2658 -7.2

Power Generating & Specialized Machines 876 952 967 997 899 2.6

Office & EDP Machines 524 525 483 423 377 -28.1

Telecommunication Eqpt. & Elect. Mach. 708 613 653 715 726 2.5

Land Transport Eqpt. excl. Passenger Cars & Motorized Cycle 311 309 329 352 323 3.9

Aircraft, Ships & Boats 300 424 71 611 209 -30.3

Prof. Sci. & Cont. Inst.; Photographic Eqpt. & Optical Goods 144 136 169 155 124 -13.9

Raw Materials & Intermediate Goods 6040 6559 6414 6308 5903 -2.3

Unprocessed Raw Materials 669 472 738 886 660 -1.3

Wheat 681 275 187 723 282 204 926 290 268 666 335 223 639 338 216 -6.2 22.9 15.5

Corn 94 378 35 15 1374 20 9 638 6 19 863 16 29 345 10 -69.1 -8.7 -71.4

Unmilled cereals excl. rice & corn 3 3 2 3 2 -33.3

Crude materials, inedible 400 198 432 626 401 0.3

Pulp & waste paper 14 13 9 7 10 -28.6

Cotton 2 2143 4 2 1869 4 2 1711 4 1 1519 2 4 1750 7 100.0 -18.3 75.0

Syn. fibers 9 2345 20 7 2584 19 8 3318 27 7 3034 23 6 2667 16 -33.3 13.7 -20.0

Metalliferous ores 224 7 101 457 238 6.3

Others 138 155 291 137 130 -5.8

Tobacco, unmanufactured 44 47 30 18 31 -29.5

Semi-Processed Raw Materials 5371 6087 5676 5422 5243 -2.4

Feeding stuffs for animals 507 396 201 524 441 231 433 533 230 553 555 306 485 585 284 -4.3 47.7 41.3

Animal & vegetable oils & fats 145 99 77 62 62 -57.2

Chemical 1598 1543 1644 1469 1423 -11.0

Chemical compounds 432 354 411 339 320 -25.9

Medicinal & pharmaceutical chemicals 224 235 242 259 256 14.3

Urea 124 378 47 108 397 43 167 386 64 195 358 70 127 291 37 2.4 -22.9 -21.3

Fertilizer excl. urea 183 343 63 232 345 80 323 353 114 238 340 81 215 326 70 17.5 -5.0 11.1

Artificial resins 428 407 385 325 351 -18.0

Others 404 424 428 394 389 -3.7

Manufactured goods 1272 1341 1245 1284 1355 6.5

Paper & paper products 217 851 185 241 807 195 227 818 186 207 836 173 243 761 185 12.0 -10.6 0.0

Textile yarn, fabrics & made-up articles 157 167 146 168 160 1.9

Non-metallic mineral mftures. 108 138 140 148 155 43.5

Iron & steel 401 893 358 398 879 350 400 800 320 433 785 340 484 754 365 20.7 -15.6 2.0

Non-ferrous metals 185 190 160 155 182 -1.6

Metal products 166 173 162 183 181 9.0

Others 113 128 131 116 127 12.4

Mat/Acc for the mftr. of elect. eqpt. 2156 2804 2480 2282 2119 -1.7

Iron ore, not agglomerated 0 0 0 496 139 69 0 0 0 120 160 19 0 0 0 0.0 0.0 0.0

Mineral Fuels & Lubricant 3870 3159 3428 3209 3176 -17.9

Coal, Coke 1564 93 146 2192 95 209 2007 87 174 2035 83 169 2108 79 166 34.8 -15.1 13.7

Petroleum Crude 2/

24.33 103.34 2514 11.33 116.25 1317 17.42 105.02 1829 16.69 111.37 1859 13.60 113.69 1546 -44.1 10.0 -38.5

Others 2/

9.05 133.69 1209 12.82 127.36 1633 12.09 117.74 1424 9.88 119.59 1181 12.08 121.18 1464 33.5 -9.4 21.1

Consumer Goods 1706 1910 1985 2093 1824 6.9

Durable 820 888 897 1077 914 11.5

Passenger cars & motorized cycle 466 501 483 601 519 11.4

Home appliances 69 81 96 114 99 43.5

Misc. manufactures 285 306 318 362 296 3.9

Non-Durable 886 1022 1088 1015 910 2.7

Food & live animals chiefly for food 812 955 1009 932 813 0.1

Dairy products 75 2671 201 82 2496 204 84 2291 192 80 2062 165 74 2473 183 -1.3 -7.4 -9.0

Fish & fish preparation 62 875 55 55 994 54 52 807 42 71 790 56 70 829 58 12.9 -5.3 5.5

Rice 3/

101 276 28 297 422 126 437 416 182 174 322 56 4 763 3 -96.0 176.4 -89.3

Fruits & vegetables 92 82 75 126 91 -1.1

Others 436 489 518 529 478 9.6

Beverages & tobacco mfture. 18 22 23 23 30 66.7

Articles of apparel, access. 56 45 56 60 67 19.6

Special Transactions 0 25 45 31 12 0.0

TOTAL IMPORTS 4/

14479 14612 14544 14895 13573 -6.3

Coverage Adjustments 647 776 739 797 312 -51.8

TOTAL IMPORTS, BPM6 15126 15388 15283 15692 13885 -8.2

1/ Derived from NSO's value and volume - - Less than one million US dollars

2/ Volume in million barrels; unit price in U.S.$/barrel

3/ Includes rice imporation arrivals which were contracted in the previous year . . Less than one thousand metric tons

4/ Excludes value of goods that do not involve change in ownership such as consigned, returned/replacement, and temporarily imported goods

p/ - Preliminary

Components may not add up to total due to rounding.

Source: National Statistics Office

2013 p/Q1 2013

2012 p/ Growth Rates (%)Commodities Q1 Q2 Q3 Q4 Q1

12 INTERNATIONAL RESERVES

as of periods indicated

in million US dollars

2 0 1 1 2 0 1 2 2013

Mar Jun Sep Dec Mar Jun Sep Dec Mar

Gross International Reserves 65,983 68,996 75,174 75,302 76,129 76,130 82,029 83,831 83,951

Gold 7,080 7,617 7,457 8,013 10,444 9,981 11,043 10,353 9,901

SDRs 1,154 1,165 1,137 1,118 1,298 1,272 1,293 1,288 1,257

Foreign Investments 57,002 59,478 65,710 65,276 63,536 64,035 68,304 70,728 71,325

Foreign Exchange 386 362 423 423 334 323 858 928 944

Reserve Position in the Fund 361 374 447 472 517 519 531 534 524

Net International Reserves 65,970 68,993 75,161 75,300 76,116 76,128 82,016 83,829 83,938

Source: Bangko Sentral ng Pilipinas

13 EXCHANGE RATES OF THE PESO

pesos per unit of foreign currency

period averages

2011 43.3131 0.5436 60.2791 69.4551 34.4567 5.5645 14.1716 1.4219 0.0049 1.4746 0.0391

Jan 44.1722 0.5350 59.0151 69.6606 34.3415 5.6790 14.4303 1.4482 0.0049 1.5183 0.0395

Feb 43.7031 0.5293 59.6914 70.4721 34.2489 5.6109 14.3526 1.4237 0.0049 1.4973 0.0391

Mar 43.5160 0.5335 60.9427 70.3743 34.3116 5.5850 14.3386 1.4333 0.0050 1.4748 0.0388

Apr 43.2402 0.5190 62.3995 70.6571 34.6324 5.5619 14.3268 1.4375 0.0050 1.4866 0.0398

May 43.1307 0.5317 61.8629 70.5236 34.8410 5.5488 14.3417 1.4284 0.0050 1.5014 0.0399

Jun 43.3657 0.5386 62.4391 70.4189 35.1330 5.5726 14.3534 1.4232 0.0051 1.5075 0.0402

Jul 42.8088 0.5389 61.1949 69.0626 35.1642 5.4967 14.2929 1.4211 0.0050 1.4851 0.0404

Aug 42.4209 0.5505 60.7724 69.4325 35.0881 5.4408 14.2280 1.4214 0.0050 1.4650 0.0395

Sep 43.0256 0.5599 59.3496 67.9974 34.4720 5.5202 14.0215 1.4171 0.0049 1.4516 0.0387

Oct 43.4514 0.5669 59.4688 68.3653 33.9693 5.5856 13.8267 1.4070 0.0049 1.4334 0.0376

Nov 43.2745 0.5587 58.6807 68.3853 33.5505 5.5605 13.7269 1.3992 0.0048 1.4318 0.0381

Dec 43.6486 0.5606 57.5321 68.1115 33.7275 5.6121 13.8198 1.4032 0.0048 1.4428 0.0381

2012 42.2288 0.5299 54.3079 66.9249 33.8041 5.4441 13.6818 1.3595 0.0045 1.4282 0.0375

Jan 43.6191 0.5670 56.2828 67.6569 34.0705 5.6185 13.9823 1.3818 0.0048 1.4524 0.0381

Feb 42.6608 0.5448 56.4222 67.4003 34.0289 5.5017 14.1129 1.3882 0.0047 1.4439 0.0380

Mar 42.8574 0.5199 56.6288 67.8338 34.0664 5.5216 14.0931 1.3975 0.0047 1.4523 0.0381

Apr 42.6998 0.5253 56.2914 68.4145 34.1571 5.5012 13.9585 1.3841 0.0047 1.4492 0.0376

May 42.8515 0.5375 54.8780 68.2662 33.9592 5.5199 13.8470 1.3704 0.0046 1.4544 0.0370

Jun 42.7765 0.5397 53.6192 66.5015 33.4579 5.5130 13.4563 1.3518 0.0046 1.4297 0.0367

Jul 41.9054 0.5302 51.5881 65.3765 33.2304 5.4033 13.2341 1.3250 0.0044 1.3981 0.0367

Aug 42.0452 0.5349 52.0961 66.0660 33.7009 5.4213 13.4950 1.3384 0.0044 1.4040 0.0372

Sep 41.7490 0.5341 53.6856 67.2180 33.8922 5.3843 13.5519 1.3467 0.0044 1.4135 0.0371

Oct 41.4521 0.5258 53.7545 66.6237 33.8484 5.3477 13.5689 1.3515 0.0043 1.4173 0.0374

Nov 41.1222 0.5082 52.7036 65.5939 33.6142 5.3060 13.4464 1.3399 0.0043 1.4123 0.0378

Dec 41.0067 0.4914 53.7443 66.1474 33.6230 5.2914 13.4347 1.3388 0.0043 1.4117 0.0381

2013 40.7048 0.4415 53.7888 63.1776 32.9032 5.2487 13.2149 1.3661 0.0042 1.3813 0.0376

Jan 40.7295 0.4580 54.1270 65.0893 33.1823 5.2537 13.4143 1.3549 0.0042 1.4011 0.0382

Feb 40.6723 0.4372 54.3618 63.0701 32.8469 5.2446 13.1338 1.3647 0.0042 1.3727 0.0374

Mar 40.7127 0.4293 52.8776 61.3734 32.6803 5.2477 13.0966 1.3788 0.0042 1.3700 0.0370

Source: Bangko Sentral ng Pilipinas

New Taiwan

Dollar

South Korean

Won

Indonesian

RupiahThailand BahtUS Dollar Japanese Yen Euro Pound Sterling

Singapore

Dollar

Hongkong

Dollar

Malaysian

Ringgit

13a EXCHANGE RATES OF THE PESO

units of foreign currency per peso

period averages

2011 0.0231 1.8411 0.0166 0.0144 0.0290 0.1797 0.0706 0.7033 202.2252 0.6784 25.5615

Jan 0.0226 1.8691 0.0169 0.0144 0.0291 0.1761 0.0693 0.6905 204.0816 0.6586 25.3256

Feb 0.0229 1.8891 0.0168 0.0142 0.0292 0.1782 0.0697 0.7024 204.2901 0.6679 25.5460

Mar 0.0230 1.8742 0.0164 0.0142 0.0291 0.1791 0.0697 0.6977 201.0490 0.6780 25.7588

Apr 0.0231 1.9269 0.0160 0.0142 0.0289 0.1798 0.0698 0.6956 200.2107 0.6727 25.1157

May 0.0232 1.8806 0.0162 0.0142 0.0287 0.1802 0.0697 0.7001 198.1982 0.6661 25.0798

Jun 0.0231 1.8567 0.0160 0.0142 0.0285 0.1794 0.0697 0.7026 196.8135 0.6634 24.8933

Jul 0.0234 1.8557 0.0163 0.0145 0.0284 0.1819 0.0700 0.7037 199.6198 0.6734 24.7292

Aug 0.0236 1.8165 0.0165 0.0144 0.0285 0.1838 0.0703 0.7035 200.0000 0.6826 25.2951

Sep 0.0232 1.7860 0.0168 0.0147 0.0290 0.1812 0.0713 0.7057 202.7650 0.6889 25.8732

Oct 0.0230 1.7641 0.0168 0.0146 0.0294 0.1790 0.0723 0.7107 204.0816 0.6976 26.6241

Nov 0.0231 1.7899 0.0170 0.0146 0.0298 0.1798 0.0728 0.7147 207.8775 0.6984 26.2177

Dec 0.0229 1.7839 0.0174 0.0147 0.0296 0.1782 0.0724 0.7126 207.7151 0.6931 26.2796

2012 0.0237 1.8893 0.0184 0.0149 0.0296 0.1837 0.0731 0.7358 221.5638 0.7003 26.6838

Jan 0.0229 1.7638 0.0178 0.0148 0.0294 0.1780 0.0715 0.7237 207.7151 0.6885 26.2369

Feb 0.0234 1.8355 0.0177 0.0148 0.0294 0.1818 0.0709 0.7204 210.8434 0.6926 26.3125

Mar 0.0233 1.9235 0.0177 0.0147 0.0294 0.1811 0.0710 0.7156 212.9719 0.6886 26.2749

Apr 0.0234 1.9036 0.0178 0.0146 0.0293 0.1818 0.0716 0.7225 214.2857 0.6900 26.6115

May 0.0233 1.8606 0.0182 0.0146 0.0294 0.1812 0.0722 0.7297 215.6863 0.6876 26.9939

Jun 0.0234 1.8528 0.0187 0.0150 0.0299 0.1814 0.0743 0.7398 219.7802 0.6995 27.2480

Jul 0.0239 1.8860 0.0194 0.0153 0.0301 0.1851 0.0756 0.7547 224.9489 0.7153 27.2817

Aug 0.0238 1.8694 0.0192 0.0151 0.0297 0.1845 0.0741 0.7471 227.2727 0.7123 26.9122

Sep 0.0240 1.8722 0.0186 0.0149 0.0295 0.1857 0.0738 0.7425 227.5313 0.7075 26.9397

Oct 0.0241 1.9019 0.0186 0.0150 0.0295 0.1870 0.0737 0.7399 232.3126 0.7056 26.7152

Nov 0.0243 1.9679 0.0190 0.0152 0.0297 0.1885 0.0744 0.7463 232.5581 0.7080 26.4329

Dec 0.0244 2.0350 0.0186 0.0151 0.0297 0.1890 0.0744 0.7469 232.8590 0.7084 26.2467

2013 0.0246 2.2665 0.0186 0.0158 0.0304 0.1905 0.0757 0.7320 237.8384 0.7240 26.6305

Jan 0.0246 2.1833 0.0185 0.0154 0.0301 0.1903 0.0745 0.7381 237.3247 0.7137 26.1531

Feb 0.0246 2.2870 0.0184 0.0159 0.0304 0.1907 0.0761 0.7327 238.0952 0.7285 26.7344

Mar 0.0246 2.3291 0.0189 0.0163 0.0306 0.1906 0.0764 0.7253 238.0952 0.7299 27.0040

Source: Bangko Sentral ng Pilipinas

Hongkong

DollarUS Dollar

Japanese

YenEuro

South

Korean

Won

Malaysian

Ringgit

Thailand

Baht

Indonesian

Rupiah

New Taiwan

Dollar

Pound

Sterling

Singapore

Dollar

13b EFFECTIVE EXCHANGE RATE INDICES OF THE PESO

December 1980 = 100

period averages

Broad 2

Narrow 3

Broad 2

Narrow 3

2011 13.17 40.97 85.56 86.03 143.00 176.21

Jan 13.18 40.86 85.82 85.13 140.89 173.51

Feb 13.22 41.10 86.15 85.82 141.73 174.48

Mar 13.14 40.83 84.95 85.07 141.35 172.94

Apr 13.15 40.56 84.67 85.26 140.23 171.32

May 13.14 40.34 84.07 85.23 141.37 174.99

Jun 13.04 40.18 83.86 84.98 142.07 175.87

Jul 13.20 40.42 84.51 87.28 143.28 177.09

Aug 13.23 40.80 85.06 87.33 144.65 178.23

Sep 13.20 41.15 85.70 86.24 144.10 177.78

Oct 13.10 41.59 86.45 85.83 144.61 178.63

Nov 13.22 41.90 87.61 87.09 146.56 180.10

Dec 13.24 41.93 87.84 87.05 145.23 179.64

2012 13.86 43.66 92.70 91.80 151.89 189.86

Jan 13.32 41.82 87.69 87.57 144.39 178.00

Feb 13.54 42.21 88.59 88.38 144.58 178.25

Mar 13.62 42.40 89.32 88.59 145.34 180.00

Apr 13.64 42.72 90.05 89.30 146.69 180.78

May 13.67 42.96 90.55 89.81 149.54 186.90

Jun 13.79 43.64 92.28 91.03 153.23 191.72

Jul 14.15 44.40 94.25 95.29 157.57 196.30

Aug 14.05 44.26 94.28 94.88 157.59 197.49

Sep 13.95 44.50 95.06 92.89 156.04 197.05

Oct 14.04 44.81 96.16 93.24 155.16 197.05

Nov 14.28 45.05 96.98 95.32 157.01 197.72

Dec 14.30 45.09 97.21 95.32 155.60 197.06

2013 14.69 45.60 98.12 97.88 156.06 195.90

Jan 14.53 45.29 97.69 97.12 156.07 196.64

Feb 14.68 45.73 98.38 97.74 155.87 195.94

Mar 14.87 45.79 98.30 98.79r

156.25r

195.12r

1 US, Japan, European Monetary Union, United Kingdom

2 Singapore, South Korea, Taiwan, Malaysia, Thailand, Indonesia, Hongkong

3 Indonesia, Malaysia, Thailand

r Revised using actual inflation rates

Source: Bangko Sentral ng Pilipinas

N O M I N A L R E A L

Competing Countries Competing CountriesMajor Trading

Partners 1

Major Trading

Partners 1

14 TOTAL EXTERNAL DEBT

as of periods indicated

in million US dollars

Medium & Medium &

Trade Non-Trade Long- Term Trade Non-Trade Long- Term

Grand Total 3,118 5,365 51,855 60,337 2,766 7,020 49,260 59,046

Public Sector - 652 44,523 a

45,175 - 675 42,262 a

42,937

Banks - 652 4,138 4,790 - 675 3,917 4,592

Bangko Sentral ng Pilipinas - - 1,451 1,451 - - 1,424 1,424

Others - 652 2,688 3,339 - 675 2,493 3,168

Non-Banks - - 40,385 40,385 - - 38,344 38,344

CB-BOL - - - - - - - -

NG and Others - - 40,385 40,385 - - 38,344 38,344

Private Sector 3,118 4,713 7,331 15,162 2,766 6,345 6,998 16,109

Banks - 4,525 1,222 5,747 - 6,157 1,234 7,390

Foreign Bank Branches - 788 43 831 b

- 1,423 62 1,485 b

Domestic Banks - 3,737 1,179 4,916 - 4,733 1,172 5,905

Non-Banks 3,118 c

188 6,109 d

9,415 2,766 c

188 5,765 d

8,719

Inclusiona

Cumulative foreign exchange revaluation on US dollar-denominated

multi-currency loans from Asian Development Bank and World Bank

Exclusionsb

Due to Head Office/Branches Abroad accounts of branches and

offshore banking units of foreign banks operating in the Philippinesc

Loans without BSP approval/registrationd

Obligations under various capital lease agreements;

Loans without BSP approval/registration

Source: Bangko Sentral ng Pilipinas

Total

31 March 2012

30 December 2012

Short-termTotal

11,241

61

6,995

253

1,210

31 March 2013

Short-term

30 December 2012

1,214

10,309

862

8,077

125

15 SELECTED FOREIGN DEBT SERVICE INDICATORS

for periods indicated

in million US dollars

2013 p/

Q1 Q2 Q3 Q4 Q1

Debt Service Burden (DSB) 1/

1950 1603 1627 1376 2383

Principal 978 973 690 811 1556

Interest 972 630 937 565 827

Export Shipments (XS) 3/

10339 12692 12262 10991 11152

Exports of Goods and Receipts 20507 22441 22870 22450 21764

from Services and Income (XGSI) 2/ 3/

Current Account Receipts (CAR) 3/

21488 23470 23914 23504 22783

Gross National Income (GNI) 67430 73657 72917 84970 77897

Ratios (%) :

DSB to XS 18.86 12.63 13.27 12.52 21.37

DSB to XGSI 9.51 7.14 7.11 6.13 10.95

DSB to CAR 9.07 6.83 6.80 5.85 10.46

DSB to GNI 2.89 2.18 2.23 1.62 3.06

1Debt service burden represents principal and interest payments after rescheduling. In accordance with the

internationally-accepted concept, debt service burden consists of (a) Principal and interest payments on fixed MLT credits

including IMF credits, loans covered by the Paris Club and Commercial Banks rescheduling, and New Money Facilities;

and (b) Interest payments on fixed and revolving short-term liabilities of banks and non-banks but excludes (i) Prepayments of

future years' maturities of foreign loans and (ii) Principal payments on fixed and revolving ST liabilities of banks and non-banks.2

Includes cash remittances of overseas Filipinos that were coursed through and reported by commercial banks which

are reflected under Compensation of Employees in the income account and workers' remittances in the Current

Transfers account.3

Based on the accounting principle under the Balance of Payments and International Investment Position Manual, Sixth edition (BPM6)p/

Preliminaryr/

Revised to reflect latest data adjustments

Source: BSP

2012

16 SELECTED FOREIGN INTEREST RATES

period averages; in percent

2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

US Prime Rate 3.2500 3.2500 3.2500 3.2500 3.2500 3.2500 3.2500 3.2500 3.2500 3.2500 3.2500 3.2500 3.2500

US Discount Rate 0.6096 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500

US Federal Funds Rate 0.1394 0.1980 0.1996 0.1943 0.1622 0.1015 0.1054 0.0738 0.1141 0.1648 0.1570 0.1722 0.1546

LIBOR (90 days) 0.2521 0.4357 0.3880 0.2929 0.3079 0.2632 0.2978 0.4794 0.5141 0.4663 0.4239 0.3170 0.2917

SIBOR (90 days) 0.2574 0.4399 0.4101 0.3056 0.3119 0.2725 0.3068 0.4854 0.5198 0.4667 0.4287 0.3189 0.2951

Source: Bloomberg, Asian Wall Street Journal, Reuters

2012 2010 2011

17 BALANCE SHEET OF THE BANGKO SENTRAL NG PILIPINAS

as of periods indicated

in billion pesos

Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sepu

Decu\p

Assets 2,580.7 2,752.8 2,823.3 3,195.4 3,331.9 3,459.4 3,768.0 3,787.9 3,727.9 3,684.2 3,889.7 3,975.9

2,580.8 2,752.8 2,823.3 3,195.3 3,331.9 3,459.4 3,768.0 3,787.9 3,727.9 3,684.2 3,889.7 3,975.9

International Reserves 2,059.2 2,255.0 2,354.9 2,721.6 2,848.5 2,975.8 3,273.0 3,286.5 3,248.1 3,202.9 3,408.2 3,424.3

Foreign Exchange Receivable 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Domestic Securities 251.6 251.1 254.9 245.7 243.4 239.9 244.0 240.4 219.0 217.3 220.3 218.1

Loans and Advances 145.1 125.3 116.3 111.9 111.5 106.4 113.0 114.1 115.8 119.4 116.5 118.5

Revaluation of International Reserves 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 64.6

Bank Premises and Other Fixed Assets 12.3 12.5 12.5 12.9 12.8 12.6 13.3 15.4 15.6 16.1 16.3 16.5

Derivative Instruments in a Gain Position 0.1 10.1 0.1 1.3 0.2 0.6 4.0 2.6 0.5 0.3 0.2 1.5

Derivative Asset 0.0 0.0 0.0 0.7 0.7 0.0 0.0

Other Assets 112.4 98.9 84.5 101.9 115.5 124.0 120.8 128.9 128.3 127.4 128.2 132.4

Liabilities 2,351.8 2,529.1 2,619.3 3,024.0 3,199.5 3,338.2 3,632.3 3,647.9 3,606.3 3,582.7 3,815.1 3,911.4

Currency Issue 527.5 503.3 487.5 601.3 521.9 521.4 524.1 648.9 576.2 555.5 559.6 692.7

Deposits 1,524.0 1,577.7 1,716.1 1,973.6 2,321.9 2,360.6 2,630.7 2,466.2 2,630.2 2,657.2 2,851.6 2,854.5

Reserve Deposits of Other Depository Corporations (ODCs) 1

486.9 475.3 497.7 518.8 535.3 579.0 638.5 673.5 680.2 716.6 724.7 782.6

Reserve Deposits of Other Financial Corporations (OFCs) 2

0.4 0.4 0.4 0.4 0.6 0.7 0.6 0.6 0.6 0.3 0.3 0.3

Special Deposit Accounts 3

786.1 835.2 912.3 1,239.1 1,488.9 1,389.2 1,622.1 1,642.7 1,577.1 1,572.3 1,826.3 1,640.1

Treasurer of the Philippines 4

126.7 140.6 193.3 110.1 186.7 310.3 294.0 60.1 293.8 259.7 214.3 340.8

Other Foreign Currency Deposits 28.6 37.2 26.2 19.9 17.0 11.1 1.2 14.5 3.5 23.6 15.8 20.5

Foreign Financial Institutions 51.4 47.0 46.9 41.8 38.3 38.4 44.4 43.0 43.0 40.3 40.3 40.3

Other Deposits 5

44.0 42.1 39.4 43.4 55.2 31.9 29.9 31.9 32.0 44.4 30.0 29.8

Foreign Loans Payable 3.2 3.5 2.6 2.7 1.7 1.8 1.0 1.0 0.1 0.1 0.1 0.1

Net Bonds Payable 32.3 32.5 31.3 21.9 22.2 21.7 22.4 22.0 21.9 21.1 21.3 20.5

Derivative Instruments in a Loss Position 14.8 1.7 25.2 7.0 5.9 3.5 0.4 0.3 3.9 5.8 0.9 0.6

Derivatives Liability 0.1 0.1 0.2 0.0 0.1 0.1 0.1 0.2 0.3 0.3 0.2 0.1

Allocation of SDRs 57.6 57.6 57.3 56.6 57.7 58.2 57.4 56.5 55.7 53.8 53.9 52.9

Revaluation of International Reserves 23.9 137.1 45.0 61.9 26.9 66.7 144.6 145.8 50.7 4.8 38.9 0.0

Reverse Repurchase Agreements 3

159.6 206.8 245.1 285.2 231.4 295.2 241.7 296.0 256.6 274.1 277.8 278.5

Other Liabilities 8.8 8.9 8.9 13.8 9.7 8.9 10.1 11.0 10.7 10.0 10.9 11.5

Net Worth 228.9 223.7 204.1 171.4 132.4 121.2 135.7 140.0 121.6 101.5 74.6 64.5

Capital 10.0 10.0 10.0 10.0 10.0 10.0 10.0 20.0 20.0 20.0 20.0 40.0

Surplus/Reserves 218.9 213.7 194.1 161.4 122.4 111.2 125.7 120.0 101.6 81.5 54.6 24.5

Note: Details may not add up to totals due to rounding.u

Unaudited. Starting with end-December 2005, BSP financial statements have been prepared in compliance with some of the requirements of the Philippine Financial Reporting Standards (PFRS)

and Philippine Accounting Standards (PAS) both of which have been aligned with the International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS). p

Preliminary1

ODCs are deposit generating institutions other than the BSP such as universal and commercial banks (UB/KBs), specialized government banks (SGBs), thrift banks (TBs), rural banks (RBs)

and non-banks with quasi-banking functions (NBQBs).2

OFCs are trust units of banks.3

Includes accrued interest payables.4

Includes foreign currency deposits.5

Mostly GOCC deposits.

Source: Bangko Sentral ng Pilipinas

20122010 2011

18 INCOME POSITION OF THE BANGKO SENTRAL NG PILIPINAS

1

2 Q1 Q2 1

Q3 1

Q4 FY Q1 Q2 1

Q3 1

Q4 FY Q1 Q2 Q3u

Q4u/p

FYu/p

3 2 1 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct

Revenues 26.972 27.593 24.049 34.951 113.565 16.296 25.873 57.695 18.871 118.735 17.223 17.851 15.279 15.376 65.729

Interest Income 11.780 10.472 10.618 10.579 43.449 11.359 11.228 11.105 11.929 45.621 10.485 10.161 10.145 10.125 40.916

International Reserves 7.326 6.178 6.613 6.850 26.967 8.526 8.591 8.267 8.456 33.840 8.202 7.511 7.502 7.598 30.813

Domestic Securities 2.749 2.737 2.773 2.627 10.886 1.654 1.361 1.579 1.152 5.746 0.984 1.206 1.282 1.025 4.497

Loans and Advances 1.143 1.038 0.865 0.852 3.898 0.753 0.750 0.727 1.758 3.988 0.741 0.774 0.791 0.905 3.211

Others 0.562 0.519 0.367 0.250 1.698 0.426 0.526 0.532 0.563 2.047 0.558 0.670 0.570 0.597 2.395

Miscellaneous Income 15.215 17.036 13.305 24.327 69.883 4.973 14.587 46.384 6.813 72.757 6.647 7.539 4.957 5.097 24.240

Net Income from Branches -0.023 0.085 0.126 0.045 0.233 -0.036 0.058 0.206 0.129 0.357 0.091 0.151 0.177 0.154 0.573

Expenses 17.668 19.964 20.745 24.105 82.482 24.319 31.162 31.343 29.144 115.968 28.302 27.115 27.727 27.544 110.688

Interest Expenses 14.418 15.583 16.568 19.503 66.072 20.851 23.507 26.290 24.986 95.634 24.492 22.028 22.793 21.449 90.762

Legal Reserve Deposits of Banks 3.433 3.670 3.642 3.474 14.219 1.966 2.031 2.419 0.428 6.844 1.640 0.697 0.006 0.006 2.348

National Government Deposits 0.660 0.681 0.950 0.925 3.216 0.771 1.289 1.695 1.071 4.826 0.944 1.385 1.331 2.029 5.689

BSP Debt Instruments 2.068 1.786 1.639 2.636 8.129 2.733 2.688 2.733 3.047 11.201 2.443 2.392 2.666 2.519 10.020

Special Deposit Accounts 7.555 8.628 9.594 11.726 37.503 14.600 16.766 18.876 19.914 70.156 18.960 17.051 18.300 16.443 70.755

Loans Payable and Other

Foreign Currency Deposits 0.620 0.674 0.621 0.594 2.509 0.545 0.561 0.548 0.517 2.171 0.483 0.474 0.465 0.450 1.872

Other Liabilities 0.082 0.144 0.122 0.148 0.496 0.236 0.172 0.019 0.009 0.436 0.022 0.029 0.025 0.002 0.078

Cost of Minting/Printing of Currency 0.521 0.714 0.884 1.994 4.113 0.749 1.340 1.354 2.000 5.443 0.951 1.175 1.224 2.218 5.569

Taxes and Licenses 0.632 0.567 0.572 0.754 2.525 0.418 2.932 0.334 0.262 3.946 0.301 0.260 0.272 0.236 1.069

Others 2.097 3.100 2.721 1.854 9.772 2.301 3.383 3.365 1.896 10.945 2.558 3.652 3.438 3.640 13.288

Net Income Before Gain/Loss(-) on FXR Fluctuations,

Provisions for Income Tax and Capital Reserves 9.304 7.629 3.304 10.846 31.083 -8.023 -5.289 26.352 -10.273 2.767 -11.079 -9.264 -12.448 -12.168 -44.959

Gain/Loss(-) on Foreign Exchange Rate Fluctuations 1

-21.859 -12.502 -22.556 -33.201 -90.118 -12.593 -9.227 -14.840 0.436 -36.224 -8.686 -9.567 -17.311 -14.812 -50.376

Provision for Income Tax 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.231 0.231 0.000 0.000 0.000 0.045 0.045

Capital Reserves 0.000

Net Income Available for Distribution -12.555 -4.873 -19.252 -22.355 -59.035 -20.616 -14.516 11.512 -10.068 -33.688 -19.765 -18.831 -29.759 -27.025 -95.380

uUnaudited. Starting with end-December 2005, BSP financial statements have been prepared in compliance with some of the requirements of the Philippine Financial Reporting Standards (PFRS)

and Philippine Accounting Standards (PAS), both of which have been aligned with the International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS). p

Preliminary1

This represents realized gains or losses from fluctuations in FX rates arising from foreign currency-denominated transactions of the BSP, including: 1) rollover/re-investments of matured FX investments

with foreign financial institutions and FX-denominated government securities; 2) servicing of matured FX obligations of the BSP; and 3) maturity of derivatives instruments.

Source: Bangko Sentral ng Pilipinas

for periods indicated

in billion pesos

20122010 2011