Report on Economic and Financial Developments · Report on Economic and Financial Developments ......

Fourth Quarter 2016

B A N G K O S E N T R A L N G P I L I P I N A S

Report on Economic and Financial Developments

ii

Report on Economic and Financial Developments Fourth Quarter 2016

Table of Contents

Executive Summary 1

Introduction 4 Real Sector

Aggregate Supply and Demand 5 Labor and Employment 7

Fiscal Sector

National Government Cash Operations 8

Monetary Sector

Prices 9

Domestic Liquidity 10

Monetary Policy Developments 11

Domestic Interest Rates 12

Financial Sector

Banking System 13

Banking Policies 17

Capital Market Reforms 17

Stock Market 17

Bond Market 19

Credit Risk Assessment 20

Payments and Settlements System 22

External Sector

Balance of Payments 23

International Reserves 26

Exchange Rate 27

External Debt 28

Foreign Interest Rates 30

Global Economic Developments 31

Financial Condition of the BSP

Balance Sheet 33

Income Statement 34

Conclusion, Challenges and Future Policy Directions 35

Annexes

Statistical Tables

Fourth Quarter 2016 Report on Economic and Financial Developments | 1

Executive Summary

The Philippine economy finishes strong in Q4 2016.

The Philippines maintained its strong economic

performance in Q4 2016 with a 6.6 percent Gross

Domestic Product (GDP) growth. This was a

percentage point (ppt) higher than the 6.5 percent

growth recorded in Q4 2015, although this was lower

than the past three quarters’ expansion. On the

expenditure side, household consumption and capital

formation remained as the primary contributors to

output growth. On the production side, the services

and industry sectors continued to bolster domestic

output. The full -year 2016 GDP growth averaged

6.8 percent, which was at the upper end of the

National Government’s (NG) target range of

6.0-7.0 percent for the year. The Philippines

remained one of the fastest-growing economies in

the region, outpacing Malaysia (4.5 percent),

Indonesia (4.9 percent), and Vietnam (6.2 percent).

Employment conditions improve. Preliminary results

of the October 2016 Labor Force Survey showed an

improvement in the country’s labor and employment

conditions. The number of jobless persons declined

by 14.0 percent to 2.0 mill ion from 2.4 mill ion a year

ago, bringing the unemployment rate down to

4.7 percent from 5.6 percent in the previous year.

Additional employment created in October totaled

1.9 mill ion, due largely to the strong growth in the

services and industry sectors. Underemployment

increased slightly to 18.0 percent from 17.6 percent

recorded in the same period in 2015.

National Government spending increases. Cash

operations of the NG yielded a deficit of

P139.7 bil l ion in Q4 2016, higher than the year-ago

shortfall of P96.1 bil l ion. The higher revenue

collections during the period, due mainly to

improved tax collections, were more than offset by

an increase in spending on infrastructure, subsidies

to government-owned and-controlled corporations,

transfers to local government units, as well as

increased maintenance expenditures and higher

outlays for personnel services.

Inflation continues to trend upward. Headline

inflation for Q4 2016 rose to 2.5 percent, faster than

the quarter- and year-ago rates of 2.0 percent and

1.0 percent, respectively. This brought average

inflation for 2016 to 1.8 percent, higher than the

1.4 percent inflation in 2015 but stil l below the NG’s

announced target range of 3.0 percent ± 1.0

percentage point for 2016-2018. The higher inflation

during the review quarter was attributed to the

increase of food and non-food prices. Core inflation,

which excludes certain volatile food and energy

items, also accelerated to 2.5 percent from

2.0 percent in the previous quarter.

Domestic liquidity remains ample. Money supply

expanded by 12.7 percent year-on-year as of

end-December 2016 to P9.5 tril l ion, slightly slower

than the 12.9-percent expansion as of

end-September 2016. The increase in l iquidity during

the review period was driven mainly by the

17.0-percent year-on-year growth in domestic claims

to the economy. Credit extended to the private

sector grew by 16.4 percent, supported by the

sustained growth in bank lending.

The BSP maintains monetary policy settings in

Q4 2016. The Monetary Board decided to maintain

key policy interest rate at 3.0 percent for the

overnight reverse repurchase or RRP facil ity during

its November and December monetary policy

meetings. The reserve requirement ratios were

l ikewise left unchanged. The BSP’s decision to

maintain the key policy rate was based on its

assessment of the dynamics and risks in the inflation

environment over the policy horizon.

2 | Fourth Quarter 2016 Report on Economic and Financial Developments

Domestic interest rates are generally higher.

Primary market interest rates in Q4 2016 rose across

all tenors as investors remained cautious amid

heightened expectation of a US Fed rate hike.

Similarly, secondary market yields of government

securities for all maturities increased as of

end-December 2016 relative to yields as of

end-September 2016. Meanwhile, other market

interest rates showed mixed trends as interbank call

loans, savings deposit, and bank lending rates

declined during the review quarter while time

deposit rates increased.

Philippine banks remain sound and resilient. Total

resources of the banking system reached

P13.9 tril l ion as of end-December 2016, higher by

11.8 percent from the P12.4 tril l ion recorded a year

ago. Bank lending by universal and commercial

banks, net of RRP placements with the BSP, grew by

17.3 percent year-on-year as of end-December 2016,

of which 80.3 percent went to production activities.

Furthermore, gross non-performing loan ratio as of

end-December 2016 improved slightly to 2.0 percent

relative to the previous year’s ratio of 2.2 percent.

Loan exposure remained adequately covered, with

non-performing loan coverage ratio of 119.4 percent

during the review period. Similarly, capital adequacy

slightly improved as of end-September 2016 (latest

available), which stood at 15.4 percent and

16.2 percent on solo and consolidated bases,

respectively, and remained well above the

10.0-percent regulatory threshold of the BSP and

8.0-percent minimum by international standards.

Local stocks trend downward. The Philippine Stock

Exchange index (PSEi) closed 9.3 percent lower

quarter-on-quarter (q-o-q) to average 7,123.3 index

points in Q4 2016 as concerns over global and

domestic developments saw investors remaining on

the sidelines. Philippine equities continued to be

under pressure amid risk-off sentiment ahead of the

US presidential elections and the market’s

knee-jerk reaction to Donald Trump’s election

victory. As of end-December 2016, the PSEi closed at

6,840.64 index points, lower by 10.3 percent,

q-o-q and by 1.6 percent, year-to-date.

Debt spreads reflect shifts in market sentiment. The

country’s 5-year sovereign credit default swap

spread stood at 111 basis points in end-December

2016, lower than the 116 basis points recorded in

end-September 2016. Debt spreads widened in

October and November due to the increased

probability of a Fed rate hike, unpredictability of the

outcome of the US presidential election and after

Donald Trump won over Hillary Clinton in the US

presidential election. However, debt spreads took a

positive turnaround and narrowed in December as

investors appeared upbeat following the Fed rate

hike, which reflected higher growth expectations for

the US economy. Philippines’ credit default swap

traded lower than Indonesia’s (158 basis points) and

Malaysia’s (138 basis points).

The BOP position reverses to deficit. The country’s

balance of payments position registered a deficit of

US$2.1 bil l ion in Q4 2016, a reversal of the US$809

mill ion surplus recorded in Q4 2015. This developed

as the current account reversed to a deficit during

the quarter even as the financial account registered

lower net outflows (or net lending by residents to the

rest of the world). The deficit in the current account

was due mainly to the higher deficit in trade-in-

goods, combined with lower net receipts of services

and primary income.11

Meanwhile, the reduced net

outflows in the financial account was a result of the

substantial increase in net inflows of direct

investments as well as the reversal of portfolio

investments to net inflows from net outflows, which

more than compensated for the higher net outflows

in the other investment account.

Gross international reserves remain ample. The

country’s gross international reserves (GIR) stood at

US$80.7 bil l ion as of end-December 2016, easing

from the record high of US$86.1 bil l ion in

end-September 2016. The end-December GIR level

remains sufficient to cover 9.2 months’ worth of

imports of goods and payments of services and

income. It was also equivalent to 5.8 times the

country’s short-term external debt based on original

maturity and 4.1 times based on residual maturity.

11

Primary Income account (formerly th e Income account) shows the flows for the use of labor and fin ancial resourc es between resid ent and non-resident institut ional units. Secondary Inco me account (formerly the

Current Transfers account) shows current transfers, in c ash or in kind, for nothing in return, between residents and non-residents.


The decline in reserves was due to outflows arising

from payments made by the NG for its maturing

foreign exchange obligations, foreign exchange

operations of the BSP, and revaluation adjustments

on the BSP’s gold holdings and foreign

currency-denominated reserves. These were partially

offset by the NG’s net foreign currency deposits.

External debt remains manageable. The country’s

outstanding external debt as of end- 2016 stood at

US$74.8 bil l ion, lower by US$1.9 bil l ion

(or 2.4 percent) from the end-September 2016 level

of US$76.6 bil l ion. Meanwhile, on a year-on-year

basis, debt stock l ikewise dropped by US$2.7 bil l ion

(or 3.5 percent) from US$77.5 bil l ion a year ago due

net principal repayments by both the public and

private sectors; previous periods’ negative audit

adjustments due to late reporting; and negative FX

revaluation adjustments. However, the full

downward impact of these factors on the debt stock

was partly offset by an increase in non-residents

investments in Philippine debt papers issued

offshore. As of year-end, the maturity profile of the

country’s external debt was comprised mostly of

medium- and long-term obligations implying that FX

requirements for debt servicing remain manageable.

The peso depreciates further in Q4 2016. On a

quarter-on-quarter basis, the peso depreciated by

4.19 percent to average P49.11/US$1 from the

previous quarter’s average of P47.05/US$1. Similarly,

y-on-y, the peso weakened by 4.6 percent relative to

the P46.83/US$1 average in Q4 2015. The weakness

of the peso during the review quarter was due mainly

to a confluence of factors such as the US Fed rate

hike and expectation of more rate increases in 2017,

and investor sentiment related to various changes in

political dynamics around the world.

Global growth modest but remains positive. While

there has been a stronger-than-expected momentum

in growth in advanced economies, an expected

slowdown in some emerging market economies

contributed to the modest growth for the global

economy. Real GDP in the US grew by 1.9 percent

driven primarily by personal expenditure

consumption, private inventory investments,

residential and non-residential fixed investment, and

government spending. Economic activity in the Euro

area likewise expanded by 1.7 percent while Japan

managed to grow by the same rate of 1.7 percent

amid stagnating private demand and weakening yen.

Meanwhile, most emerging market economies in Asia

recorded stronger output growth. China expanded by

6.8 percent, driven by exports and the real estate

sector, as well as supply-side structural reform. The

ASEAN region continued to perform well, most

notably the Philippines, Vietnam, and Indonesia.


Introduction

The Philippine economy remained solid in Q4 2016,

expanding by 6.6 percent. This brought the year-to-

date real GDP growth to 6.8 percent, at the high end

of the National Government’s (NG) growth target of

6.0-7.0 percent in 2016. Expansion in the domestic

economy had been generally broad-based during the

review quarter. On the demand side, household

consumption continued to be upbeat, government

spending increased, and investments remained

strong. On the supply side, services and industry

continued to show strong positive performance.

The sustained strength of the economy was

accompanied by an increase in inflation to

2.5 percent during the review quarter. However,

average headline inflation for the four quarters of

2016 at 1.8 percent remained below the low end of

the NG’s announced target of 3.0 percent ± 1.0

percentage point for 2016-2018.

The Philippine banking system remained solid and

resil ient in Q4 2016. Bank lending continued to

expand, increasing by 17.3 percent during the review

quarter. This was accompanied by improvements in

bank capitalization and loan exposure coverage.

In terms of external payments position, the country’s

external buffers continued to grow, with reserves

amounting to US$80.7 bil l ion as of end-December.

Remittances and receipts from business process

outsourcing continued to support the country’s

external position. At the same time, external debt

remains manageable, with a debt profile composed

largely of medium- to long-term (MLT) maturities.

Given a benign inflation outlook, monetary policy

settings were kept steady in Q4 2016. The BSP’s

decision to maintain key policy interest rates was

based on its assessment that the inflation

environment remained manageable. Moreover, the

continued expansion in domestic l iquidity, which

grew by 12.7 percent as of end-December 2016,

point to monetary conditions being supportive of

economic activity.

Going forward, the Philippine economy stil l faces

uncertainty and challenges coming mainly from the

external environment. However, the country’s solid

macroeconomic fundamentals as well as adequate

policy levers to pursue appropriate and timely

response to shocks are expected to provide impetus

for a sustained economic growth.


Real Sector

Aggregate Supply and Demand

The performance of the Philippine economy in

Q4 2016 remained solid as real Gross Domestic

Product (GDP) grew by 6.6 percent. Albeit lower

than the past three quarters’ growth, the Q4 2016

growth was a percentage point (ppt) higher

compared to the 6.5 percent growth in the same

period in 2015. The slight moderation in Q4 2016

was attributed mainly to the transition of

government, which has prompted investors to take

on a “wait-and-see” attitude in pursuing investments

and expansion plans. The Q4 2016 GDP growth was

also moderated by the negative performance of the

agriculture sector. The full year 2016 growth

averaged 6.8 percent, which was at the upper end of

the target range set by the NG of 6.0 – 7.0 percent

for the year.

Real GDP within the target

The growth drivers on the supply side were the

simultaneous expansion of both the services and

industry sectors backed by the continued strong

performance of real estate, renting and business

activities and the construction and manufacturing

subsectors. On the demand side, growth impetus

emanated from sustained firm household

consumption and consecutive quarters of

double-digit increase in investments.

Chart 1. Gross Domestic Product and Gross National

Income

Annual growth rate in percent; at constant 2000 prices

GDP by industry

The services sector stil l held on to its position as the

primary driver of growth for Q4 2016, as it expanded

by 7.4 percent and contributed 4.1 ppts to the

6.6 percent growth during the review quarter. The

expansion of the services sector was fuelled by the

broadbased positive contribution of its subsectors, in

particular: trade and repair of motor vehicles,

motorcycels, personal and household goods

(1.2 ppts), real estate, renting and business activities

(1.0 ppt), transportation, storage and communication

(0.5 ppts). The services sector benefited largely from

the benign inflation environment, sound financial

system, robust retail trade activities, sustained

remittance inflows from overseas Fil ipinos (OFs) and

continued expansion of the business process

outsourcing (BPO) industry. The latter two have been

largely l inked to the booming performance of the real

estate sector and related activities.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

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

201 4 201 5 201 6

Real GDP Real GNI

Source: Philippine Statistics Authority (PSA)


Chart 2. Gross Domestic Product, by Industry


The industry sector posted the fastest growth among

the three major sectors of the economy in Q4 2016

at 7.6 percent, enabling it to contribute 2.6 ppts to

the GDP outturn during the review quarter. The two

pillars of the industry’s solid performance in Q4 2016

were the manufacturing and construction subsectors

which accounted for 1.7 ppts and 0.7 ppts of the

total 2.6 ppts contribution of the industry sector,

respectively. Among the fastest growing

manufacturing industries in Q4 2016 include the

following: petroleum and other fuel products

(53.8 percent), transport equipment (33.3 percent),

office, accounting and computing machinery

(20.2 percent), machinery and equipment except

electrical (19.1 percent), and rubber and plastic

products (15.8 percent). The construction subsector

was buoyed by the solid numbers from both public

and private construction. The double digit growth in

public construction for the past seven consecutive

quarters was on account of the aggressive stance of

the government in approving and implementing

critical infrastructure projects.

The agriculture, hunting, forestry, and fishing (AHFF)

sector returned to the negative territory as it

contracted by 1.1 percent in Q4 2016, shaving off

0.1 ppt from the 6.6 percent GDP growth during the

review quarter. Contributing to the weak

performance of the sector was the adverse impact on

crops and fisheries output of Typhoons Karen and

Lawin. These typhoons caused the reduction in

yields of major crops, particularly palay (-3.6 percent)

and corn (-0.1 percent) in Q4 2016, which reversed

the recovery posted by both crops in Q3 2016. The

fisheries subsector has l ikewise been stuck in the

negative territory, at an average of -4.0 percent for

the past five successive quarters. Aside from

inclement wheather conditions, other challenges

which confronted the agriculture sector in Q4 2016

included reports of unrealized plantings of various

crops in several provinces in Mindanao due to

inadequate irrigation water.

GDP by expenditure

On the expenditure side, the Q4 2016 GDP outturn

was propelled by the sustained expansion of both

household consumption and capital formation.

Household spending continued to be a significant

driver of domestic demand as it grew by 6.3 percent

during the review quarter, albeit a moderation from

the average growth of 7.2 percent in the past three

consecutive quarters. This was attributed to the

deceleration in purchases of major consumption

items such as food and non-alcoholic beverages

(from 6.5 percent in Q4 2015 to 5.7 percent in

Q4 2016) , clothing and footwear (from 5.2 percent

to -2.4 percent) , and furnishings, household

maintenance (from 4.3 percent to 1.3 percent).

Nonetheless, household consumption contributed

4.6 ppts to the 6.6 percent GDP growth in Q4 2016,

buttressed by the favorable inflation and interest

rate environment, sustained inflow of OF

remittances, as well as improving labor market

conditions. A notable development in Q4 2016 was

the eight quarters of uninterrupted double digit

growth of capital formation at an average of

18.4 percent. Investments contributed 4.0 ppts to the

Q4 2016 output growth, supported mainly by the

robust investments in durable equipment at

26.2 percent. Fixed capital formation continued to

accelerate, boosted by the 23.0 percent expansion in

public construction. Overall, domestic demand

continued to exhibit resil ience but was dragged by

the 3.1 ppts contraction of net exports amid lingering

weak external demand.

-10.0

-5.0

0.0

5.0

10.0

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

201 4 201 5 201 6

Agriculture, Hunting, Forestry and Fish ing

Indu stry

Services

Source: PSA


Chart 3. Gross Domestic Product, by Expenditure


Labor and Employment Labor and employment conditions in the country

have improved based on the preliminary estimates of

the Philippine Statistics Authority’s (PSA’s) Labor

Force Survey in October 2016.12

Employment created

as of the October 2016 survey round reached

1.9 mill ion, bringing the total number of employed

persons to 41.7 mill ion (Table 2). The increase is

attributed mainly to the robust growth of both the

industry and services sectors.

Growth in industry and serv ices

sectors boosts labor market

Employment in the industry sector rose by

13.0 percent, driven by the expansion in the

construction and manufacturing sub-sectors with

additional 630,000 and 185,000 workers,

respectively. Similarly, employment in the services

sector grew by 5.5 percent owing to the additional

490,000 workers in the wholesale and retail trade

and repair of motor vehicles and motorcycles

sub-sector. Meanwhile, employment in the

agriculture sector declined by 1.0 percent with the

number of workers in the Fishing and Aquaculture

subsector decreasing by 123,000. Of the total

employed persons, 54.9 percent were in the services

sector, 27.9 percent in the agriculture sector, and

17.2 percent in the industry sector.

12

October 2016 LFS released on 13 December 2016 includes Leyte.

By class of workers, the number of wage and salary

workers increased by 7.4 percent, boosted by the

additional 1.7 million employed in private

establishments. On the contrary, the number of

workers employed in government/government

corporations decreased by 1.4 percent. In terms of

employment, those who worked on a full-time basis

rose by 6.0 percent or 1.6 mill ion workers while

those who worked part-time grew by 2.0 percent or

269,000 workers.

The number of jobless persons dropped by

14.0 percent to 2.0 mill ion from 2.4 mill ion in the

previous year, bringing the unemployment rate down

to 4.7 percent from 5.6 percent during the same

period a year ago. A large number of unemployed

persons were men (1.3 mill ion), 15-24 years of age

(971,000), and with high school education (887,000).

During the reference period, the underemployment13

rate rose to 18.0 percent from 17.6 percent.

Chart 4. Unemployment and Underemployment

Rates In percent

The labor force participation rate14

in October 2016

was at 63.6 percent, higher than previous year’s

63.3 percent, due possibly to the faster growth in the

number of persons in the labor force compared to

the growth of household population 15 years old and

above.

13

Underemployment covers all employed persons who desire to have additional hours of work or additional job, or have a new job with longer

working hours. During the reference period, the underemployed persons are those who work for less than 40 hours. 14

Labor Force Participation Rate is computed by dividing the total number

of persons in the labor force by the total population 15 years old and above.

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

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

201 4 201 5 201 6

Hou sehold Final Consumption Expenditure

Government Final Consumption Expenditure

Capital Formation

Source: PSA

15

16

17

18

19

20

21

22

23

24

4.0

5.0

6.0

7.0

8.0

JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL OCT

2014 2015 2016

Unemployment Rate (LHS)

Underemployment Rate (RHS)

Source: Labor Force Survey (LFS) - PSA


The PSA also conducted the quarterly Labor Turnover

Survey (LTS)15

that aims to capture “job creations”

and “job displacements” in business enterprises in

Metro Manila.

LTS results in the National Capital Region (NCR)

showed that employment grew in Q3 2016 with the

labor turnover rate16

at 3.7 percent, higher than the

2.3 percent recorded a quarter ago. The accession

rate of 14.1 percent exceeded the total separation

rate of 10.4 percent, i .e., additional 141 workers per

1,000 were newly hired to the enterprise workforce

due to expansion or replacement; while 104 workers

per 1,000 were terminated or quit their jobs.

Employment gains were noted in the industry and

service sectors, while employment losses were

registered in the agriculture sector.

Fiscal Sector

National Government Cash

Operations

The cash operations of the NG yielded a deficit of

P139.7 bil l ion in Q4 2016, higher than the year-ago

level of P96.1 bil l ion. As a percent of GDP, the NG’s

cash position accounted for -3.4 percent in Q4 2016,

an increase from the year-ago level of -2.6 percent,

primarily due to the increase in government

expenditures.

NG cash operations yield a

higher deficit

Total revenues for the period reached P549.2 bil l ion,

higher than the year-ago level of P504.0 bil l ion. The

y-o-y increase in revenues was due mainly to

improved collections by the Bureau of Internal

Revenue (BIR) and Bureau of Customs (BOC).

However, total revenues as a percentage of GDP is

15

Released in 31 January 2017 16

Labor turnover rate is the percent difference between accession rate and

separation rate.

recorded at 13.4 percent in Q4 2016, similar to the

comparable ratio in 2015. Tax collections, which

constituted 92.4 percent of total revenues,

amounted to P507.7 bil l ion, 10.4 percent higher than

the year-ago level. Meanwhile, non-tax revenues,

which consisted mainly of collections made by the

Bureau of the Treasury (BTr), decreased by

6.3 percent y-o-y.

Meanwhile, total expenditures in Q4 2016 reached

P688.9 bil l ion, 14.8 percent higher than the

P600.1 bil l ion expenditures in the same period in

Q4 2015. Total disbursements as a percent of GDP is

recorded at 16.8 percent in Q4 2016. The upbeat

spending performance was on account mainly of the

large double-digit growth rates in infrastructure

spending, subsidies to government-owned and –

controlled corporations (GOCCs) and transfers to

local government units (LGUs), as well as increased

maintenance expenditures and higher outlays for

personnel services.

Netting out the interest payments from the expenditures, the resulting primary balance amounted to a deficit of P85.0 bill ion, representing -

2.1 percent of GDP in the review quarter.

The NG made net availments in Q4 2016 amounting

to P0.5 bil l ion, 97.0 percent lower than the availment

of P16.7 bil l ion in Q4 2015. The net availments came

mainly from domestic borrowings, which covered

75.5 percent of the total financing requirement of

the NG.

Fiscal discipline has generated sufficient fiscal space

which can be allocated to accelerate infrastructure

development. The need to address infrastructure

gaps is a top priority for the country to increase

productive capacity and competitiveness. The

government plans to pursue massive buildup in

infrastructure and increase infrastructure spending

to 5.3 percent of GDP in 2017.


Chart 5. Cash Operations of the National

Government In bi llion pesos

Monetary Sector

Prices

Headline Inflation. Inflation had been on a generally

upward path throughout 2016, with inflation in

Q4 2016 rising to 2.5 percent from 2.0 percent in the

previous quarter (Table 4) as both food and

non-food inflation in the Philippines accelerated in

Q4 2016. This brought the average headline inflation

for the full year 2016 to 1.8 percent, higher than the

1.4 percent in 2015 but remained below the NG’s

target range of 3.0 percent ± 1.0 ppt.

Supply-related inflationary

pressures continue to drive

headline inflation higher in Q4

2016

Core Inflation. Core inflation, which excludes certain

volatile food and energy items, also increased to

2.5 percent from 2.0 percent in the previous quarter.

On the other hand, the three alternative measures of

core inflation computed by the BSP showed mixed

trends. In particular, the net of volatile items

increased to 2.0 percent in Q4 2016 from 1.7 percent

while the trimmed mean was steady during the

quarter at 1.8 percent. By contrast, weighted median

dropped slightly to 2.0 percent in Q4 2016 from

2.1 percent in the previous quarter.

Table A. Alternative Core Inflation Measures Quarterly average of year-on-year changes

Food inflation rose to 3.6 percent in Q4 2016 from

2.8 percent in the previous quarter as prices of most

food items went up with the onset of the holiday

season and tighter supply triggered by recent

weather-related production disruptions. Specific

food items that posted higher inflation in Q4 2016

include fish, fruits, vegetables as well as oils and fats.

Meanwhile, rice prices also increased during the

quarter due mainly to l imited supply from major rice-

producing regions with the end of harvest season.

Non-food inflation increased to 1.5 percent in

Q4 2016 from 1.2 percent in the previous quarter

owing to price increases of energy-related CPI

commodities. In particular, higher international crude

oil prices led to upward adjustments in prices of

domestic petroleum products, contributing to the

increase in non-food inflation for the month.

Likewise, transport services increased due to higher

travel fares with the onset of the holiday season.

-200 .0

-100 .0

0.0

100.0

200 .0

300 .0

400.0

500 .0

600 .0

700 .0

800 .0

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

201 4 201 5 201 6

Revenues Expenditures Surplu s/Deficit (-)

Source: Bureau of the Treasury

Quarter

Official

Headline

Inflation

Official Core

Inflation

Trimmed

Mean 1

Weighted

Median 2

Net of

Volatile

Items 3

2014 4.1 3.0 3.5 2.9 2.6

Q1 4.1 3.0 3.3 2.6 2.8

Q2 4.4 3.0 3.6 3.2 2.6

Q3 4.7 3.3 3.8 3.1 2.8

Q4 3.6 2.7 3.3 2.7 2.4

2015 1.4 2.1 1.9 1.9 1.8

Q1 2.5 2.5 3.0 3.0 2.3

Q2 1.7 2.2 2.1 2.2 1.9

Q3 0.6 1.6 1.3 1.2 1.5

Q4 1.0 1.8 1.3 1.3 1.5

2016 1.8 1.9 1.6 1.8 1.6

Q1 1.1 1.6 1.2 1.3 1.3

Q2 1.5 1.7 1.5 1.7 1.3

Q3 2.0 2.0 1.8 2.1 1.7

Q4 2.5 2.5 1.8 2.0 2.01

The trimmed mean represents the average inflation rate of the (weighted) middle 70 percentin a lowest-to-highest ranking of year-on-year inflation rates for a l l CPI components .2 The weighted median represents the middle inflation rate (corresponding to a cumulative CPIweight of 50 percent) in a lowest-to-highest ranking of year-on-year inflation rates .3 The net of volati le i tems method excludes the fol lowing i tems: bread and cereals , meat, fi sh,frui t, vegetables , gas , sol id fuels , fuels and lubricants for personal transport equipment, and

passenger transport by road, which represents 39.0 percent of a l l i tems. The series has been

recomputed us ing a new methodology that i s a l igned with PSA's method of computing the

officia l core inflation, which re-weights remaining i tems to comprise 100 percent of the core

basket after excluding non-core i tems. The previous methodology reta ined the weights of

volati le i tems in the CPI basket whi le keeping their indices constant at 100.0 from month to month.

Source: PSA, BSP estimates


Chart 6. Food and Non-Food Inflation in the Philippines (2006=100) In percent

Meanwhile, inflation for health as well as restaurants

and miscellaneous goods and services also posted

lower inflation rates in Q4 2016 but not enough to

offset the increase in inflation for housing, water,

electricity, gas and other fuels, as well as transport.

In terms of geographical location, inflation in the

NCR rose to 2.3 percent in Q4 2016 from 1.4 percent

in the previous quarter (Table 4A). Higher food

inflation in NCR can be traced mainly to rising

inflation of heavily weighted food items such as rice,

fruits, and vegetables. At the same time, inflation for

milk, cheese, and eggs as well as oils and fats were

also higher.

Likewise, non-food inflation increased to 0.7 percent

in Q4 2016 from 0.2 percent in the previous quarter

as transport inflation accelerated due to the

adjustments in domestic petroleum prices, largely

influenced by the higher international price of crude

oil. Meanwhile, inflation for electricity, gas, and

other fuels remained negative albeit less so

compared to the previous quarter.

Inflation in areas outside NCR (AONCR) increased to

2.5 percent (from 2.1 percent) as prices of both food

and non-food items went up (Table 4B). Food

inflation increased to 3.1 percent from 2.6 percent in

the previous quarter on higher prices of most food

items namely, rice, fish, fruits, vegetables, sugar, as

well as milk, fish, and eggs.

Non-food inflation in AONCR continued to increase

in Q4 2016 at 1.9 percent (from 1.6 percent) as

inflation for electricity, gas, and other fuels turned

positive during the quarter at 0.5 percent after

declining for eight consecutive quarters since

Q4 2014. Meanwhile, higher prices of domestic

pump prices as well as services relating to transport

and maintenance of dwelling l ikewise contributed to

the increase in non-food inflation.

Chart 7. Inflation Rate (2006=100) in percent

Domestic Liquidity17

Money supply or M3 grew by 12.7 percent y-o-y as of

end-December 2016 to P9.5 tril l ion, slightly slower

than the 12.9-percent expansion as of

end-September 2016 (Table 5). The increase in

M3 was driven largely by the 17.0-percent y-o-y

growth in domestic claims or credits to the economy

in December 2016. Credits extended to the private

sector grew by 16.4 percent, supported by the

sustained increase in bank lending. Meanwhile, net

claims on the central government rose by

27.6 percent as a result of the continued withdrawal

by the NG of its deposits with the BSP as part of NG

cash operations.

17

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.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

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

201 4 201 5 201 6

Headline Inflation

Food Inflation

Non-Food Inflation

Source: PSA

0.0

1.0

2.0

3.0

4.0

5.0

6.0

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

201 4 201 5 201 6

Philippines

National Capital Region

Areas Outside the Nat ional Capital Region

Source: PSA


Table B. Domestic Liquidity (M3)

Levels (in billion pesos) Growth Rates (in %)

Particulars Dec-16 Sep-16 Dec-15 Quarter-

on-

Quarter

Year-on-

Year

Domestic Liquidity

(M3),

9,497.90 8,860.70 8,429.90 7.2 12.7

of which:

Net Foreign Assets 4,309.00 4,498.80 3,998.80 -4.2 7.8

Domestic Claims 9,193.60 8,603.20 7,861.00 6.9 17

of which:

Net Claims on

Central Government

1,607.50 1,485.40 1,261.70 8.2 27.4

Claims on the

Private Sector

6,475.00 6,034.80 5,564.20 7.3 16.4

Net foreign assets (NFA) in peso terms rose by

7.8 percent y-o-y in December 2016. The BSP’s NFA

position continued to expand during the month on

the back of robust foreign exchange inflows coming

mainly from overseas Fil ipinos’ remittances and

business process outsourcing receipts. Likewise, the

NFA of banks increased due mainly to the growth in

banks’ foreign assets resulting from higher interbank

loans, deposits with other banks, and investments in

marketable debt securities.

Meanwhile, the growth of M4, a broader concept of

domestic l iquidity comprising broad money liabilities

and foreign currency deposits of residents,

accelerated to 13.3 percent y-o-y in December 2016

compared to the 12.1-percent growth in September

2016.

Monetary Policy Developments

During its monetary policy meetings in 10 November

and 22 December, the BSP decided to maintain its

key policy interest rate at 3.0 percent for the

overnight reverse repurchase or RRP facil ity. The

corresponding interest rates on the overnight lending

and deposit facil ities were also kept steady. The

reserve requirement ratios were likewise left

unchanged.

The BSP maintains monetary

policy settings in Q4 2016

The BSP’s decision was based on its assessment of

the dynamics and risks in the inflation environment

over the policy horizon. Latest forecasts continue to

indicate that average inflation would likely settle

below the target range of 3.0 percent ± 1 for 2016

and return gradually to a path consistent with the

inflation target in 2017-2018 due to higher oil prices

and strong domestic economic activity. The overall

balance of risks surrounding the inflation outlook

also remains ti lted to the upside, owing partly to the

pending petitions for adjustments in electricity rates

as well as the initial impact of the government’s

broad fiscal reform program. Meanwhile, increased

uncertainty in global economic prospects continues

to pose a key downside risk to the inflation outlook.

Nevertheless, inflation expectations remain broadly

consistent with the inflation target over the policy

horizon.

At the same time, the BSP also emphasized that

domestic demand conditions are l ikely to stay firm,

supported by solid private household spending,

higher government expenditure, and adequate

domestic l iquidity amid modest and uneven global

economic growth. In addition, the BSP has

considered the potential impact of the ongoing

monetary policy adjustment in the US on global

financial market conditions.

Chart 8. BSP Policy Rates In percent

0

1

2

3

4

5

6

7

Jan

201

4Fe

bM

arA

pr

May Jun

Jul

Au

gSe

pO

ctN

ov

Dec

Jan

201

5Fe

bM

arA

pr

May Jun

Jul

Au

gSe

pO

ctN

ov

Dec

Jan

201

6Fe

bM

arA

pr

May Jun

Jul

Au

gSe

pO

ctN

ov

Dec

Overnight RRP Rate

Overnight RP Rate

SDA Rate/Overnight Depos it Facility Rate*

* On 3 June 2016, Special Deposit Accounts (SDAs) were replaced by the Overnight Deposit Facility (ODF) in line with the implementation of the Interest Rate Corridor (IRC) System.

Source: BSP


Given these considerations, the BSP was of the view

that prevailing monetary policy settings remain

appropriate. The BSP noted that maintaining

monetary policy settings at this juncture will give the

BSP more time to assess evolving economic

developmens and calibrate its policy tools as

appropriate. Going forward, the BSP will continue to

monitor emerging price and output conditions to

ensure price and financial stability conducive to

sustained economic growth.

Domestic Interest Rates

The primary market rates of the 91-day, 182-day, and

364-day treasury bil ls (T-bil l) increased in Q4 2016 by

2.4 bps, 23.7 bps and 20.1 bps relative to Q3 2016,

to settle at 1.4 percent, 1.7 percent and 1.9 percent,

respectively. The primary market rates rose as

investors remained cautious amid heightened

expectation of a US Fed hike by the end of the year.

Primary market interest rates rise

across all tenors

Similarly, the secondary market yields of government

securities (GS) for all maturities increased as of

end-December 2016 relative to yields as of

end-September 2016. The yields of all actively traded

tenors climbed by at least 22.5 bps (3-year) to at

most 165.3 bps (6-month), after the US Fed hiked

its policy rate in the last FOMC meeting for 2016.

Yields of secondary market GS

rise

Chart 9. Yield Curve of Government Securities

In percent

Domestic market interest rates showed mixed

trends. The interbank call loans, savings deposit and

bank lending rates were lower in Q4 2016 by 1.7 bps,

3.0 bps and 5.5 bps, respectively. Meanwhile, the

time deposit rate was higher by 13.2 bps.

Other market interest rates

show mixed trends

During its monetary policy meetings on

10 November and 22 December 2016, the Monetary

Board (MB) kept the interest rate on the BSP’s

overnight RRP facil ity at 3.0 percent. The

corresponding interest rates on the overnight lending

and deposit facil ities were also kept steady at

3.5 percent and 2.5 percent, respectively. The

reserve requirement ratios were likewise left

unchanged at 20 percent. Meanwhile, the interest

rates on the 7-day and the 28-day term deposit

facil ities (TDF) rose by 28.8 bps and 39.4 bps to settle

at 2.8 percent and 2.9 percent as of Q4 2016,

due to seasonal demand for more liquid assets as

well as market expectations of further policy rate

hikes by the US Federal Reserve.

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

Q4 2015 Q1 2016 Q2 2016

Q3 2016 Q4 2016

Source: BSP-Department of Economic Statistics (DES)


BSP’s policy rate and reserve

requirement ratio remain

steady

The MB’s decision was based on its assessment that

inflation continues to be manageable over the policy

horizon. Headline inflation is projected to settle

slightly below the lower edge of the 3.0 percent ±

1.0 ppt target range for 2016. However, inflation is

expected to gradually return to the target band in

2017 and 2018. The overall balance of risks

surrounding the inflation outlook remains ti lted to

the upside, coming from the pending petitions for

adjustments in electricity rates along with the

government’s fiscal reform program. Slower global

economic activity poses as the main downside risk to

inflation.

The differentials (gross and net of tax) between the

domestic and US interest rates narrowed in Q4 2016

relative to Q3 2016. The lower interest rate

differential can be traced to the 14.2 bps gain in

90-day LIBOR, and a 9.1 bps gain in average

US 90-day T-bil l rate relative to a much smaller

2.4 bps increase in RP 91-day T-bil l rate. Foreign

interest rates generally rose following the release of

upbeat US data on GDP, manufacturing activity,

services sector, home and retail sales, and corporate

earnings.

Adjusted for risk premium,

interest rate differentials narrow

The positive differential between the BSP's policy

interest rate (overnight borrowing or RRP rate) and

the US Federal Funds target fell to 225 bps as of

end-December 2016, given the 25 bps increase in the

US Federal Funds rate against the unchanged BSP

policy rate. Compared to its September 2016 value,

the risk-adjusted spread between the two policy

rates narrowed further to 145 bps in December 2016

due to a 1 bp decline in risk premium (measured as

the difference between the 10-year ROP and the

10-year US note). The lower risk premium was due to

an 86.0 bps increase in the yields of the 10-year US

Treasury note relative to smaller 84.8 bps increase in

the yields of 10-year ROP note.

Financial Sector

Banking System

Financial Sector

The Philippine banking system remained resil ient in

supporting long-term economic growth and stable

financial condition. During the review quarter,

banks’ balance sheets exhibited steady growth in

assets and deposits. Furthermore, asset quality

indicators improved while capital adequacy ratios

remained above international standards, even with

the implementation of the tighter Basel III

framework.

Philippine banking system posts

steady growth in assets and

deposits

Banks continued to dominate the financi al sector,

with universal and commercial banks (U/KBs)

accounting for 90 percent of total banks’ assets. In

terms of the number of head offices and

branches/agencies, non-bank financial intermediaries

remained to have the widest physical network,

consisting mainly of pawnshops.

Performance of the Banking System

Market Size

The number of banking institutions (head offices)

decreased to 613 offices as of end-September 2016

from the levels recorded as of the previous year at

634 offices and as of the previous quarter at

618 offices. This indicated continued consolidation of

banks as well as the exit of weaker players in the

banking system.


Number of banks declines but

operating network expands

By banking classification, banks (head offices)

consisted of 41 U/KBs, 64 thrift banks (TBs), and

508 rural banks (RBs). Meanwhile, the operating

network (head offices and branches/agencies) of the

banking system expanded to 11,024 offices in

end-September 2016 from 10,538 offices during the

same period in the previous year and 10,936 offices

in end-June 2016, due mainly to the increase in the

branches/agencies of U/KBs, TBs and RBs.

The total resources of the banking system grew by

11.8 percent to P13.9 tril l ion as of end-December

2016 from the level of P12.4 tril l ion as of

end-December 2015, and by 5.8 percent from

P13.1 tril l ion as of the previous quarter. As a percent

of GDP, total resources stood at 96.0 percent as of

end-December 2016.

Chart 10. Total Resources of the Banking System

Levels in trillion pesos; share in percent

Savings Mobilization

Savings and demand deposits remained the primary

sources of funds for the banking system.

Demand, sav ings and time

deposits increase

Banks’ total deposits18

as of end-December 2016

amounted to P8.2 tril l ion, 12.6 percent and

6.0 percent higher than the year- and quarter-ago

level, respectively.

18

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

On a quarterly basis, demand, savings, and time

deposits expanded by 4.0 percent, 4.9 percent, and

10.7 percent, respectively. Likewise, foreign currency

deposits owned by residents (FCD-Residents)

increased by 6.4 percent to P1.7 tril l ion, q-o-q.19

Chart 11. Deposit Liabilities of Banks

In bi llion pesos

Bank Lending Operations

Outstanding loans of UKBs as of end-December

2016, net of banks' RRP placements with the BSP,

grew by 17.3 percent y-o-y. Similarly, bank lending

inclusive of RRPs increased by 16.1 percent y-o-y.

Bank lending sustains y-o-y

growth

Loans for production activities, which comprised

89.3 percent of UKBs’ aggregate loan portfolio

(net of RRPs), expanded by 16.9 percent in

end-December 2016, y-o-y.

19

FCD-Residents, along with M3, forms part of a money supply measure called M4. M ean while, M3 consists of savings deposits, time deposits,

demand deposits, currency in circulation, and deposit substitutes.

0.00

20.00

40.00

60.00

80.00

100.00

120.00

0.0

5.0

10.0

15.0

Mar Sep Mar Sep Mar Sep Mar Sep Mar Sep

Total Resources (LHS) as % of GDP (RHS)

2 2012 2013 2014 2015 2016

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

7,000.0

8,000.0

Ma

r

Jun

Sep

De

c

Ma

r

Jun

Sep

De

c

Ma

r

Jun

Sep

De

c

Ma

r

Jun

Sep

De

c

Ma

r

Jun

Sep

De

c

Demand Savings Time

2012 2013 2014 2015 2016


Chart 12. Loans Outstanding of Commercial Banks (Gross of RRPs) In tri l lion pesos

The growth in production loans was driven primarily

by increased lending to the following sectors:

information and communication (41.0 percent); real

estate activities (20.0 percent); electricity, gas,

steam and airconditioning supply (19.6 percent);

financial and insurance activities (17.2 percent);

wholesale and retail trade, repair of motor vehicles

and motorcycles (12.7 percent); and manufacturing

(6.1 percent). Bank lending to other sectors also

increased except in the case of public administration

and defense, compulsory social security

(-7.1 percent); mining and quarrying (-5.7 percent);

and water supply, sewerage, waste management

and remediation activities (-0.5 percent).

Loans for household consumption also increased by

23.4 percent due to the sustained growth in credit

card loans, motor vehicle loans and salary-based

general-purpose loans, offsetting the decline in other

types of household loans.

Credit Card Receivables

The combined credit card receivables (CCRs) of the

banking system as of end-September 2016, inclusive

of credit card subsidiaries, increased by 9.3 percent

to P183.1 bil l ion y-o-y, and by 2.1 percent q-o-q.

Credit card receivables

continue to rise

Meanwhile, the ratio of CCRs to the total loan

portfolio (TLP) slightly decreased to 2.74 percent as

of end-September, relative to the year- and

quarter-ago ratios of 2.91 percent and 2.78 percent,

respectively. In terms of loan quality, the ratio of

non-performing CCRs to total CCRs improved as it fell

to 6.24 percent from 8.00 percent and 6.42 percent

posted at end-September 2015 and end-June 2016,

respectively.

Motor Vehicle Loans20

As of end-September 2016, the banking system’s

combined motor vehicle loans (MVLs), inclusive of

non-bank subsidiaries, increased by 28.5 percent to

P364.3 bil l ion as of end-September 2016 from

P283.6 bil l ion as of a year ago and by 5.1 percent a

quarter ago.

Motor vehicle loans maintain

strong growth

Consumers’ strong demand for passenger cars and

commercial vehicles, the introduction of new and

refreshed models, appropriate product mix, as well

as flexible financing schemes from banks and other

car financing firms helped sustain the rise in vehicle

purchases. The share of total MVLs to TLP, exclusive

of interbank loans, increased to 5.46 percent from

the previous year and previous quarter’s ratios of

4.93 percent and 5.36 percent, respectively. In terms

of loan quality, the ratio of non-performing MVLs to

total MVLs improved to 4.34 percent from the

year-ago ratio of 4.79 percent and the quarter-ago

ratio of 4.77 percent.

Salary-Based General-Purpose Consumption Loans21

The banking system’s Salary-Based General-Purpose

Consumption Loans (SBGPCL), inclusive of non-bank

subsidiaries, increased by 37.9 percent to

P134.1 bil l ion as of end-September 2016 from the

year-ago level of P97.2 bil l ion and by 9.8 percent

from the quarter-ago level of P122.2 bil l ion. 22

20

Renamed effective September 2015 (formerly Auto Loans) 21

Formerly Salary Loans 22

Data collection started with June 2014 data.

0

1

2

3

4

5

6

7

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

2012 2013 2014 2015 2016


Salary loans are on the uptrend

The share of total SBGPCLs to TLP increased to

2.01 percent from 1.69 percent 1.89 percent

registered a year- and quarter-ago, respectively. In

terms of loan quality, the ratio of non-performing

SBGPCLs to total SBGPCLs decreased to 4.07 percent

relative to the end-September 2015 ratio of

4.20 percent and the previous quarter ratio of

4.46 percent.

Residential Real Estate Loans

As of end-September 2016, the total residential real

estate loans (RRELs) of the banking system grew by

18.0 percent to P496.8 bil l ion from P420.9 bil l ion a

year-ago, and by 4.5 percent from P475.6 bil l ion a

quarter ago.

Residential real estate loans

sustain growth

Sustained household investments in residential

properties, the slow rise in the cost of construction

materials, the increase in the number of projects

unveiled by real estate developers as well as banks’

intensified promotional campaigns supported the

growth in real estate purchases during the review

period. Total RRELs to TLP increased to 7.44 percent

from the previous year’s and quarter’s ratios of

7.31 percent and 7.36 percent, respectively. In terms

of loan quality, the non-performing RRELs declined to

2.84 percent from 3.08 percent and 2.94 percent

registered a year and a quarter ago, respectively.

Asset Quality and Capital Adequacy

The Philippine banking system’s gross

non-performing loan (GNPL) ratio improved to

1.96 percent as of end-December 2016 relative to the

previous year’s and quarter’s ratios of 2.15 percent

and 2.19 percent, respectively, due mainly to the

expansion in the banking system’s TLP from

P6.3 bil l ion a year ago.23

23

For comparative purpos es, computations for periods prior to Janu ary 2013 are align ed with Circular No. 772. Certain ratios were round ed-off to the

nearest hundredths to show marginal movements.

Chart 13. Ratio of Gross NPLs and Net NPLs to Total Loans of the Banking System In percent

Banks’ initiatives to improve their asset quality along

with prudent lending regulations helped maintain the

GNPL ratio below its pre-Asian crisis level of

3.5 percent.24

Similarly, the net non-performing loan

(NNPL) ratio declined to 0.57 percent as of

end-December 2016 relative to the previous year’s

ratio of 0.64 percent and the previous quarter’s ratio

of 0.74 percent. In computing for the NNPLs, specific

allowances for credit losses on TLP are deducted

from the GNPLs, said allowances increased to

P101.1 mill ion in end-December 2016 from

P98.6 mill ion posted a quarter ago.25

The Philippine banking system’s GNPL ratio of

1.96 percent was higher relative to that of Malaysia

(1.20 percent) and South Korea (1.71 percent) but

lower than that of Thailand (2.83 percent) and

Indonesia (3.03 percent).26

The loan exposures of banks remained adequately

covered as the banking system registered an NPL

coverage ratio of 119.4 percent as of end-December

2016 from 118.4 percent registered a year ago and

113.5 percent a quarter ago.

The capital adequacy ratio (CAR) of universal and

commercial banks (U/KBs) at end-September 2016

improved slightly to 15.40 percent on solo basis,

relative to the previous quarter ratio of

24

The 3.5 percent NPL ratio was based on the pre-2013 definition. 25

This typ e of pro visioning applies to loan accounts classified under loans

especially mention ed (LEM), substandard-secured loans, substandard-unsecured loans, doubtful accounts and loans considered as loss accounts. 26

Sources: M alaysia (Banking System’s Impairment ratio (net of imp airment

provisions, Q4 2016); South Korea (Domestic Banks’ Substandard o r Below Loans [SBLs] ratio, Q3 2016); Thai land (Total Fin ancial Institutions’ Gross NPLs ratio, Q4 2016); and Indonesia, IMF and fin ancial stabil ity reports

(Banks’ Nonperforming Loans to Gross Loans Ratio, Q3 2016).

0.000

0.500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

0.000

0.200

0.400

0.600

0.800

1.000

1.200

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

Net NPLs/Total Loans (RHS)

Gross NPLs/Total Loans (LHS)

2012 2013 2014 2015 2016


15.37 percent. Likewise, the CAR on a consolidated

basis, increased slightly to 16.15 percent from the

quarter ago ratio of 16.12 percent. These figures

were well above the BSP regulatory threshold of

10.0 percent and international minimum of

8.0 percent.

Banks maintain high levels of

CAR amid tighter capital

requirements

The CAR of Philippines’ U/KBs on a consolidated basis

at 16.15 percent was higher than that of South Korea

(14.02 percent) but lower than that of Malaysia

(16.50 percent), Thailand (18.04 percent) and

Indonesia (20.64 percent).27

Chart 14. Capital Adequacy Ratio of Universal and Commercial Banks In percent

Banking Policies

Banking policies implemented during the quarter

were aimed at enhancing/providing

guidelines/regulations on the following:

(1) supervisory framework governing pawnshops;

(2) foreign exchange transactions; (3) Europay,

MasterCard, and Visa (EMV) card fraud liability shift

framework; (4) treatment of other comprehensive

income in the computation of Basel III non-stock

savings and loan associations (NSSLAs);

27

Sources: South Korea (Domestic Banks’ C apital R atio, Q1 2016); Malaysia (Banking System’s Total Cap ital Ratio, Q4 2016); Thailand (Commerc ial

Banks’ Capital Funds Percentage of Risk Assets, Q4 2016); and Indonesia, IMF and financial stabi lity reports (Commercial B anks, Regulatory Cap ital to Risk-Weighted Assets Ratio Q3 2016).

(5) implementation of section 2(a) to (d) of “The

Revised NSSLA of 1997”; (6) establishment/

relocation/voluntary closure/sale of branches;

(7) clean note and coin policy; (8) conversion of

microfinance-oriented thrift/rural banks/branches ;

and (9) governing fees on retail bank

products/services and dormant deposit accounts

(Annex A).

Capital Market Reforms

Capital market policy reforms continued to gain

ground during the fourth quarter of 2016 as the

government spearheaded measures to further the

development of the Philippine capital market. During

the period, the reforms focused on: (i) encouraging

more investments through a comprehensive tax

reform package that will aid revenue generation for

the government; and ii) a greater openness in view of

the country’s increasing integration with global

markets (see Annex B).

Stock Market

In the last three months of 2016, the Philippine Stock

Exchange index (PSEi) closed 9.3 percent lower

quarter-on-quarter to average 7,123.3 index points

during the period-in-review. Concerns over global

and domestic developments saw investors remaining

on the sidelines in Q4 2016. As of end-December

2016, the PSEi closed at 6,840.64 index points, lower

quarter-on-quarter by 10.3 percent and year-to-date

by 1.6 percent. (Table 10)

The local stocks close lower in

the last quarter of the year

amid a volatile env ironment

14.0

15.0

16.0

17.0

18.0

19.0

20.0

Mar Jun Sep DecMar Jun Sep DecMar Jun Sep DecMar Jun Sep DecMar Jun Sep

Solo Consolidated

2012 2013 2014 2015 2016


Notwithstanding the country’s robust Q3 economic

growth, Philippine equities remained under pressure

amidst risk-off sentiment ahead of the US

presidential elections and the market’s knee-jerk

reaction to Donald Trump’s surprising election

victory. This has cast a cloud of uncertainty over the

impact of possible Trump policies on the Philippine

economy. Moreover, concerns over the much

anticipated rate hike finally implemented by the US

FED in December; the change in political leadership

in Italy and Austria; the uncertainty over other

scheduled elections in 2017 in the Netherlands

(March), France (April) and Germany (October); and,

rising geopolitical tensions following the

assassination of Russia’s ambassador to Turkey and

an apparent terrorist attack against shoppers at a

German Christmas market also weighed on the main

index.

Chart 15. Average PSEi In index points

Meanwhile, on the domestic front, political noise

related to Congressional hearings on the il legal drug

trade, and concerns over the possible action that the

Philippine Competition Commission may take against

the purchase by the two largest telecommunication

companies of the telecommunication assets of a

third player earlier in the year also dampened

sentiments. These developments offset positive news

of the country’s continued robust growth, the ECB’s

decision to extend its asset-buying program beyond

the March 2017 cut-off date and the OPEC’s

agreement to cut production by January 2017 to

raise oil prices.

Mirroring the decline in the PSEi, total market

capitalization declined by 3.6 percent,

quarter-on-quarter, to P14.4 tri l l ion in

end-December. However, this was higher

year-to-date by 7.2 percent from the P13.5 tril l ion

market capitalization posted in end-2015. Average

value turnover similarly dropped by 22.1 percent

quarter-on-quarter from P9.0 bil l ion in Q3 to

P7.0 bil l ion in Q4.

Chart 16. PSE Market Capitalization by Sector

Q4 2016, percent share

Given the uncertainty in the global and domestic

environment, foreign investors also dumped local

shares in the last three months of 2016. Preliminary

data from the PSE showed that foreign investors

registered net sales of P33.8 bil l ion during the review

quarter, a reversal from the net purchases of

P7.0 bil l ion posted in the preceding three months

ending September.

Chart 17. PSEi Foreign Transactions In bi llion pesos

Source: PSE

Financial 29.31%

Industrial 17.61%

Holding Firms

25.69%

Services 11.18%

Property 13.61%

Mining & Oil

2.48%

SME 0.12%

Source: PSE


Lastly, data from Bloomberg similarly reflected a

deceleration in the domestic price-earnings ratio

from 20.77x in end-September to 18.63x in

end-December.

Bond Market

Local Currency Bond Market

Size and Composition28

Local currency (LCY) bonds issued by both the public

and private sectors amounted to P149.7 bil l ion in the

fourth quarter of 2016, 42.9 percent lower than the

P262.0 bil l ion registered in the previous quarter but

66.5 percent higher than the P89.9 bil l ion recorded in

the same period last year.

LCY bond issuances of public sector

decrease The NG issued Treasury bil ls (T-bil ls) and Fixed-rate

Treasury bonds (T-bonds) amounting to a total of

P77.5 bil l ion decreased by 63.1 percent from

Q3 2016. The decline in government issuance

reflects the higher yields demanded by investors.

Meanwhile, the private sector issuance of LCY bonds

amounted to P72.1 bil l ion, 39.1 percent higher than

the previous quarter and 185.8 percent higher than

Q4 2015. Local firms continue to tap the bond

market to take advantage of relatively lower rates as

they anticipate the US Fed to keep the rates steady

for the meantime before hiking rates again anytime

in 2017.

28

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 that were issued by the BTr

and GOCCs. These exclude issuances by the central bank.

Chart 18. LCY Bond Issuances

in bi llion pesos

Source: BTr, Bloomberg, Staff calculation

In terms of market share, issuances from the public

sector comprised 51.8 percent of the total bond

issuances while the private sector took the remaining

48.2 percent share. Bonds issued by the BTr

accounted for the entire public sector issuance while

issuers from the private sector came from real estate

companies.

Chart 19. LCY Bond Issuances As percent of market share; Q4 2016

Source: BTr, Bloomberg, Staff calcualtion

Primary Market 29

In the primary auctions conducted for both T-bil ls

and T-bonds, the NG offered a total of P135.0 bil l ion

of both short- and long-term debt securities. Demand

was robust as tenders were oversubscribed by

1.3 times. Tenders for T-bil ls reached P83.3 bil l ion as

against the NG’s offering of P60.0 bil l ion while for

T-bonds, tenders reached P90.1 bil l ion against the

P75.0 bil l ion offering.

29

The discussion includes primary market for government issuances only.

0

100

200

300

400

500

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Public Sector Private Sector

*Public: October 2016/ Private: October 2016 to November

51.8%

48.2%

Public Private Corp

*Public: October 2016/ Private: October 2016 to November 2016


NG partially awards bids for

T-bills and T-bonds due to

relatively high yields demanded

The NG partially awarded the P135.0 bil l ion offering

in GS in Q4 2016 following the NG’s rejection of some

bids for both T-bil ls and T-bonds which were found to

be relatively higher than NG’s preferred rates.

Demand for shorter-term debt instruments tend to

be higher than long-term instruments given the

uncertain external developments that mainly affect

investment decisions in the long-term.

Secondary Market

Trading of both government and private corporate

bonds in the secondary market decreased by

51.0 percent to P345.9 bil l ion from P706.0 bil l ion

registered in the previous quarter. Likewise, on a

y-o-y basis, trading in the secondary market

decreased by 13.1 percent.

Trading decreases at the

secondary market

Trading was dominated mostly by Fixed Income

Treasury Notes (FITNs) which accounted for about

87 percent of the total trading while the share of

corporate bonds traded at the Philippine Dealing and

Exchange Corporation (PDEx) remained marginal at

1.5 percent. The relatively thin trading at the

secondary market reflected investor’s cautiousness

and concerns over the implications of the timing and

magnitude of further Fed interest rate hikes and the

uncertainty in the economic policy of the new

US administration.

Chart 20. Secondary Market Volume

In bi llion pesos

Source: Philillipine Dealing and Exchange Corporation (PDEx)

Foreign Currency Bond Market

During the quarter, the government refrained from

raising funds in the offshore market. The only foreign

issuance for the year was during the first quarter of

2016 amounting to US$2 bill ion with a 25-year tenor.

The NG opted to rely more on domestic financing

sources than on foreign creditors to l imit exposure to

foreign exchange risks. Meanwhile, for the private

sector, most firms also took advantage of the ample

domestic l iquidity, as indicated by a lone issuance by

a financial institution of US$300 mill ion bonds in the

foreign capital market. Sourcing by corporates of

their financing needs from the local capital market

reflects prudent l iability management and hedging

strategy as the dollar was expected to strengthen on

the back of the planned gradual US Fed rate hikes.

NG refrains from tapping the

international bond market in

raising funds

Credit Risk Assessment As of end-December 2016, Moody’s assigned the

Philippines a rating of Baa2, which is a notch above

the minimum investment grade and carries a

“stable” outlook. The factors behind the

Philippines’ investment grade credit rating were:

1) economic strength, citing robust economic

growth, favorable demographics, and rising

investments; 2) institutional strength due to the

ability of government institutions to implement

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2Q

201

03

Q2

010

4Q

201

01

Q2

011

2Q

201

13

Q2

011

4Q

201

11

Q2

012

2Q

201

23

Q2

012

4Q

201

21

Q2

013

2Q

201

33

Q2

013

4Q

201

31

Q2

014

2Q

201

43

Q2

014

4Q

201

41

Q2

015

2Q

201

53

Q2

015

4Q

201

51

Q2

016

2Q

201

63

Q2

016

4Q

201

6


sound policies; 3) fiscal strength, referring to the

overall hea lth of government’s finances; 4) low

susceptibility to event risks given sound policies that

remain intact in both economic and political fronts;

5) low risk of banking system trouble; and 6) the

likewise low vulnerability of the economy to external

shocks.30

Philippine sovereign credit

ratings maintain investment

grade

On 13 November 2016, Japan-based debt watcher

Rating and Investment Information, Inc. (R&I)

affirmed the Philippines’ investment grade rating of

“BBB”, which is a notch above the minimum

investment grade and is assigned a “stable” outlook.

In its statement, the R&I said “The Philippines’

economy remains solid. Risks are l imited in terms of

external and fiscal positions, and the financial system

continues to be stable. Per capita income also keeps

improving.”

Among the other factors cited for affirming the

country’s investment grade rating include: 1) the

GIR providing sufficient buffer against external

shocks; 2) GIR is now higher than the country’s

external debt; 3) general government debt as a

percentage of GDP continues to decline; and 4)

private consumption and investments continue to

rise, supporting the Philippines’ official growth

targets.31

Table C. Latest Philippine Sovereign Credit Ratings

As of December 2016

30

Investor’s R elations Office, “Moody’s: Duterte Ad ministrat ion’s tax reform

infra agenda may boost PH credit rating, 18 October 2016. 31

Investor Relations Office, J apanes e ratings watchdog R&I affi rms PH investment grad e; s ays econo my rem ains ‘solid’ und er Duterte ad min,

13 November 2016.

Bond spreads

In October 2016, debt spreads widened following the

increased probability of a Fed rate hike by December

and the increased unpredictability of the outcome of

the US presidential election in November. The

increase in debt spreads were particularly evident in

the Philippines as the rise in negative investor

sentiments led to the poor performance of the stock

market and the Philippine peso.

Debt spreads narrow on

improved US economic data

In November, debt spreads widened further after

Donald Trump unexpectedly won over Hillary Clinton

in the US presidential election. Investors became

wary of the negative impact of the policy plans of US

President-elect Trump on emerging market

economies such as the Philippines.32

Prospects of

higher US government spending plan also cemented

the expectation of a 100 percent rate hike by the Fed

in December. Moreover, the increased concern over

Europe’s stability also created market jitters. 33

In December, debt spreads took a positive

turnaround and narrowed as investors appeared

upbeat as the Fed finally implemented the rate hike

reflecting higher growth expectations in the US.

Rising geopolitical tensions following the

assassination of Russia’s ambassador to Turkey, an

apparent terrorist attack against shoppers at a

German Christmas market; and concerns over the

change in European political leadership in Italy and

Austria provided relative uncertainty in bond

spreads.

By 30 December 2016, the Philippines’ 5-year

sovereign credit default swaps (CDS) stood at

111 bps, lower than the 116 bps in end-3Q and has

also remained lower than Indonesia’s 158 bps and

Malaysia’s 138 bps in the current quarter.

Meanwhile, the EMBIG Philippines ended the quarter

wider at 110 bps when compared to the previous

quarter’s closing of 102 bps.

32

Remittances and BPO industry may be adversely affected. 33

Start of BREXIT process and Italy’s referendum on constitutional reform.

Latest Philippine Sovereign Credit Ratings

As of December 2016

ptember 2016

2016

a

Rating

AgencyLocal Currency

(LT/ST)

Foreign Currency

(LT/ST)

Outlook

S&P BBB/A2 BBB/A2 Stable

Moody's Baa2/.n.a. Baa2n.a. Stable

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


Chart 21. 5-Year CDS Spreads of Selected ASEAN Countries In basis points

Chart 22. EMBIG Spreads of Selected ASEAN Countries In basis points

Payments and Settlements System34 In Q4 2016, the total number of transactions settled

and processed in the Philippine Payments and

Settlements System (PhilPaSS) decreased by

1.5 percent to 406,791 from the previous quarter’s

level of 412,803. The decrease in volume was due

mainly to the decline in: Megalink transactions

(62.9 percent), and trades in government securities

(40.5 percent) and the US dollar (14.6 percent).

Both volume and value of

PhilPaSS transactions fall Q-o-Q

but show remarkable Y-o-Y

growth

34

Starting 1 April 2014, the volume and value of transactions exclude

payment transfers to BSP Payments Unit.

Similarly, the total value of transactions fell by

30.5 percent to P111.5 tril l ion from the previous

quarter level of P160.4 tril l ion. The drop in the value

of transactions was brought about by the decline in:

government securities (64.3 percent), overnight

deposit facil ity placements/maturities

(45.2 percent), interbank transactions (41.3 percent)

and US dollar trades (13.6 percent).

Table D. PhilPaSS Transactions

Overseas Fil ipino (OF) remittances coursed through

the REMIT system and interbank dealings continue to

dominate volume of transactions in the PhilPaSS

composing 75.2 percent of the total volume for the

quarter. In terms of value, interbank dealings,

reverse repurchase, term deposit, and overnight

deposit placements/maturities make up 91.3 percent

of the total value of transaction for the quarter.

On a year-on-year basis, Q4 2016 volume and value

of transactions increased by 13.1 percent and

68.4 percent, respectively.

As a result of lower volume and value of transactions,

total revenue derived from PhilPaSS operations

(mainly fees from settled debit instructions and third

party transactions) declined to P32.6 mill ion or

9.6 percent lower than the quarter-ago level of

P36.1 mill ion. On a y-o-y basis, total revenues rose by

2.1 percent.

0

50

100

150

200

250

300

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

2013 2014 2015 2016

Philippines Indonesia Thailand Malaysia

0

50

100

150

200

250

300

350

400


2013 2014 2015 2016

EMBIG Phil ippines EMBIG Malaysia

EMBIG Indonesia

2015

Q4 Q3 Q4 Y-o-Y

Volume 406,791 412,803 359,562 -1.5 13.1

Value 111.5 160.4 66.2 -30.57 68.4 (in trillion pesos)

Transation Fees 32.6 36.1 32.0 -9.67 2.1 (in million pesos)

Source: Payments and Settlements Office, BSP

Growth Rates (in percent)

2016

Q-o-Q


External Sector

Balance of Payments

The country’s balance of payments position

registered a deficit of US$2.1 bil l ion in Q4 2016,

a reversal of the US$809 mill ion surplus posted in

Q4 2015.

Q4 2016 BOP position reverses

to deficit

This developed as the current account reversed to a

deficit during the quarter even as the financial

account registered lower net outflows (or net lending

by residents to the rest of the world). The deficit in

the current account was due mainly to the higher

deficit in trade-in-goods, combined with lower net

receipts of services and primary income.35

Meanwhile, the reduced net outflows in the financial

account was a result of the substantial increase in net

inflows of direct investments as well as the reversal

of portfolio investments to net inflows from net

outflows, which more than compensated for the

higher net outflows in the other investment account.

Economic recovery in China remained subdued and

growth prospects for ASEAN countries weakened due

to slower manufacturing activity across the region.

Meanwhile, economic activity in the US and euro

area remained steady and favorable business

sentiment supported the continued improvement of

the Japanese economy. Lingering uncertainties

arising from the uneven pace of economic growth

continued to factor into the country’s external

transactions, particularly the trade-in-goods account.

35

Primary Income account (formerly th e Income account) shows the flows for the use of labor and fin ancial resourc es between resid ent and non-resident institut ional units. Secondary Inco me account (formerly the

Current Transfers account) shows current transfers, in c ash or in kind, for nothing in return, between residents and non-residents.

Table E. Balance of Payments in mi llion US$

Current Account. The current account registered a

deficit of US$1 bil l ion in Q4 2016 (equivalent to

1.2 percent of GDP), a reversal of the US$1.4 bil l ion

surplus posted in Q4 2015.

Current account reverses to

deficit

This resulted primarily from the widening trade-in-

goods deficit along with the decline in net receipts in

the trade-in-services and primary income accounts.

Trade-in-Goods. The trade-in-goods deficit increased

to US$10 bill ion in Q4 2016 from US$7.5 bil l ion in Q4

2015 as the growth in imports of goods outpaced

that of exports by more than four times.

Trade-in-goods deficit widens

Exports of Goods. Exports of goods grew moderately

by 3.8 percent in Q4 2016 to

US$10.6 bil l ion from US$10.2 bil l ion in Q4 2015.

Increments in exports of coconut, mineral products,

fruits and vegetables, and other agro-based products

were posted during the quarter.

Balance of Payments ( in million US$)

2015 r 2016

Current Account 1442 -1032

Capital Account 23 24

Financial Account 926 54

Net Unclassified Items 270 -1006

Overall BOP* 809 -2068

r Revised

Q4

*Positive balance in the financial account indicates net outflows

while a negative balance indicates net inflows. The overall BOP

position, therefore, is equal to the current account plus the capital

account minus the financial account plus net unclassified items.

Details may not add up to total due to rounding.


Exports of goods grow

moderately

Exports of coconut products grew by 71.3 percent to

US$489 mill ion in Q4 2016 on account mainly of

higher shipments of coconut oil (by 75.5 percent)

following the increase in its world market price.

Exports of coconut products contributed

2 percentage points to the 3.8 percent expansion in

exports. Mineral products exports rose by

24.8 percent to US$631 mill ion due to increased

shipments of other mineral products, largely nickel

ores and nickel oxide sinters and other intermediate

products of nickel metallurgy. Exports of fruits and

vegetables went up to US$351 mill ion attributed to

higher exports of bananas. These gains, however,

were partly offset by lower shipments of

manufactures and petroleum products.

Manufactured goods exports, comprising

82.4 percent of total exports of goods, fell by

1.5 percent on account mainly of lower shipments of

wood manufactures and non-consigned electronics.

Chart 23. Exports by Major Commodity Group in percent share

Imports of Goods. Imports of goods expanded by

16.5 percent to reach US$20.6 bil l ion in

Q4 2016 from US$17.7 bil l ion in Q4 2015. Except for

mineral fuels and lubricants, higher imports were

recorded in all major commodity groups during the

quarter.

Imports of goods outpace

exports

Imports of capital goods increased by 32.9 percent,

on account of higher imports of aircraft, ships and

boats, power generating and specialized machines,

telecommunication equipment and electrical

machines, and land transport equipment, excluding

passenger cars and motorized cycle. Imports of

capital goods contributed 8.1 percentage points to

the 16.5 percent increase in imports. Imports of raw

materials and intermediate goods grew by

17.3 percent, mostly semi-processed raw materials

(which increased by 15.4 percent), such as chemicals

and manufactured goods (notably iron and steel).

Imports of capital goods and raw materials and

intermediate goods combined, contributed

14.2 percentage points to the 16.5 percent increase

in imports, indicating continued expansion in

production to support domestic economic activity.

Imports of consumer goods went up by 19.9 percent,

boosted mainly by increased importation of durable

goods particularly passenger cars and motorized

cycles. Meanwhile, imports of mineral fuels and

lubricants dropped by 1.4 percent to US$2.1 bil l ion in

Q4 2016 due primarily to reduced imports of

petroleum crude oil (by 11.6 percent) following the

decline in import volume (from 19 mill ion barrels in

Q4 2015 to 18 mill ion barrels in Q4 2016) even as the

import price of crude oil increased during the

quarter.36

Chart 24. Imports by Major Commodity Group

in percent share

36

Based on World Bank Commodities Pr ice d ata, th e average price of Dubai crude oil in October-December 2016 increased to US$47.9/barrel

from US$41.2/barrel in October-December 2015.


Trade-in-Services. Net receipts in trade-in-services

amounted to US$1.7 bil l ion in Q4 2016,

lower by 16.7 percent than the US$2.1 bil l ion net

receipts in the comparable quarter a year ago.

Net receipts in trade-in-services

decline

The decline was due largely to lower net receipts in

technical, trade-related, and other business services

(by 16.4 percent), coupled with higher net payments

in travel and transport services. Meanwhile, net

receipts in computer services were markedly higher

(by 134.7 percent), on account of higher business

process outsourcing (BPO) transactions, particularly

software publishing and development. Export

revenues from BPO services totaled US$4.6 bil l ion in

Q4 2016, 3.1 percent lower than the US$4.7 bil l ion

receipts in Q4 2015.

Primary Income. The primary income account posted

net receipts of US$721 mill ion in

Q4 2016, 21.6 percent lower than US$920 mill ion net

receipts in Q4 2015.

Net receipts in primary income

drop

This was due largely to the decline in compensation

inflows from resident overseas Fil ipino (OF) workers

(by 6.8 percent), specifically from sea-based workers

and increased net payments of investment income

(by 6.6 percent) on account of higher dividends paid

to foreign direct and portfolio investors.

Compensation inflows from resident OF workers

amounted to US$1.8 bil l ion during the quarter.

Secondary Income. Net receipts in the secondary

income account increased by 10.1 percent to

US$6.5 bil l ion in Q4 2016 from US$5.9 bil l ion in

Q4 2015.

Net receipts in secondary

income increase

Personal transfers grew by 9 percent to reach

US$6.1 bil l ion. The bulk of these personal transfers

comprised of non-resident OF workers' remittances

(about 98 percent), which increased by 9.2 percent to

US$6 bill ion.

Capital Account. Net receipts in the capital account

were marginally higher in Q4 2016 at US$24 mill ion.

The capital registers higher net

receipts

Receipts from other capital transfers to the National

Government (NG) increased during the quarter.

Financial Account. The financial account registered

net outflows (or net lending by residents to the

rest of the world) of US$54 mill ion in Q4 2016,

94.2 percent lower than the US$926 mill ion net

outflows in Q4 2015.

The financial account registers

lower net outflows

The lower net outflows resulted mainly from higher

net inflows of direct investments which more than

offset the increase in net outflows of other

investments.

Direct Investments. Net inflows of direct

investments reached US$1.8 bil l ion in Q4 2016,

twenty-two times the US$83 mill ion net inflows in

the comparable quarter a year ago.

Net inflows of direct investment

expand

This positive development was on account of a

marked reduction in residents’ net acquisition of

financial assets. Meanwhile, residents’ net incurrence

of l iabilities (foreign direct investments in the

Philippines or FDI) rose by 82.6 percent to

US$2.1 bil l ion, driven largely by the 149.7 percent

increase in non-residents’ net placements in debt

instruments issued by their local


affil iates/subsidiaries (or intercompany borrowings)

to reach US$1.5 bil l ion. Non-residents’ net

placements of equity capital in local affi liates l ikewise

grew by 13.8 percent to US$418 mill ion, with fresh

infusions coming mostly from Hong Kong, Japan, the

United States (US), Taiwan, and Germany. These

inflows were channeled to arts, entertainment and

recreation; financial and insurance; real estate;

manufacturing; and wholesale and retail trade

activities.

Portfolio investment account

shifts to net inflows

Portfolio Investments. The portfolio investment

account registered net inflows totaling

US$309 mill ion in Q4 2016, a turnaround from

US$256 mill ion net outflows in the comparable

quarter of the previous year. This resulted mainly

from residents’ net disposal of financial assets

(amounting to US$418 mill ion), particularly non-

residents’ redemption of local banks’ holdings of

short-term debt securities amounting to

US$1.1 bil l ion. Meanwhile, residents’ net repayment

of l iabilities reached US$109 mill ion. These

repayments include non-residents’ net withdrawal of

placements in equity securities issued by local non-

bank corporations (US$435 mill ion) and banks

(US$218 mill ion), as well as in debt securities issued

by local corporates (US$363 mill ion).

Financial Derivatives. The financial derivatives

account recorded a net gain of US$78 mill ion during

the review quarter compared to a net loss of

US$18 mill ion in Q4 2016.

Trading in financial derivatives

result in net gain

Other Investments. The other investment account

yielded US$2.3 bil l ion net outflows in Q4 2016, more

than threefold the level posted in Q4 2015.

Other investments account

posts higher net outflows

Residents’ net acquisition of financial assets reached

US$2 bill ion, coming mostly from local banks’ short-

term net lending to non-residents (US$1 bil l ion) and

their placements of currency and deposits in foreign

banks (US$541 mill ion). Meanwhile, residents’ net

repayment of l iabilities reached US$307 mill ion, a

reversal of the US$11 mill ion net incurrence of

l iabilities in the same quarter of the previous year.

The primary sources of net outflows from the

liabilities side were net repayment of loans availed by

local corporates from non-resident creditors

(US$477 mill ion), non-residents’ net withdrawal of

currency and deposits in local banks

(US$403 mill ion), and residents’ net settlement of

trade credit and advances extended by non-residents

(US$311 mill ion).

International Reserves

The country’s gross international reserves (GIR) stood

at US$80.7 bil l ion as of end-December 2016, easing

from the record high of US$86.1 bil l ion in

end-September 2016. The GIR remains highly

adequate as it can cover 9.2-months’ worth of

imports of goods and payments of services and

income. It is also equivalent to 5.8 times the

country’s short-term external debt based on original

maturity and 4.1 times based on residual maturity.

Reserves remain adequate

The decline in reserves was due mainly to the

outflows arising from payments made by the NG for

its maturing foreign exchange obligations, foreign

exchange operations of the BSP, and revaluation

adjustments on the BSP’s gold holdings and foreign

currency-denominated reserves. These were partially

offset by the NG’s net foreign currency deposits.

Of the total reserves as of end-December 2016,

84.6 percent were held in foreign investments;

9.0 percent in gold; and 6.4 percent in holdings of

Special Drawing Rights (SDRs), the BSP’s reserve

position in the IMF, and foreign exchange.


Chart 25. Gross International Reserves

In bi llion US dollars

Net international reserves (NIR), which refer to the

difference between the BSP’s GIR and total

short-term liabilities, amounted to US$80.7 bil l ion as

of end-December 2016, a decline of US$5.4 bil l ion

from end-September 2016.

Exchange Rate

The peso depreciated against the US dollar in the

fourth quarter of 2016. On a quarter-on-quarter

basis, the peso weakened by 4.2 percent to average

₱49.11/US$1 from the previous quarter’s average of

₱47.05/US$1. On a year-on-year basis, the peso

likewise depreciated by 4.6 percent relative to the

₱46.83/US$1 average in the fourth quarter of 2015 .37

The weakness of the peso against the US dollar was

due mainly to a confluence of factors such as: (i) the

US Fed rate hike in December 2016 and expectation

of more and faster rate increases in 2017; and

(i i) investor sentiment related to various changes in

political dynamics and their possible repurcussions

on economic policies such as the local elections, the

Brexit, referendum in Italy, and the victory of Donald

Trump in the US presidential elections. Mr. Trump’s

victory is expected to usher in a more stimulative

fiscal policy (lower taxes and more infrastructure

spending) which could result in higher interest rates

and inflation expectations.

37

Dollar rates or the reciprocal of the peso-dollar rates were used to

compute for the percentage change.

Peso depreciates against the

US dollar

In October 2016, the peso depreciated against the

US dollar by 1.9 percent to average ₱48.35/US$1

relative to the ₱47.43/US$1 a month ago on the back

of positive US economic data which strengthened the

prospect for an increase in US interest rate by

December 2016. In the domestic front, corporate

demand for foreign exchange was heavy due to

month-end requirements. Similarly, in November,

the peso depreciated against the US dollar by

1.6 percent to average ₱49.16/US$1. Potential

changes in US policy under President-elect Donald

Trump, specifically increased trade protection (such

as US withdrawal from the Trans-Pacific Partnership

trade deal) and the negative market sentiment due

to an expected Fed rate hike in December 2016,

triggered risk aversion to regional currencies

including the peso. In December, the peso

depreciated anew by 1.3 percent to average

₱49.82/US$1 as the outlook for Asian currencies,

including the peso remained clouded by expectations

that the US Fed could raise rates at a faster pace in

2017. Overall, the ample level of international

reserves, sustained structural inflows of foreign

exchange from overseas Fil ipino remittances, foreign

direct investments, and BPO and tourism receipts

continued to support the peso.38

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

the US dollar by 5.4 percent on 29 December 2016 as

it closed at ₱49.72/US$1. The peso depreciated along

with most Asian currencies, except the Japanese yen,

Indonesian Rupiah, New Taiwan dollar and Thai Baht.

38

As of end-December 2016, country’s gross international reserves (GIR) stood at US$80.69 billion (revised) from the year-ago level of US$80.67

billion; personal remittances (cumulative) reached US$29.71 billion as of end-December 2016 from US$28.31 billion during the same period last year;

foreign direct investments (FDI) grew to US$6.97 billion as of end-November 2016 from the year-ago level of US$5.56 billion; tourism receipts expanded to US$4.04 billion at end-September 2016 from US$3.94 billion a year ago;

BPO receipts are expected to reach US$22.89 billion as of end-December 2016 (based on Information Technology and Business Processing Association of the Philippines [IBPAP] estimates) from the previous year level of

US$20.50 billion.

72

76

80

84

88


2013 2014 2015 2016

Source: BSP


Chart 26. Year-to-date Appreciation/Depreciation of Asian Currencies against US dollar In percent, as of 29 December 2016

Meanwhile, volatil ity as measured by the coefficient

of variation (COV) of the peso’s daily closing rates

stood at 1.4 percent during the fourth quarter of

2016, higher compared to the 1.2 percent in the

previous quarter. Compared to other currencies in

Asia, the volatil ity of the peso was in the middle of

the pack.39

On a real trade-weighted basis, the peso gained

external price competitiveness in Q4 2016, against

the basket of currencies of all trading partners (TPI),

trading partners in advanced (TPI-A) and developing

countries (TPI-D) as the real effective exchange rate

(REER) index of the peso decreased by 1.5 percent,

1.1 percent, and 1.7 percent, respectively, relative to

the third quarter of 2016. Behind this development

was the nominal depreciation of the peso against

these currency baskets.40,41

39

The volatility of the peso was higher than that of Thai baht and Chinese yuan but lower than that of Indonesian rupiah, Singaporean dollar, South

Korean won, Malaysian ringgit, and Japanese yen. 40

The Trading Partners Index (TPI) measures the nominal and real effective

exchange rates of the peso across the currencies of 14 major trading partners of the Philippines, which includes US, Euro Area, Japan, Australia, China, Singapore, South Korea, Hong Kong, Malaysia, Taiwan, Indonesia,

Saudi Arabia, United Arab Emirates, and Thailand. The TPI-Advanced measures the effective exchange rates of the peso across currencies of

trading partners in advanced countries comprising of the US, Japan, Euro Area, and Australia. The TPI-Developing measures the effective exchange rates of the peso across 10 currencies of partner developing countries which

includes China, Singapore, South Korea, Hong Kong, Malaysia, Taiwan, Indonesia, Saudi Arabia, United Arab Emirates, and Thailand. 41

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.

Relative to Q4 2015, the peso likewise gained

external price competitiveness against the TPI, TPI-A,

and TPI-D baskets. This developed as the nominal

depreciation of the peso offset the impact of

widening inflation differential, resulting in a decrease

in the REER index of the peso by 4.3 percent,

6.7 percent, and 2.6 percent against the TPI, TPI-A,

and TPI-D baskets, respectively.

External Debt

Outstanding Philippine external debt stood at

US$74.8 bil l ion as of end-2016, a decline of

US$1.9 bil l ion (or 2.4 percent) from the

US$76.6 bil l ion end-September 2016 level.

Year-on-year (y-o-y), the debt stock l ikewise dropped

by US$2.7 bil l ion (or 3.5 percent) from the

US$77.5 bil l ion level in 2015.

External debt remains

manageable

This development is attributed to: (a) downward

foreign exchange (FX) revaluation adjustments of

US$1.8 bil l ion as the US dollar strengthened against

third currencies, particularly the Japanese Yen

(US$1.4 bil l ion); (b) net principal repayments of

US$611 mill ion, mainly by the National Government

(NG) and the Power Sector Assets and Liabilities

Management Corporation (PSALM); and (c) prior

period audit adjustments (negative US$73 mill ion).

The downward impact of these developments on the

debt stock was partially offset by the US$591 mill ion

transfer of Philippine debt papers from residents to

non-residents which had the effect of increasing

outstanding external debt.


On a y-o-y basis, the debt stock l ikewise dropped due

to: (a) net principal repayments by both the public

and private sectors (US$3.4 bil l ion); (b) previous

periods’ audit adjustments (negative US$168 mill ion)

due to late reporting; and (c) negative (downward)

FX revaluation adjustments (US$36 mill ion).

However, the full downward impact of these factors

on the debt stock was partly offset by an increase in

non-residents investments in Philippine debt papers

issued offshore (US$846 mill ion).

Chart 27. Philippine External Debt In bi llion US dollars

Source: BSP-International Operations Department (IOD)

By Maturity

As of year-end, the maturity profile of the country’s

external debt continued to be largely medium- to

long-term (MLT) in nature [i.e., those with original

maturities longer than one (1) year], with a share to

total of 80.6 percent (US$60.2 bil l ion). This means

that FX requirements for debt payments are well

spread out and, thus, more manageable.

The weighted average maturity for all MLT loans

stood at 16.9 years at the close of 2016, slightly

better than the 16.5 years recorded a year ago.

Although q-o-q, this was shorter with the end-

September 2016 figure at 17.5 years.

Short-term (ST) loans [or those with original

maturities of up to one (1) year] stood at

US$14.5 bil l ion by the close of 2016, accounting for

19.4 percent of the debt stock. These accounts

consisted of: (a) bank liabilities of US$12.3 bil l ion

(domestic banks - US$7.4 bil l ion; foreign bank

branches - US$4.0 bil l ion; and government financial

institutions - US$801 mill ion); (b) trade credits

(US$2.1 bil l ion); and (c) other l iabilities

(US$188 mill ion).

Chart 28. Philippine External Debt by Maturity as of end-December 2016

Source: BSP-IOD

By Borrower

At the end of 2016, public sector borrowings were

down to US$37.5 bil l ion (or by US$1.8 bil l ion) from

US$39.3 bil l ion in September 2016, with its share to

total correspondingly declining from 51.3 percent to

50.1 percent. This was due largely to negative FX

revaluation adjustments (US$1.7 bil l ion) and net

principal repayments (US$896 mill ion), which were

partly offset by the increase in non-residents’

investments in public sector debt papers

(US$749 mill ion). About US$30.5 bil l ion

(81.5 percent of public sector obligations) were NG

borrowings.

Private sector debt remained almost unchanged on a

q-o-q basis at US$37.3 bil l ion, although its share to

total increased to 49.9 percent from 48.7 percent q-

o-q due to the substantial drop in public sector

accounts. As of end-2016, the following were noted

for private sector accounts: (a) increase in resident

holdings of private sector debt papers

(US$158 mill ion); (b) downward FX revaluation

adjustments (US$90 mill ion); and (c) prior periods’

adjustments due to late reporting (negative

US$74 mill ion). Net availments during the quarter

(US$286 mill ion) partly mitigated the decline in

private sector debt. About US$14.4 bil l ion

(or 38.7 percent) of these accounts were obtained

without BSP approval (including capital leases of

US$1.3 bil l ion).

72.0

73.0

74.0

75.0

76.0

77.0

78.0

79.0

80.0

Short-Term US$14.5

billion 19.4%

Medium- and Long-

Term US$60.2

Total = US$74.7 billion


Chart 29. Philippine External Debt by Borrower

as of end-December 2016

Source: BSP-IOD

The DSR, which relates principal and interest

payments (debt service burden or DSB) to exports of

goods and receipts from services and primary

income, is a measure of adequacy of the country’s FX

earnings to meet maturing obligations. As of

end-2016, the ratio increased to 7.8 percent as

against 5.2 percent a quarter ago, and 5.5 percent a

year ago.

The external debt ratio (a solvency indicator), or total

outstanding debt expressed as a percentage of

annual aggregate output or the gross national

income (GNI), continued to improve by year-end to

20.4 percent, from 21.1 percent in end-September

2016 and 21.9 percent as of end-2015. The same

trend was observed using GDP as denominator,

indicating the country's sustained strong position to

service FX obligations in the medium-term.

Foreign Interest Rates

The timing of exit from accommodative monetary

policy in advanced economies has differed across

countries depending on the strength of their

economic growth. Accommodative monetary policy

is expected to continue in countries where risk of low

inflation persists and recovery remains fragile due to

weakness in labor market conditions, slowdown in

spending, and anemic bank lending growth.

Monetary policy in some AEs

continues to be

accommodative, as recovery

remains fragile

In Q4 2016, the US Fed raised the target range for the

federal funds rate at 0.50-0.75 percent. At the same

time, the Fed maintained its existing policy of

reinvesting principal payments from its holdings of

agency debt and agency mortgage-backed securities

and of roll ing over maturing Treasury securities at

auction.42

Both the average US prime rate and

discount rate increased to 3.512 percent and

1.049 percent from the previous quarter’s figures of

3.500 percent and 1.000 percent, respectively

(Table 16). Moreover, the US Fed funds rate

increased to 0.499 percent from the 0.399 percent

average reported in the previous quarter.

The Monetary Policy Committee (MPC) of the Bank of

England (BOE) maintained the official bank rate paid

on commercial banks’ reserves at 0.25 percent. It

also continued the purchase of up to £10 bil l ion of

corporate bonds and £60 bil l ion of government

bonds, increasing the stock of the asset purchases to

£435 bil l ion.43

The Bank of Japan (BOJ) introduced the “Quantitative

and Qualitative Monetary Easing with Yield Curve

Control” as a new framework to further strengthen

its monetary easing scheme. The framework is

composed of two components: the first component is

the "yield curve control" in which the BOJ controls

short-term and long-term interest rates; and the

second component is an "inflation-overshooting

commitment" in which the BOJ commits itself to

expand the monetary base until inflation exceeds the

target of 2 percent. As for the short-term interest

rate, the BOJ applies a negative interest rate of

0.1 percent to current accounts that financial

institutions hold at the Bank. For the long- term

interest rate, the BOJ buys Japanese government

bonds (JGBs) at a rate of 80 tril l ion yen per year in

42

Press Release. (n.d.). Retrieved from

https://www.federalreserve.gov/newsevents/press/mon etary/20161214a.htm 43


http://www.bankofengland.co.u k/public ations/Pages /news/2016/012.aspx

Total = US$74.7 billion Public Sector

US$37.4 50.1%

Private Sector

US$37.3 49.9%


order for the 10-year JGB yields to remain at around

zero percent. In terms of asset purchases, the BOJ

has doubled the purchase of exchange-traded funds

(ETFs) at an annual pace of 6 tril l ion yen from

3.3 tril l ion yen while the purchase of Japan real

estate investment trusts (J-REITs) were maintained at

90 bil l ion yen annually. Likewise, the BOJ continues

its purchases of commercial papers and corporate

bonds until their outstanding amounts reach

2.2 tril l ion yen and 3.2 tril l ion yen, respectively.44

Meanwhile, the Governing Council of the European

Central Bank decided to maintain the interest rates

on the deposit facil ity, main refinancing operation,

and marginal lending facility at -0.40 percent,

0.0 percent, and 0.25 percent, respectively. The

Governing Council also decided to continue its

purchases under the asset purchase program (APP) at

a monthly pace of €80 bil l ion until the end of March

2017 and starting in Apri l 2017, the net asset

purchases are intended to continue at a monthly

pace of €60 bil l ion until the end of December 2017.45

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

Singapore Interbank Offered Rate (SIBOR) increased

in Q4 2016 to 0.921 percent and 0.906 percent from

0.785 percent and 0.881 percent, respectively, as

global financial markets remained generally l iquid.

Chart 30. Selected Foreign Interest Rates In percent

44

Press Release. (n.d.). Retrieved from https:// www.boj.or.jp/en/announcements/releas e_2016/k161220a.pdf 45


https://www.ecb.europ a.eu/press/pr/date/2016/html/pr161208.en.html

Global Economic Developments

Developments in the fourth quarter (Q4) of 2016

showed a stable but average growth for the global

economy. While there has been a stronger-than-

expected momentum in growth in advanced

economies attributable to the continued recovery of

manufacturing output, the slowdown in some

emerging market economies contributed to the

modest growth for the global economy.

(see Table F. Macroeconomic Indicators for Selected

Economies)

The uptick in the US economy resulted in an annual

growth of 1.9 percent in Q4 2016. The increase in US

real GDP was driven primarily by positive

contributions from personal consumption

expenditure, private inventory investments,

residential and non-residential fixed investment, and

government spending. These were partly offset by

negative contributions from exports and increased

imports.46

For the fourth consecutive quarter, Japan

registered a 1.7 percent expansion amid stagnating

private demand and weakening yen. Strong external

dynamics and accommodative monetary policy

boosted business confidence, which resulted in

higher private non-residential investments.47

The Eurozone economic activity advanced by

1.7 percent in Q4 2016, a modest growth from the

previous quarter, as stronger growth in Germany and

France was partially offset by the weak economic

growth in Italy and the steady pace in output growth

in Spain.48

46

US Bureau of Economic Analysis 47

FocusEconomics 48

Eurostat

0.0000

0.5000

1.0000

1.5000

2.0000

2.5000

3.0000

3.5000

4.0000

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

2014 2015 2016

US Prime Rate US Discount Rate

US Federal Funds Rate LIBOR (90 days)

SIBOR (90 days)1

Source: Bloomberg, Asian Wall Street Journal, Reuters 1SIBOR data refers to SIBOR rates ( in Singapore $)


Chart 31. Real GDP of G3 Countries year-on-year growth; in percent

Meanwhile, most emerging economies in Asia

recorded stronger output growth. India’s economy

recorded one of the fastest growth in the region at

7 percent in Q4 2016 from 7.3 percent in Q3,

attributable to robust growth in public

administration, defense and other services,

manufacturing and trade, hotels, transportation and

communication services related to broadcasting.49

China also grew at a rapid pace of 6.8 percent, 50

driven by exports and real estate sector, and

complemented by supply-side structural reforms

such as reduction of overcapacity and inventories,

de-leveraging, lowering costs, and shoring up weak

growth areas. Economic growth in Hong Kong stood

at 3.1 percent underpinned largely by private

consumption expenditure and government spending.

Similarly, Singapore’s economy grew by 2.9 percent

from 1.1 percent in the previous quarter driven by

the expansion in manufacturing, and transportation

and storage sectors.51

Meanwhile, South Korea’s

economy slowed to 2.3 percent due to the lackluster

growth in household, public spending, investment,

and exports.

In the ASEAN-5 region, member countries posted

mixed GDP growth rates. The Malaysian economy

grew by 4.5 percent during the review quarter, a

modest improvement from the 4.3 percent growth in

the previous quarter. This was supported by the

expansion in domestic demand and exports. In

Vietnam, GDP grew by 6.2 percent buoyed by the

uptrend in the industry and manufacturing sectors.

Indonesia, Philippines, and Thailand, however,

49

Government of India, Ministry of Statistics and Programme Implementation 50

National Bureau of Statistics of China 51

The Ministry of Trade and Industry, Singapore

recorded a slightly weaker growth in the review

quarter. The Indonesian economy s hrank to

4.9 percent as growth was steered by weaker private

consumption, while investment, government

spending, and exports rebounded. The Philippine

economy grew by 6.6 percent, sl ightly slower from

the previous quarter’s 7.0 percent growth, driven

mainly by manufacturing, trade, real estate, renting

and other business activities.52

In Thailand, GDP

growth further softened in the current quarter to

3.0 percent. The decline in economic growth was

brought about by slowdown in private consumption

amidt expansion in major crop production of wet-

season rice.53

Average headline inflation rates generally increased

in major advanced economies in Q4 2016 as the

effects of past energy price declines dissipate.

Inflation in the US edged up to 1.8 percent from

1.1 percent while Japan’s inflation increased to

0.3 percent from -0.5 percent and Euro area inflation

to 0.7 percent from 0.3 percent.

Chart 32. Inflation of G3 Countries quarterly average, in percent

Most emerging Asian economies also recorded an

increase in inflation during the fourth quarter, except

for Hong Kong and India. South Korea recorded a

higher inflation rate at 1.4 percent during the review

quarter from the previous quarter’s 0.8 percent while

in Singapore, inflation was at 0.0 percent from

-0.4 percent a quarter ago. In China, inflation was

registered at 1.5 percent from 1.3 percent in the

previous quarter. Average inflation rates in Hong

Kong and India were lower at 1.2 percent and

2.7 percent during the review quarter from

52

Philippine Statistics Authority 53

National Economic and Social Development Board, Thailand

1.9

1.7

1.9

0.7

0.9

1.7

2.0

1.6 1.7

0.0

0.5

1.0

1.5

2.0

2.5

Q4 2015 Q3 2016 Q4 2016

US Japan Euro Area

Source: Bloomberg, Country Websites

0.5

1.1

1.8

0.3

-0.5

0.3 0.1

0.3

0.7

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

Q4 2015 Q3 2016 Q4 2016

US Japan Euro Area

Source: Bloomberg, Country Websites


5.3 percent, and 3.1 percent in the previ ous quarter,

respectively.

In the ASEAN-5 region, average inflation rates

generally picked-up in Q4 2016, with Vietnam

recording the highest improvement, owing to faster

price increase in transport, beverages and tobacco,

household, and culture and entertainment. Inflation

in Indonesia during the review period was boosted by

domestic demand, weak external pressure, and

improved inflation expectations. Meanwhile, higher

prices for food and non-alcoholic beverages as well

as for transport, recreation and culture resulted in

higher inflation in the Philippines. Likewise,

Malaysia’s inflation was influenced mainly by growth

in food including food at home, food away from

home, and non-alcoholic beverages such as coffee,

tea, and cocoa. The rise in Thailand‘s Q4 inflation was

traced to increases in consumer prices particularly in

prices of energy and vehicles, and vehicles

operations.

Global labor market conditions moderately

improved. The unemployment rate in the US and

Euro area eased to 4.7 percent and 9.7 percent,

respectively, during the review quarter while Japan’s

unemployment rate grew moderately at 3.1 percent.

Chart 33. Unemployment Rates of G3 Countries In percent

In Asia, the unemployment rate in China was stable,

while that of Singapore’s slightly inched up to

2.2 percent from 2.1 percent a quarter-ago.

Meanwhile, the unemployment rates showed a

downtrend in the Philippines (4.7 percent), but

stagnant in Malaysia (3.5 percent) and with a slight

uptrend in Thailand at 1.0 percent.

Table F. Macroeconomic Indicators in Selected Economies in percent

Financial Condition of the BSP

Balance Sheet

The BSP’s total assets stood at P4,559.1 bil l ion as of

end-December 2016, lower by P201.6 bil l ion or

4.2 percent than the quarter-ago level of P4,760.7

bil l ion, but higher by P249.20 bil l ion or 5.8 percent

relative to the year-ago level of P4,309.9 bil l ion

(Table 17). Similarly, the BSP’s l iabilities fell by

P202.7 bil l ion or 4.3 percent, q-o-q, to

P4,500.7 bil l ion, albeit slightly higher by

P232.00 bil l ion or 5.4 percent compared to the end-

December 2015 level. Consequently, BSP’s net worth

for the review period was reported at P58.4 bil l ion or

1.9 percent above the quarter-ago level of

P57.3 bil l ion, and significantly greater by

41.8 percent than the year-ago net worth of

P41.2 bil l ion.

5.0 4.9 4.7

3.3 3.0 3.1

10.5 10.0 9.7

0.0

5.0

10.0

15.0

Q4 2015 Q3 2016 Q4 2016

US Japan Euro Area

Source: Bloomlberg, Country Websites

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

Q4

2015

Q1

2016

Q2

2016

Q3

2016

Q4

2016

G3

US 1.9 1.6 1.3 1.7 1.9 0.5 1.1 1.0 1.1 1.8 5.0 4.9 4.9 4.9 4.7

Japan 0.7 0.2 0.6 0.9 1.7 0.3 0.0 -0.4 -0.5 0.3 3.3 3.2 3.2 3.0 3.1

Euro Area 2.0 1.7 1.6 1.6 1.7 0.1 0.0 -0.1 0.3 0.7 10.5 10.3 10.1 10.0 9.7

Emerging Asia3/

Hong Kong 1.9 0.8 1.7 1.9 3.1 2.3 2.8 2.6 3.1 1.2 3.3 3.3 3.4 3.4 3.3

South Korea 3.1 2.8 3.3 2.6 2.3 1.1 1.0 0.9 0.8 1.4 3.5 3.8 3.7 3.8 3.6

Singapore 1.8 2.0 2.0 1.1 2.9 -0.7 -0.8 -0.9 -0.4 0.0 1.9 1.9 2.1 2.1 2.2

China 6.8 6.7 6.7 6.7 6.8 1.7 1.3 1.0 1.3 1.5 4.1 4.0 4.1 4.0 4.0

India 7.2 7.9 7.1 g 6.5 5.7 6.2 5.3 2.7 n.a. n.a. n.a. n.a. n.a.

ASEAN-54/

Indonesia 5.0 4.9 5.2 5.0 4.9 4.8 4.3 3.5 3.0 3.3 n.a. 5.5 5.5 5.6

Malaysia 4.5 4.2 4.0 4.3 4.5 2.6 3.4 1.9 1.4 1.7 3.2 3.4 3.4 3.5 3.5

Philippines 6.5 6.8 7.0 7.1 6.6 1.0 1.1 1.5 2.0 2.5 5.6 5.8 6.1 5.4 4.7

Thailand 2.8 3.2 3.5 3.2 3.0 -0.9 -0.5 0.3 0.3 0.7 0.8 0.9 1.1 0.9 1.0

Vietnam 6.7 5.5 5.5 5.9 6.2 0.0 1.3 2.2 2.8 4.5 2.4 2.1 2.1 2.1 n.a.

Sources: Bloomberg, Country Websites

1/ Real GDP growth rate from Quarter One Year Ago

2/ Unemployment rate is the proportion (in percent) of the total number of unemployed as a percentage of the labor force

3/ Includes Emerging Asia countries classified in the July 2016 IMF World Economic Outlook (WEO) Update , plus Hong Kong, South Korea, and

Singapore.

4/ ASEAN-5 pertains to those countries in the said WEO Update.

CountryReal GDP (y-o-y growth rate)1/ Inflation (quarterly average) Unemployment rate2/


BSP’s net worth improves from

the prev ious quarter

The BSP’s assets were composed largely of

international reserves amounting to P3,998.0 bil l ion

(U$80.7 bil l ion) as of end- December 2016, lower

than the quarter-ago balance of P4,158.0 bil l ion

(US$86.1 bil l ion). The reduction in the international

reserves was brought by lower net foreign currency

deposits following the payments made by the

National Government (NG) for its foreign currency

obligation and foreign exchange operations of the

BSP. Furthermore, the BSP’s gold holdings declined

during the review period due to the decrease in the

price of gold in the international market.

As of end-December 2016, the BSP’s l iabilities

amounted to P4,500.7 bil l ion, comprised mostly of

deposits and currency issues.54

This amount was

below the quarter-ago level of P4,703.4 bil l ion due

mainly to decreased deposits from Treasurer of the

Philippines account of about P181.2 bil l ion, and

lower placements in overnight deposit facil ities of

about P397.9 bil l ion.

Table G. Balance Sheet of the BSP In bi llion pesos

Income Statement

Based on preliminary and unaudited data, the BSP

registered a net income of P3.0 bil l ion for Q4 2016,

lower than the previous quarter’s net income of

P10.6 bil l ion. The decrease in net income was

54

As of 31 Dec emb er 2016, th ere were about 3.85 billion piec es of notes valued at P1.09 trillion and 26.35 billion pieces of coins valued at of P29.63

billion in circulation.

brought about by the drop in revenues of

P11.3 bil l ion and increase in expenses of P2.4 bil l ion,

partially offset by the rise in Gain on Foreign

Exchange Rate Fluctuations of P6.3 bil l ion (Table 18).

BSP registers net income in Q4

2016

Total revenues for Q4 2016 amounted to

P12.1 bil l ion, 48.4 percent lower than the

P23.4 bil l ion posted in the previous quarter, as

miscellaneous income dropped to P0.7 bil l ion from

the previous quarter’s level of P11.5 bil l ion.

Meanwhile, total expenditures advanced by P2.4

bil l ion to P19.4 bil l ion. The q-o-q rise in expenditures

was brought by higher cost of printing of coins and

other expenses, tempering the combined effect of

lower revenues and higher expenditures is the

P6.3 bil l ion rise in Gain on FX rate fluctuations.

Table H. Income Position of the BSP

In bi llion pesos

2015

Dec p, uSep Decr

Assets 4,559.1 4,760.7 4,309.9

Liabilities 4,500.7 4,703.4 4,268.7

Net Worth 58.4 57.3 41.2

Note:p

u Unaudited.r

Source:

2016

Based on the preliminary (pre-closing) BSP balance sheet

as of end-December 2016 prepared by the Financial

Accounting Department (FAD) of the BSP.

Details may not add up to total due to rounding off.

BSP

Restated based on the audited financial statements

prepared by BSP-FAD

2015

Q4 p ,u Q3 Q4 r

Revenues 12.085 23.422 13.477

Less: Expenses 19.364 16.993 19.162

Net Income/(Loss) Before Gain/(Loss) on FX R

Fluctuations and Income Tax Expense/(Benefit) (7.279) 6.429 (5.685)

Gain/(Loss) on Foreign Exchange Rate Fluctuations 10.413 4.145 3.897

Income Tax Expense/(Benefit) 0.104 0.002 (0.335)

Net Income/(Loss) After Tax 3.030 10.572 (1.453)

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

u

r

Source:

2016

BSP

Based on the preliminary (pre-closing) BSP income statement as of end-December

2016 prepared by the Financial Accounting Department (FAD) of the BSP.

Unaudited

Restated based on the audited financial statements prepared by BSP-FAD


Conclusion, Challenges and Future Policy Directions Overall, the Philippine economy continues to be in a

position of strength, characterized by accelerating

growth, benign inflation environment, ample l iquidity

and credit, sound banking system, robust external

payments position, and adequate level of reserves.

Looking ahead, prospects for the domestic economy

continue to remain favorable as domestic growth

fundamentals are expected to remain intact. Growth

is expected to settle within the DBCC-approved

medium-term assumption of 6.5 - 7.5 percent in 2017

and 7.0-8.0 percent in 2018-2022, reflecting to an

important extent the stronger growth in

manufacturing and public sector construction,

particularly as more Public-Private Partnership (PPP)

projects and other government infrastructure

programs get underway. Domestic demand will

continue to underpin output expansion, supported

by steady growth in remittance inflows, low and

stable inflation, healthy credit growth and better

employment prospects. Increased spending on

infrastructure, education, health and targeted social

protection programs are not only there to provide

additional growth impetus, but would likewise

improve human capital and enhance the country’s

competitiveness. This would enable the country to

springboard to more rapid and sustainable economic

growth over the long run.

While the country’s progress toward a high growth

trajectory appears to be on track, several key

developments have emerged, posing potential risks

and challenges to the economic outlook.

Global growth is projected to pick up pace in 2017,

supported by strengthened economic activity in both

advanced economies and emerging market and

developing economies (EMDEs). In its January 2017

World Economic Outlook (WEO) Update, the

International Monetary Fund (IMF) expects global

growth to accelerate to 3.4 percent in 2017,

recovering moderately from the estimated

3.1 percent growth in 2016, with stronger-than-

expected outturn in the second half of 2016 and

stimulus coming from fiscal measures in major

economies, particularly United States and China.55

However, the global economic recovery in the

near-term remains fragile, with elevated uncertainty

emanating from the Brexit process and the scope of

potential policy shifts by the new US administration.

US President Donald Trump’s proposed expansionary

fiscal policies could lead to higher and faster-than-

expected hikes on US federal funds rate. Moreover,

the possible shift toward inward-looking policies

could result in slower global trade activity and weigh

on investments growth in EMDEs.

The IMF also stated that downside risks to the global

outlook continue to be pronounced. In addition to

the possibility of protectionist policies among many

countries, other risks involve factors such as the

extended financial turbulence and higher risk

aversion from the intensification of bank distress in

some European economies, the potential disruptive

rebalancing in China due to reliance on credit growth,

sizeable fiscal adjustments for commodity-exporting

countries, and financial stability issues in emerging

market economies. At the same time, political and

other risks l ike the refugee crisis in Europe,

geopolitical tensions and terrorism, climate-related

factors, and the spread of diseases such as the Zika

virus all pose additional downside risks to growth.

The growing expectations of further normalization of

monetary policy in the US and expected divergence

of other central bank policies are seen to trigger

bouts of portfolio rebalancing, resulting in capital

flows moving away from emerging markets and

exchange rate pressures in these economies. Data

from the Institute of International Finance (IIF)

showed capital flows reversing in EMs since October

2016, persisting towards December 2016 with the US

Federal Reserve raising its policy rate during the

month.

A protracted slowdown of the Chinese economy

could impact on the country’s exports given the

55

IMF January 2017 WEO Update.


strong bilateral trade relations between the two

economies in recent years. For 2017, the IMF, in its

January 2017 WEO Update, upgraded its growth

forecast for China’s economy to 6.5 percent,

0.3 percentage points higher than the October 2016

WEO forecast due to an expected policy stimulus.

However, the IMF pointed out that continued

reliance on stimulus measures, rapid credit

expansion and lingering corporate debt concerns,

raises the risk of a sharper slowdown. Nevertheless,

the expected recovery in economic activity in

advanced economies, particularly the US, could

compensate for a potential slowdown in China.

Following the agreements of some of the

Organization of the Petroleum Exporting Countries

(OPEC) and non-OPEC producers in late 2016 to l imit

oil production, a modest recovery in oil prices is seen

to occur over the near term. In its January 2017

Commodity Markets Outlook (CMO), the World Bank

also projects non-energy commodity prices to rise in

2017 amid mounting supply constraints for metals,

particularly lead and zinc, and adverse weather

conditions in some parts of East Asia and South

America, leading to small uptick in prices of oils and

meals, as well as raw materials components.

On the inflation outlook, latest forecasts show that

inflation would likely settle within the target range of

3.0 percent ± 1.0 percentage point in 2017-2018.

Upside risks to inflation forecasts include possible

adjustments in electricity rates as well as the initial

impact of the government’s broad tax reform

program. Meanwhile, uncertainty over global growth

prospects continues to pose a key downside risk to

the inflation outlook.

Amid the uncertainties engulfing the global

environment, the government remains focused on

strengthening anchors and building defenses to

protect the economy from negative surprises and

buoy its sustainable growth momentum. First, on the

fiscal front, there is elbow room for fiscal authorities

to further boost public spending. The narrowing

debt-to-GDP ratios afford the government to

increase the fiscal deficit-to-GDP ratio target to

3.0 percent for 2017-2022. This would allow greater

flexibil ity to accelerate infrastructure spending and

investments in human capital, and pursue

much-needed structural reform agenda, steering a

stronger and more inclusive Philippine economy.

Second, there is enough leg room for monetary

policy to support economic activity. Real policy rates

are several basis points above zero-bound levels,

indicating adequate space to calibrate monetary

policy in the event of further tightening of global

financial conditions.

To continue to support the positive growth and

inflation dynamics in the country through enhancing

further monetary policy transmission, BSP adopted

operational reforms through the interest rate

corridor (IRC) system on 3 June 2016. The IRC is

expected to enhance the link between the BSP’s

monetary policy stance and financial markets, and

thereby impact the real economy. The IRC system has

provided the BSP the means to drain l iquidity

gradually and on a more long-term basis. This would

enhance the transmission of monetary policy to

market interest rates over the medium term.

Going forward, the BSP will continue to keep a

watchful eye over how domestic and external

developments will evolve to ensure that an enabling

monetary and financial environment is maintained to

achieve the country’s growth objectives, while

safeguarding price and financial stability.

In response to uncertainties in the global financial

market, the BSP will be able to help mitigate the

adverse impact of capital outflows on the domestic

economy by ensuring adequate level of l iquidity in

the economy and the financial markets during

periods of heightened uncertainty and increased risk

aversion. While guarding against speculative flows

that could contribute to the peso’s volatil ity and

undermine the inflation target, the BSP will continue

to maintain a market-determined exchange rate and

a comfortable level of international reserves as

safeguard against external shocks.

To guard against possible formation of financial

imbalances, the BSP has expanded its crises

surveillance and monitoring toolkit. To name a few,

the Bank Distress Index is used to identify potential

banking crisis episodes in the country; the Philippine

Composite Index of Financial Stress is used to


measure the degree of financial stress across

markets; and the Early Warning Systems on currency

crisis and on debt sustainability. The BSP continues to

further refine and expand these tools as appropriate.

The sound and stable condition of the Philippine

banking system has been one of the anchors of the

sustained robust performance of the domestic

economy. The state of the country’s financial system,

at present, is grounded on the structural and

regulatory reforms pursued by the BSP over the

years. This reform momentum will be further

sustained with a view to toughen its resil ience

against shocks as well as to boost its role as a catalyst

for durable long-term economic growth. To this end,

the BSP will continue to ensure that a sound

regulatory framework, that would allow Philippine

banks to cope with challenges related to global

financial volatilities, is in place.

The BSP will also continue to pursue reforms

promoting effective risk management, a stronger

capital base and improved corporate governance

standards, which are essential ingredients to

ensuring stability in the financial system. The BSP will

continue to craft banking regulations that are

responsive, consistent with best practices and in l ine

with the international financial architecture reform

agenda.

In addition, the BSP will continue to actively pursue

initiatives to promote a deeper domestic capital

market that will complement the presence of a

resil ient banking system. The policy thrust is to focus

on enhancing further the infrastructure and the

regulatory framework for capital market transactions

to promote efficiency in trading, settlement and

delivery of securities. At the same time, the BSP will

continue to adopt policies and programs that would

help develop a sound, responsive, and i nclusive

financial system that will broaden the access of the

underserved and the unbanked segments of our

population to the financial sector. Among the key

strategies in the BSP’s financial inclusion agenda are

putting in place banking regulations that leverage on

technology to increase access to financial products ;

strengthening financial consumer protection; and

raising financial education and awareness to new

financial products and modes of delivery.

The BSP will l ikewise remain proactive in ensuring the

credibil ity and promoting a safe, sound and efficient

payments and settlements system with the

continued enhancement of its processes and

provision of necessary infrastructure through the

operation of the Philippines’ real time gross

settlement system or the PhilPaSS.

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.


Annexes

Annex A. Banking Policies

Amendments to the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) - Pawnshop (P) Regulations (BSP Circular No. 938 dated 23 December 2016)

The Bangko Sentral ng Pilipinas (BSP) Monetary Board (MB) has approved a new supervisory

framework governing pawnshops in line with the BSP’s recognition of the important role of the pawnshop industry in building a more inclusive financial system and protecting the welfare of

financial consumers. Under the new rules, the BSP shall put high regard on the fitness and propriety of the pawnshop operators,

including its incorporators, directors, partners and officers, by focusing on their integrity, market reputation, competenc e and financial capacity. The

new rules also require the pawnshop operators to adopt the applicable BSP Regulations on Financial Consumer Protection. It is now mandated to disclose to their customers: (1) the effective interest rate of

the loan, including the charges on the transaction; and (2) the policy on insurance of pawned items, maturity date and grace period in cases when the

customer failed to redeem the loan. The new framework provides that the network-based approach shall be adopted wherein pawnshop

operators are only required to submit a notification to the BSP for the establishment and operation of pawnshop offices instead of the usual approval from the BSP prior to its operation. The new rules

introduce different types of BSP licenses to pawnshop operators depending on the type and/or level of complexity of business to be

undertaken. Moreover, each type of l icense will require a specific minimum amount of capital. It also reduced the documentary requirements for the establishment, transfer, and voluntary closure of

pawnshop offices/branches. Further, it also instituted a l imit on the borrowings of pawnshops to finance its pawning operations. Said

borrowings shall not come from more than 19 creditors. However, the limit does not cover borrowings for purposes of acquiring fixed assets

intended for business operations.

Existing pawnshop operators are given one year from the date of the effectivity of the new regulations to

secure their BSP license to operate a pawnshop business. Upon the expiration of the transitory period, all Acknowledgment of Registrations and/or Authority to Operate previously issued by the BSP

shall be considered automatically revoked. Amendments to Foreign Exchange (FX) Regulations (BSP Circular No. 937 dated 27 December 2016)

The BSP Amended the Manual of Regulations on Foreign Exchange Transactions (FX Manual) to align

with the provisions of Republic Act (R.A.) No. 10641 (An Act Allowing the Full Entry of Foreign Banks in the Philippines, amending for the Purpose R.A. No. 7721) and with the BSP Circular No. 858 dated 21

November 2014 implementing the said law. The approved policy changes involve mainly: (a)

inclusion of an express provision that the FX funding for permanently assigned capital of foreign bank branches must be inwardly remitted and converted to pesos at the exchange rate prevailing at the time

of remittance, pursuant to the pertinent provisions of the Manual of Regulations for Banks (MORB); (b) use of a general reference to the MORB instead of citing R.A. Nos. 7721 and 10641 or the specific provisions of

the MORB; and (c) revision of the definitions of “unimpaired capital of a local bank”, “unimpaired capital of foreign bank branches”, and “unimpaired

capital of foreign bank subsidiaries” as contained in the MORB. The Governor affirmed that the continuing review of

FX regulations is consistent with: (a) the BSP’s commitment to maintain a safe and sound financial system, a stable FX market, and an appropriate monetary policy; and (b) other applicable laws.

Guidelines on the Implementation of EMV Card Fraud Liability Shift Framework (BSP Circular No. 936 dated 27 December 2016)

In line with the policy decision to migrate the entire payment network to EMV technology by 1 January 2017, the MB, in its Resolution No. 2304 dated 23

December 2016, approved the EMV Card Fraud Liability Shift Framework (ECFLSF) which will take effec t also on January 1, 2017. Considering the

complexity and magnitude of the EMV migration process for the entire banking industry, the ECFLSF takes into consideration that BSP-supervised financial institutions (BSFIs) would not be fully migrated by the

set deadline.


The issuance of the ECFLSF is expected to further accelerate EMV compliance efforts as well as speed

up the dispute resolution and restitution process for customers who have valid claims arising from counterfeit fraud or skimming attacks.

Pending full migration to the EMV technology, the use of magnetic stripes in payment cards and/or card-accepting devices shall be allowed subject to the ECFLSF. Nonetheless, BSFIs are expected to

achieve full EMV compliance as soon as possible or face monetary penalties and other sanctions pursuant to BSP Circular No. 875 dated 15 April 2015.

For this purpose, BSFIs should get approval from the BSP for a specific timeline for completi on of their respective EMV migration projects.

Amendments on the Treatment of Other Comprehensive Income in the Computation of Basel III Non-Stock Savings and Loan Associations

(NSSLAs) (BSP Circular No. 934 dated 23 December 2016) “The BSP issued BSP Circular No. 934 amending Part

II Qualifying Capital of Appendix 63b/AppendixQ-46 to section x1115/subsection 4115Q1 (2008-4116Q) of the MORB/MORNBFI on the risk-based capital adequacy framework for the Philippine banking

system to include the following items under (g) other comprehensive income:

Part II, Section A (3) (g) and Section B (10) (e)

(3) Remeasurement of Net Defined Benefit Liability/(Asset);

(4) Gains/(Losses) on fair value adjustments of hedging instruments; and

a. Cash flow hedge; and b. Hedge of a net investment in

foreign operations (5) Others (indicate the nature and amount

of the account lodge)”

Part II Section B, Section 2 (1) (8) (C) “(ii) Exchange differences arising on a monetary item

that forms part of a reporting bank’s net investment in a foreign operation denominated in the functional currency of the foreign operation.

(d) Remeasurements of Net Defined Benefit Liability (Asset) – This refers to remeasurements of the net defined benefit

liability (asset) made in accordance with PAS 19 “employee Benefits”.

(e) Net unrealized gains/(losses) on fair value attributable to changes in own credit

risk of financial liabilities designated at fair value through profit or loss – this refers to gains/(losses) resulting from change in the fair value of financial liabilities designated at

fair value through profit or loss where such gains/(losses) are attributable to changes in the bank’s own credit risk as provided under PFRS 9. (For early adopters of PFRS 9 on the

classification of financial l iabilities) (f) Others – This refers to Other

Comprehensive Income that cannot be appropriately classified under items (a) to (e).

Amendments to the Manual of Regulations for Non-Bank Financial Institutions applicable to NSSLAs (BSP Circular No. 933 dated 16 December 2016)

To prevent acts, practices or omissions considered prejudicial to the interest of NSSLA members, the BSP issued guidelines to be observed in

implementing section 2(a) to (d) of Republic Act No. 8367, otherwise known as “The Revised Non-Stock Savings and Loan Association Act of 1997”.

Section 1. Section 4184S and related subsections of the Manual of Regulations for Non-bank Financial Institutions applicable to Non-Stock Savings and Loan

Associations (MORNBFI-S Regulations), were added. These subsections pertain to: 1) Rules Governing Prejudicial Acts, Practices or Omissions; 2) Acts, Practices or Omissions considered prejudicial to the

interest of the members is also added enumerating acts, practices and omissions considered prejudicial to the interest of members; and 3) Enforcement actions.

Amendments to Relevant Provisions of the Manual of Regulations for Banks on the Establishment/Relocation/Voluntary Closure/Sale

of Branches (BSP Circular No. 932 dated 16 December 2016) Consistent with the BSP’s policy of promoting a

competitive banking environment and ease of doing business, the MB approved the amendments to the guidelines on the establishment of branches to

provide banks with more flexibility in expanding their branching network to strategic locations. The new regulation removed the use of theoretical

capital as well as the combined capital requirement tied to geographic location in evaluating branch applications since the branch network size and


location of head office are already emb edded in the latest minimum capital requirement for banks.

The MB also reaffirmed the general thrust of allowing banks to establish branches anywhere in the Philippines, including in the cities previously

considered as restricted areas, namely, Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig, Quezon and San Juan. The move is aligned with the initiatives on banking system liberalization which

include the removal of the branch moratorium in restricted areas and the gradual lifting of the suspension on the establishment of new domestic

banks. Anchored on their overall business model and strategic direction, smaller banks may now establish

branches in Metro Manila subject to higher capitalization and special licensing fee if said branches are to be located in the cities previously

considered as restricted areas. New Service Fees for Banks' Deposit and Withdrawal Transactions and Amendments to

Operational Processes under the Enhanced Cash Management (ECM) Services and Guidelines on Clean Note and Coin Policy (BSP Circular No. 931 dated 9 December 2016)

The BSP issued the guidelines on the Clean Note and Coin Policy (CNCP) and the new service fees for

banks’ deposit and withdrawal transactions. This recently issued BSP Circular stipulates the requirement on banks’ adoption of a CNCP which

include the following: (a) bank-wide coverage of the policy; (b) criteria to determine when a note/coin is to be pulled out of circulation; (c) guidelines in ensuring that the life of currency is extended; and (d)

deposit and/or exchange on a regular basis of unfit notes/coins with the BSP. The said circular also lays down the important roles

of compliance and internal audit functions of banks in assessing consistent adherence to the CNCP. In line with the implementation of the BSP’s ECM

services to better serve the country’s currency requirements, the BSP rationalized the service fee structure for banks’ deposit and withdrawal

transactions with the BSP, and amended some operational processes under the ECM services for greater efficiency. Fee on banks’ withdrawals of banknotes was waived, among others, to encourage

banks to withdraw new banknotes. Thereby, accelerating the replacement of unfit banknotes in circulation which is supportive of the BSP’s Clean Note Policy.

The BSP Coin Series continues to be legal tender. As such, they can be used as medium of exchange in all

business transactions in the country. Effective recirculation of coins will lead to less minting cost on the part of the BSP. This could potentially increase the amount of dividend that the

BSP will be able to remit to the National Government. In turn, allowing the National Government to allocate additional resources to build public infrastructures, particularly farm-to-market

roads and school buildings, among others. The BSP also encourages the public to exchange with

banks their unfit coins. A currency coin shall be considered unfit for circulation when it is bent or twisted out of shape or defaced or show signs of corrosion, but its genuineness and/or denomination

can still be readily and clearly determined/identified, or it has considerably reduced in weight by natural abrasion/wear and tear. Unfit coins shall not be

recirculated, but may be presented for exchange to or deposited with any bank pursuant to BSP Circular No. 829, Series of 2014.

Amendments to Subsection x102.5 of the MORB on the Conversion of Microfinance-Oriented Thrift/Rural Banks/Branches (BSP Circular No. 929 dated 28 October 2016)

The BSP amended the MORB to allow the conversion of microfinance-oriented thrift banks (TBs) and rural

banks (RBs) to regular TBs and RBs as well as the conversion of their microfinance-oriented branches to regular branches.

The circular states that TBs and RBs are allowed to convert to regular TBs and RBs provided, that they have complied with all the requirements for a regular TB/RB license and subject to the submission of

certification signed by the president or officer of equivalent rank stating that the allocation of at least 50 percent of the gross loan portfolio to microfinance

is no longer feasible sue to changes in market condition. This should be supported with a market study and strategic plan and business strategy.

Another requirement is the certified true copy of the resolution of the bank’s board of directors authorizing the conversion of the microfinance-

oriented bank into a regular bank. The bank must also change its business name to reflect its reclassification to a regular bank.


Amendments to the Regulations Governing Fees on Retail Bank Products/Services and Dormant Deposit

Accounts (BSP Circular No. 928 dated 24 October 2016) The BSP enhanced the rules governing dormant

deposit accounts and the fees charged by banks on their retail products and services in line with the BSP Consumer Protection Framework.

Under the reform initiative, the imposition by banks and NSSLAs of dormancy fee has been subject to more stringent conditions. A monthly dormancy fee,

not exc eeding Ᵽ30.00, can only be imposed if there is no deposit or withdrawal from the account for five years; if the deposit is below the minimum monthly average daily balance; and if the depository bank or

NSSLA has complied with the notification requirements.

The new rules also require banks to give three notices pertaining to dormant accounts: (1) potential dormancy prior to the commencement of the dormancy period; (2) charging of dormancy fee; and

(3) escheat of account pursuant to the Unclaimed Balances Act. To comply with the notification requirements, a

depositor must be notified through postal mail, courier delivery, email, telephone or other means at least 60 days before the deposit becomes dormant;

and at least 60 days prior to the charging of dormancy fees. Depositors shall also be notified at least 60 days

before the start of proceedings for escheat or the transfer of unclaimed dormant deposits to the National Treasurer. There will be a permanent retention of records of escheated accounts for

purposes of tracing of deposits. NSSLAs are required under the new rules to notify

their members of the dormancy and the possible imposition of a dormancy fee at least 60 days prior to the dormancy of the account and 60 days prior to the imposition of the dormancy fee.

To enable financial consumers to compare fees, the amended policy also requires banks to post their fees

on retail deposit, remittance and loan products/services in their official website and in conspicuous places in all banking units.

Banks shall publicly notify clients of any amendments in the terms and conditions of retail bank products/services. Complementary individual notices to a client, however, shall be sent if the amendments

pertain to or will result to fees to be paid or charged on the account of the client.

Clients are granted the opportunity to manifest objection to amendments to fees’ terms and conditions and the right to exit the contract wi thout penalty.

The new regulations provide that fees for domestic fund transfers or remittances should be charged only to the sender. This enables determination of the

exact amount to be received by the beneficiary and allows consumers to decide on the most cost-efficient means for remitting money. Currently, both

the remitter and recipient/beneficiary pay for the remittance transaction. Under the enhanced rules, banks shall also adopt a

policy for the fees charged on financial products and services and a fee structure as a measure of Fair Treatment of its clients. The enhanced rules shall be

effec tive six months from publication in a newspaper of general circulation. However, the notification requirements and record retention of accounts subject to escheat shall be effective 15 days after

publication to cover the next round of escheat in January 2017.

Annex B. Capital Market Reforms56

Tax Reform Package

In the last week of September, the

Department of Finance (DOF) submitted to the Congress the first package of tax reforms designed to lower personal income taxes

rates while raising revenues. The proposed tax reform measures included restructuring the personal income tax system, widening the tax base, and adjusting excise taxes on

automobiles and petroleum products.

In October, the Congress started to discuss

the package and expected the tax policy

reform to be quickly put in place to enable the government to raise the additional funds needed to increase public infrastructure spending and investments in human capital

and social protection.

56

Source: Bangko Sentral ng Pilipinas, Media Releases, August 2016.


Foreign Exchange Rules Further Liberalized

In December, the BSP furthered the

liberalization of foreign exchange rules and regulations as the country faced increasing integration with the global economy.

The approved policy changes mainly

involved: (a) inclusion of an express provision that the foreign exchange (FX) funding for permanently assigned capital of foreign bank branches must be inwardly

remitted and converted to pesos at the exchange rate prevailing at the time of

remittance, pursuant to the pertinent provisions of the Manual of Regulations for Banks (MORB); (b) use of a general referenc e to the MORB instead of citing R.A.

Nos. 7721 and 10641 or the specific provisions of the MORB; and (c) revision of the definitions of “unimpaired capital of a local bank”, “unimpaired capital of foreign

bank branches” and “unimpaired capital of foreign bank subsidiaries” as contained in the MORB.

Report on Economic and Financial Developments - Fourth Quarter 2016 Statistical Tables

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

6 Selected Domestic Interest Rates

7 Number of Financial Institutions

8 Total Resources of the Philippine 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

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 ORIGINfor periods indicated

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

Agriculture, Hunting, Forestry and Fishing 179.7 167.0 155.8 216.3 181.4 166.9 155.7 215.8 173.5 163.6 160.2 213.3

Industry 561.3 614.5 558.1 657.3 590.8 652.2 592.4 700.4 643.8 698.4 642.3 753.8

Mining and Quarrying 21.7 30.3 16.4 13.3 21.1 27.7 16.4 15.2 23.5 25.6 16.0 15.1

Manufacturing 400.8 414.7 378.6 472.4 425.0 434.2 400.7 501.2 459.0 461.1 428.0 535.8

Construction 87.3 109.0 98.5 114.5 90.7 127.0 106.2 123.9 101.9 141.9 122.7 137.4

Electricity, Gas and Water Supply 51.5 60.5 64.6 57.2 54.0 63.3 69.1 60.1 59.4 69.7 75.6 65.5

Services 942.0 1,053.3 1,003.0 1,062.1 994.1 1,124.2 1,075.0 1,145.0 1,069.8 1,217.3 1,147.9 1,229.2

Transportation, Storage and Communication 130.0 144.0 119.1 144.9 141.0 153.6 128.7 158.1 148.6 164.5 134.7 168.0

Trade and Repair of Motor Vehicles, Motorcycles,

Personal and Household Goods 255.2 288.4 312.0 330.2 270.3 307.6 338.3 354.3 290.5 334.7 358.9 378.6

Financial Intermediation 125.5 136.7 124.0 129.2 130.9 144.6 130.7 140.4 143.7 154.6 141.8 148.9

Real Estate, Renting and Busines Activities 182.3 209.8 206.1 205.1 194.0 224.2 222.2 221.1 211.5 245.1 242.0 240.9

Public Administration and Defense;

Compulsory Social Security 68.9 83.3 71.1 70.2 66.1 82.7 73.0 75.3 69.6 88.0 75.6 84.4

Other Services 180.1 191.1 170.6 182.4 191.8 211.4 182.2 195.8 206.0 230.5 194.9 208.4

Gross Domestic Product 1,683.0 1,834.8 1,716.8 1,935.7 1,766.4 1,943.2 1,823.1 2,061.1 1,887.1 2,079.2 1,950.4 2,196.4

Net Primary Income 370.7 362.9 355.8 373.3 372.5 372.1 380.1 416.2 409.5 390.7 388.8 433.1

Gross National Income 2,053.7 2,197.7 2,072.7 2,309.0 2,138.9 2,315.4 2,203.2 2,477.3 2,296.6 2,469.9 2,339.3 2,629.4

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

Agriculture, Hunting, Forestry and Fishing 0.9 3.3 -2.3 4.1 1.0 -0.1 -0.1 -0.2 -4.4 -2.0 2.9 -1.1

Industry 4.8 9.0 7.8 9.2 5.3 6.1 6.1 6.5 9.0 7.1 8.4 7.6

Mining and Quarrying 17.4 10.8 12.7 6.3 -2.5 -8.6 0.5 14.0 11.1 -7.6 -2.6 -0.5

Manufacturing 7.0 11.1 7.5 7.7 6.0 4.7 5.8 6.1 8.0 6.2 6.8 6.9

Construction -4.2 3.9 12.0 17.1 3.9 16.6 7.8 8.2 12.4 11.8 15.5 11.0


Services 7.1 6.1 5.8 5.7 5.5 6.7 7.2 7.8 7.6 8.3 6.8 7.4







Compulsory Social Security 6.8 1.7 -2.5 11.4 -4.0 -0.8 2.6 7.3 5.2 6.4 3.7 12.1

Other Services 5.5 4.3 5.0 1.5 6.5 10.6 6.8 7.3 7.4 9.0 6.9 6.5

Gross Domestic Product 5.6 6.8 5.7 6.7 5.0 5.9 6.2 6.5 6.8 7.0 7.0 6.6

Net Primary Income 11.0 9.0 -2.6 1.1 0.5 2.5 6.8 11.5 9.9 5.0 2.3 4.1

Gross National Income 6.6 7.2 4.1 5.7 4.2 5.4 6.3 7.3 7.4 6.7 6.2 6.1

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

Agriculture, Hunting, Forestry and Fishing 0.1 0.3 -0.2 0.5 0.1 0.0 0.0 0.0 -0.4 -0.2 0.2 -0.1

Industry 1.6 3.0 2.5 3.0 1.8 2.1 2.0 2.2 3.0 2.4 2.7 2.6

Mining and Quarrying 0.2 0.2 0.1 0.0 0.0 -0.1 0.0 0.1 0.1 -0.1 0.0 0.0

Manufacturing 1.6 2.4 1.6 1.9 1.4 1.1 1.3 1.5 1.9 1.4 1.5 1.7

Construction -0.2 0.2 0.6 0.9 0.2 1.0 0.4 0.5 0.6 0.8 0.9 0.7


Services 3.9 3.5 3.4 3.1 3.1 3.9 4.2 4.3 4.3 4.8 4.0 4.1







Compulsory Social Security 0.3 0.1 -0.1 0.4 -0.2 0.0 0.1 0.3 0.2 0.3 0.1 0.4

Other Services 0.6 0.5 0.5 0.1 0.7 1.1 0.7 0.7 0.8 1.0 0.7 0.6


Note: Total may not add up due to rounding.

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.

Source of basic data: Philippine Statistics Authority (PSA)

LEVELS (in billion pesos; at constant 2000 prices)

2014 2015 2016

2016

ANNUAL CHANGE (in percent)

2014 2015 2016

CONTRIBUTION TO GDP GROWTH (in percent)

2014 2015

1a GROSS NATIONAL INCOME AND GROSS DOMESTIC PRODUCT BY EXPENDITURE SHARESfor periods indicated

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

Household Final Consumption Expenditure 1,161.2 1,213.1 1,170.9 1,406.9 1,231.9 1,291.3 1,241.9 1,499.0 1,318.4 1,387.0 1,330.1 1,592.8

Government Final Consumption Expenditure 185.1 219.5 168.9 155.3 185.5 224.7 195.4 179.8 207.5 254.9 201.4 186.9

Capital Formation 370.4 331.0 383.1 483.9 416.6 401.9 438.7 548.1 527.6 502.5 520.5 630.3

Fixed Capital 373.0 358.5 376.3 417.8 405.7 404.1 428.6 518.9 520.0 503.4 530.7 615.8

Construction 135.0 163.9 152.6 180.7 141.1 187.4 165.5 194.5 159.4 216.2 193.3 213.0

Durable Equipment 202.0 162.7 191.8 193.2 227.1 185.2 226.6 274.3 317.5 252.2 295.3 346.3

Breeding Stock & Orchard Dev't 26.1 22.5 18.3 30.4 26.1 23.0 19.0 31.2 27.2 23.8 19.6 32.3

Intellectual Property Products 9.8 9.4 13.6 13.5 11.4 8.6 17.6 18.8 15.9 11.2 22.5 24.2

Changes in Inventories -2.5 -27.5 6.8 66.1 10.9 -2.2 10.1 29.2 7.6 -0.9 -10.2 14.4

Exports 812.3 896.1 941.7 727.8 898.1 941.7 1,034.3 807.2 963.7 1,035.4 1,125.7 891.3

Less: Imports 858.9 807.4 938.4 852.1 963.3 909.1 1,090.4 979.4 1,146.2 1,120.2 1,238.5 1,126.6

Statistical Discrepancy 12.8 -17.5 -9.3 13.8 -2.4 -7.3 3.3 6.5 16.1 19.6 11.3 21.6

Gross Domestic Product 1,683.0 1,834.8 1,716.8 1,935.7 1,766.4 1,943.2 1,823.1 2,061.1 1,887.1 2,079.2 1,950.4 2,196.4

Net Primary Income 370.7 362.9 355.8 373.3 372.5 372.1 380.1 416.2 409.5 390.7 388.8 433.1

Gross National Income 2,053.7 2,197.7 2,072.7 2,309.0 2,138.9 2,315.4 2,203.2 2,477.3 2,296.6 2,469.9 2,339.3 2,629.4

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

Household Final Consumption Expenditure 6.3 5.7 4.9 5.3 6.1 6.4 6.1 6.5 7.0 7.4 7.1 6.3

Government Final Consumption Expenditure 3.4 1.5 -1.1 11.0 0.2 2.4 15.7 15.8 11.8 13.5 3.1 4.0

Capital Formation 8.6 7.7 -0.2 5.7 12.5 21.4 14.5 13.3 26.6 25.0 18.6 15.0

Fixed Capital 0.2 5.5 11.2 8.0 8.8 12.7 13.9 24.2 28.2 24.6 23.8 18.7

Construction -5.5 7.2 12.8 19.0 4.5 14.3 8.5 7.6 13.0 15.4 16.8 9.5


Breeding Stock & Orchard Dev't -4.4 -2.0 -1.6 2.3 0.1 2.3 3.6 2.6 4.1 3.6 3.1 3.7

Intellectual Property Products 14.6 37.5 37.1 8.5 15.9 -8.8 28.8 38.9 39.7 30.7 28.2 28.7

Changes in Inventories 91.9 14.7 -85.2 -6.8 528.8 92.0 49.3 -55.8 -29.8 59.3 -201.1 -50.6

Exports 13.4 9.0 11.9 13.0 10.6 5.1 9.8 10.9 7.3 10.0 8.8 10.4

Less: Imports 17.9 5.6 4.8 10.1 12.2 12.6 16.2 14.9 19.0 23.2 13.6 15.0

Statistical Discrepancy 280.2 -65.9 -240.5 25.4 -118.8 58.3 135.1 -53.0 765.7 369.3 246.2 232.9


Net Primary Income 11.0 9.0 -2.6 1.1 0.5 2.5 6.8 11.5 9.9 5.0 2.3 4.1

Gross National Income 6.6 7.2 4.1 5.7 4.2 5.4 6.3 7.3 7.4 6.7 6.2 6.1

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

Household Final Consumption Expenditure 4.3 3.8 3.3 3.9 4.2 4.3 4.1 4.8 4.9 4.9 4.8 4.6

Government Final Consumption Expenditure 0.4 0.2 -0.1 0.9 0.0 0.3 1.5 1.3 1.2 1.6 0.3 0.3

Capital Formation 1.9 1.4 -0.1 1.4 2.7 3.9 3.2 3.3 6.3 5.2 4.5 4.0

Fixed Capital 0.0 1.1 2.3 1.7 1.9 2.5 3.0 5.2 6.5 5.1 5.6 4.7

Construction -0.5 0.6 1.1 1.6 0.4 1.3 0.8 0.7 1.0 1.5 1.5 0.9


Breeding Stock & Orchard Dev't -0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.1

Intellectual Property Products 0.1 0.1 0.2 0.1 0.1 0.0 0.2 0.3 0.3 0.1 0.3 0.3

Changes in Inventories 1.8 0.3 -2.4 -0.3 0.8 1.4 0.2 -1.9 -0.2 0.1 -1.1 -0.7

Exports 6.0 4.3 6.1 4.6 5.1 2.5 5.4 4.1 3.7 4.8 5.0 4.1

Less: Imports 8.2 2.5 2.7 4.3 6.2 5.5 8.9 6.6 10.4 10.9 8.1 7.1

Statistical Discrepancy 1.3 -0.4 -1.0 0.2 -0.9 0.6 0.7 -0.4 1.0 1.4 0.4 0.7


Accounts (PSNA) in accordance with the 1993/1998 System of National Accounts prescribed by the United Nations. Total may not add up due to rounding.

Source : Philippine Statistics Authority (PSA)

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

CONTRIBUTION TO GDP GROWTH (in percent)

2014

2014 2015 2016

2014 2015 2016

2015 2016

LEVELS (in billion pesos; at constant 2000 prices)

ANNUAL CHANGE (in percent)

2 SELECTED LABOR, EMPLOYMENT AND WAGE INDICATORS

w/ Leyte w/o Leyte5 w/ Leyte w/o Leyte w/ Leyte w/ Leyte w/o Leyte w/ Leyte w/o Leyte w/ Leyte w/o Leyte w/ Leyte w/o Leyte w/ Leyte w/o Leyte w/ Leyte w/o Leyte w/ Leyte w/ Leyte

Employment Status 1

Labor Force (in thousands) 41,379 41,343 43,206 41,164 41,840 41,901 41,026 42,146 41,340 42,520 41,637 43,289 41,727 43,309 43,704 Employed 38,651 38,741 40,837 38,461 39,158 39,177 38,347 39,775 38,997 40,052 39,213 40,664 39,202 40,974 41,664

Employment Created2 1,253 494 (106) 160 752 44 1,797 1,889 Agriculture 34 (123)Industry 828 825 Services 935 1,186

Unemployed 2,728 2,602 2,367 2,703 2,681 2,723 2,679 2,371 2,343 2,468 2,424 2,625 2,525 2,335 2,040 Underemployed 7,118 7,180 7,478 6,883 6,983 8,220 7,990 7,020 6,865 7,881 7,716 7,431 7,148 7,094 7,508

Labor Force Participation Rate (%) 64.6 63.7 63 63.7 64.6 62.9 63.0 63.3 63.4 63.3 63.4 63.5 63.7 63.3 63.6 Employment Rate (%) 93.4 93.7 95 93.4 93.6 93.5 93.5 94.4 94.3 94.2 94.2 93.9 93.9 94.6 95.3 Unemployment Rate (%) 6.6 6.3 5 6.6 6.4 6.5 6.5 5.6 5.7 5.8 5.8 6.1 6.1 5.4 4.7 Underemployment Rate (%) 18.4 18.5 18 17.9 17.8 21.0 20.8 17.6 17.6 19.7 19.7 18.3 18.2 17.3 18.0 NCR Labor Turnover Rate (%) 1.2 1.4 0.5 1.2 3.2 0.6 1.0 2.3 3.67

Overseas Employment (Deployed, in thousands)2 1,833 1,844

Land-based 1,431 1,438

Sea-based 402 407

Strikes

Number of New Strikes 2 5 15 0 3 1 1 0 3 5 7

Number of Workers Involved 51 730 3,106 0 450 200 80 0 650 283 2173

Nominal Daily Wage Rates (in pesos)3

Non-Agricultural

NCR 466.0 481.0 491.0 466.0 481.0 481.0 481.0 481.0 491.0 491.0 491.0

Regions Outside NCR 362.5 362.5 378.5 362.5 362.5 362.5 362.5 362.5 364.0 378.5 378.5

Agricultural

NCR

Plantation 429.0 444.0 454.0 429.0 444.0 444.0 444.0 444.0 454.0 454.0 454.0

Non-Plantation 429.0 444.0 454.0 429.0 444.0 444.0 444.0 444.0 454.0 454.0 454.0

Regions Outside NCR

Plantation 337.5 337.5 353.5 337.5 337.5 337.5 337.5 337.5 337.5 353.5 353.5

Non-Plantation 322.0 335.0 335.0 322.0 322.0 322.0 335.0 335.0 335.0 335.0 335.0

Real Daily Wage Rates (in pesos), 2006=100 4

Non-Agricultural

NCR 356.5 363.8 361.6 354.1 365.8 365.8 363.8 364.7 369.2 366.1 361.6

Regions Outside NCR 260.2 257.8 265.2 259.3 260.0 260.6 257.8 259.1 250.7 268.3 265.2

Agricultural

NCR

Plantation 328.2 335.9 334.3 326.0 337.6 337.6 335.9 336.6 341.4 338.6 334.3

Non-Plantation 328.2 335.9 334.3 326.0 337.6 337.6 335.9 336.6 341.4 338.6 334.3

Regions Outside NCR

Plantation 242.3 240.0 247.7 241.4 242.1 242.6 240.0 241.2 240.0 250.5 247.7

Non-Plantation 224.7 229.5 223.5 224.4 223.3 223.0 229.5 228.5 225.9 225.1 223.5

Notes:1

2 Details may not add up to totals due to rounding.3

4

5 Annual 2014 data refer to the average estimates for April, July and October survey rounds only excluding data of the province of Leyte.P Preliminary

Sources: Philippine Overseas Employment Administration (POEA), National Wages and Productivity Commission (NWPC), and National Conciliation and Mediation Board (NCMB) and Philippine Statistics Authority (PSA)

2016p

Q4Ave/Total

2015

Q1

2014

Ave/Total

2015 2016

Starting 10 November 1990, adjustments in the minimum legislated wage rates are being determined by the Regional Tripartite Wages Productiviity Board. Starting 2010, real terms is computed using 2006 as base year.

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

Q2 Q3 Q4Ave/Total Q1 Q2 Q3

Source of data for both nominal and real wage rates is the National Wages and Productivity Commission. Includes basic minimum wage and cost of living allowance (COLA). Starting 2006, annual average/total is as of December.

3 CASH OPERATIONS OF THE NATIONAL GOVERNMENT

for periods indicated

in billion pesos

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

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul

Revenues 398.4 535.3 491.3 483.5 470.5 615.2 519.2 504.0 479.0 622.0 545.8 549.2

Ratio to GDP 13.8 17.0 16.1 13.5 15.5 18.5 16.3 13.4 14.6 17.2 15.7 13.4

Tax 355.4 469.1 449.9 444.7 403.7 489.4 462.7 459.8 425.3 557.6 489.7 507.7

Non-tax 43.0 66.3 41.4 38.9 66.9 125.8 56.6 44.2 53.6 64.4 56.1 41.4

Expenditures 482.5 505.2 468.4 525.5 504.0 567.9 558.5 600.1 591.5 629.8 639.2 688.9

Ratio to GDP 16.7 16.1 15.4 14.7 16.6 17.1 17.5 15.9 18.1 17.5 18.4 16.8

Interest Payments 103.1 56.6 97.7 63.8 100.6 55.5 99.6 53.6 102.6 51.1 96.1 54.7

Equity 0.1 0.3 0.8 0.5 0.1 0.2 . 0.4 8.2 0.3 . 3.2

Net Lending 4.9 1.5 2.0 5.0 2.2 0.4 1.8 5.2 3.5 0.6 -0.4 11.6

Subsidy 1.2 48.3 12.7 18.2 3.7 40.3 11.8 22.2 8.2 28.4 45.8 20.8

Allotment to LGUs 85.1 89.0 85.8 84.4 97.1 96.8 96.8 96.8 121.7 108.5 108.1 111.5

Tax Expenditures 0.1 12.3 0.7 12.9 5.6 1.9 0.5 5.6 0.1 3.5 0.9 7.8

Others 288.0 297.1 268.7 340.8 294.7 372.8 347.9 416.2 347.1 437.6 388.8 479.3

Surplus/Deficit (-) -84.1 30.1 22.9 -42.0 -33.5 47.3 -39.3 -96.1 -112.5 -7.8 -93.4 -139.7

Ratio to GDP -2.9 1.0 0.8 -1.2 -1.1 1.4 -1.2 -2.6 -3.4 -0.2 -2.7 -3.4

Primary Balance 19.0 86.8 120.6 21.8 67.1 102.8 60.3 -42.5 -9.9 43.3 2.7 -85.0

Ratio to GDP 0.7 2.8 4.0 0.6 2.2 3.1 1.9 -1.1 -0.3 1.2 0.1 -2.1

Financing 1 7.0 31.3 69.9 67.0 -9.3 24.8 60.7 16.7 86.3 25.0 109.1 0.584.1 -30.1 -22.9 42.0 33.5 -47.3 39.3 96.1 112.5 7.8 93.4

External Borrowings -4.2 -5.3 26.6 -4.6 22.6 28.2 -0.6 14.5 14.6 -7.4 -5.6 -25.8

Domestic Borrowings 11.2 36.6 43.3 71.6 -31.9 -3.5 61.3 2.2 71.6 32.4 114.7 26.3

Total Change in Cash: Deposit/Withdrawal (-) -170.8 88.5 85.5 34.6 30.7 29.8 23.4 -85.5 -116.3 -9.2 -15.7 -116.4

Budgetary -77.1 61.5 92.8 25.0 -42.8 72.0 21.4 -79.4 -26.2 17.2 15.7 -139.2

Non-Budgetary Accounts 2 -93.7 27.0 -7.4 9.6 73.6 -42.2 2.0 -6.1 -90.1 -26.4 -31.4 22.7

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.

. rounds off to zero

- not available

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

Source: Bureau of the Treasury

201620152014

4 CONSUMER PRICE INDEX IN THE PHILIPPINES


(2006=100)

Quarterly Average

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

ALL ITEMS 124.3 126.0 126.7 127.6 128.2 129.7 131.2 131.4 132.3 133.2 134.4 135.9 137.7 139.0 140.7 140.8 141.1 141.3 141.5 142.2 142.7 143.4 144.4 145.7

FOOD AND NON-ALCHOLIC BEVERAGES 135.2 136.2 136.7 138.1 138.0 138.9 141.0 141.5 141.7 142.2 144.1 147.1 149.7 151.8 155.6 156.4 156.9 156.4 157.3 158.5 159.4 160.0 161.6 164.0

FOOD ITEMS 136.5 137.4 137.9 139.4 139.2 140.1 142.3 142.7 142.9 143.3 145.4 148.6 151.3 153.5 157.5 158.4 158.8 158.2 159.2 160.5 161.4 162.0 163.7 166.2

ALCOHOLIC BEVERAGES, TOBACCO AND NARCOTICS 120.0 122.3 123.7 124.6 125.8 128.4 129.7 130.8 158.4 168.5 170.1 171.1 173.6 175.2 176.1 177.8 180.5 181.8 182.6 184.8 189.3 191.8 193.6 196.4

NON-FOOD 117.3 119.3 120.3 120.7 121.9 123.7 124.8 124.8 125.3 126.0 126.7 127.4 128.6 129.3 129.7 129.2 129.4 130.0 129.8 129.9 130.1 130.8 131.3 131.9

CLOTHING AND FOOTWEAR 116.5 117.8 119.3 119.9 120.9 123.7 125.3 125.9 126.8 128.2 129.1 129.7 131.3 132.5 133.5 134.1 135.4 136.0 136.6 137.2 138.0 139.1 140.1 140.8

HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 117.7 120.6 121.1 121.7 123.4 125.9 127.2 126.5 126.9 127.7 127.8 129.1 130.9 131.5 130.9 129.6 129.4 130.1 128.7 128.1 128.1 128.8 129.0 129.6

ELECTRICITY, GAS AND OTHER FUELS 125.8 132.1 132.7 134.4 137.4 140.1 141.6 139.2 138.7 139.2 138.7 142.6 146.8 146.9 143.6 138.7 134.0 134.9 129.5 126.5 124.7 125.8 125.3 126.3

FURNISHINGS, HOUSEHOLD EQUIPMENT

AND ROUTING MAINTENANCE OF THE HOUSE 115.6 116.6 117.3 117.6 118.2 120.6 122.4 123.2 124.0 125.0 125.5 126.0 127.4 128.1 128.9 129.4 130.2 130.8 131.1 131.5 132.2 132.9 133.9 134.6

HEALTH 122.8 123.8 125.0 125.5 126.2 128.0 129.3 129.8 130.7 131.8 132.7 133.2 135.0 135.8 137.2 137.7 138.6 138.9 139.5 140.2 141.2 142.2 143.2 143.8

TRANSPORT 120.0 123.5 124.0 124.1 125.2 126.3 125.5 125.9 126.3 126.1 126.8 126.9 127.7 127.8 128.2 126.9 126.8 127.8 127.6 128.1 127.2 127.8 127.6 129.2

OPERATION OF PERSONAL TRANSPORT EQUIPMENT 121.9 126.9 125.9 125.5 128.4 128.6 126.3 127.9 128.4 127.2 130.5 130.8 133.8 134.3 133.4 127.9 119.8 122.7 120.5 119.5 116.7 119.7 119.5 121.3

COMMUNICATION 92.5 92.4 92.4 92.2 92.2 92.5 92.6 92.6 92.7 92.6 92.7 92.6 92.7 92.7 92.7 92.7 92.6 92.6 92.7 92.7 92.7 92.8 92.8 92.8

RECREATION AND CULTURE 105.8 106.5 107.2 107.4 108.3 109.3 110.1 110.2 110.7 111.6 112.8 112.9 113.5 113.8 114.3 114.6 114.8 115.1 115.5 115.8 116.1 116.9 117.5 117.8

EDUCATION 126.8 128.7 132.7 132.8 132.9 134.8 138.7 138.7 138.7 140.8 145.2 145.2 145.2 147.5 152.6 152.6 152.6 154.4 158.1 158.1 158.1 159.0 160.9 161.0

RESTAURANTS AND MISCELLANEOUS GOODS AND SERVICES 117.9 119.0 119.9 120.4 121.5 123.0 123.8 124.2 125.0 125.9 126.5 126.9 127.6 128.3 128.7 129.2 129.6 129.9 130.3 130.9 131.7 132.7 133.4 133.8


ALL ITEMS 2.0 1.4 0.6 0.7 0.5 1.2 1.2 0.2 0.7 0.7 0.9 1.1 1.3 0.9 1.2 0.1 0.2 0.1 0.1 0.5 0.4 0.5 0.7 0.9

FOOD AND NON-ALCHOLIC BEVERAGES 2.7 0.7 0.4 1.0 -0.1 0.7 1.5 0.4 0.1 0.4 1.3 2.1 1.8 1.4 2.5 0.5 0.3 -0.3 0.6 0.8 0.6 0.4 1.0 1.5

FOOD ITEMS 2.8 0.7 0.4 1.1 -0.1 0.6 1.6 0.3 0.1 0.3 1.5 2.2 1.8 1.5 2.6 0.6 0.3 -0.4 0.6 0.8 0.6 0.4 1.0 1.5


NON-FOOD 1.6 1.7 0.8 0.3 1.0 1.5 0.9 0.0 0.4 0.6 0.6 0.6 0.9 0.5 0.3 -0.4 0.2 0.5 -0.2 0.1 0.2 0.5 0.4 0.5


HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 2.1 2.5 0.4 0.5 1.4 2.0 1.0 -0.6 0.3 0.6 0.1 1.0 1.4 0.5 -0.5 -1.0 -0.2 0.5 -1.1 -0.5 0.0 0.5 0.2 0.5

ELECTRICITY, GAS AND OTHER FUELS 4.1 5.0 0.5 1.3 2.2 2.0 1.1 -1.7 -0.4 0.4 -0.4 2.8 2.9 0.1 -2.2 -3.4 -3.4 0.7 -4.0 -2.3 -1.4 0.9 -0.4 0.8



HEALTH 0.9 0.8 1.0 0.4 0.6 1.4 1.0 0.4 0.7 0.8 0.7 0.4 1.4 0.6 1.0 0.4 0.7 0.2 0.4 0.5 0.7 0.7 0.7 0.4

TRANSPORT 2.8 2.9 0.4 0.1 0.9 0.9 -0.6 0.3 0.3 -0.2 0.6 0.1 0.6 0.1 0.3 -1.0 -0.1 0.8 -0.2 0.4 -0.7 0.5 -0.2 1.3

OPERATION OF PERSONAL TRANSPORT EQUIPMENT 5.8 4.1 -0.8 -0.3 2.3 0.2 -1.8 1.3 0.4 -0.9 2.6 0.2 2.3 0.4 -0.7 -4.1 -6.3 2.4 -1.8 -0.8 -2.3 2.6 -0.2 1.5

COMMUNICATION -0.1 -0.1 0.0 -0.2 0.0 0.3 0.1 0.0 0.1 -0.1 0.1 -0.1 0.1 0.0 0.0 0.0 -0.1 0.0 0.1 0.0 0.0 0.1 0.0 0.0


EDUCATION 0.1 1.5 3.1 0.1 0.1 1.4 2.9 0.0 0.0 1.5 3.1 0.0 0.0 1.6 3.5 0.0 0.0 1.2 2.4 0.0 0.0 0.6 1.2 0.1



ALL ITEMS 4.5 5.0 4.8 4.7 3.1 2.9 3.6 3.0 3.2 2.7 2.4 3.4 4.1 4.4 4.7 3.6 2.5 1.7 0.6 1.0 1.1 1.5 2.0 2.5


FOOD ITEMS 5.9 6.3 5.4 5.0 2.0 2.0 3.2 2.4 2.7 2.3 2.2 4.1 5.9 7.1 8.3 6.6 5.0 3.1 1.1 1.3 1.6 2.4 2.8 3.6


NON-FOOD 3.6 4.0 4.4 4.5 3.9 3.7 3.7 3.4 2.8 1.9 1.5 2.1 2.6 2.6 2.4 1.4 0.6 0.5 0.1 0.5 0.5 0.6 1.2 1.5


HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 4.8 4.9 5.1 5.6 4.8 4.4 5.0 3.9 2.8 1.4 0.5 2.1 3.2 3.0 2.4 0.4 -1.1 -1.1 -1.7 -1.2 -1.0 -1.0 0.2 1.2

ELECTRICITY, GAS AND OTHER FUELS 10.5 8.3 8.9 11.3 9.2 6.1 6.7 3.6 0.9 -0.6 -2.0 2.4 5.8 5.5 3.5 -2.7 -8.7 -8.2 -9.8 -8.8 -6.9 -6.7 -3.2 -0.2



HEALTH 3.1 3.4 3.3 3.1 2.8 3.4 3.4 3.4 3.6 3.0 2.6 2.6 3.3 3.0 3.4 3.4 2.7 2.3 1.7 1.8 1.9 2.4 2.7 2.6

TRANSPORT 4.2 6.6 6.9 6.3 4.3 2.3 1.2 1.5 0.9 -0.2 1.0 0.8 1.1 1.3 1.1 0.0 -0.7 0.0 -0.5 0.9 0.3 0.0 0.0 0.9

OPERATION OF PERSONAL TRANSPORT EQUIPMENT 8.2 10.8 11.1 8.9 5.3 1.3 0.3 1.9 0.0 -1.1 3.3 2.3 4.2 5.6 2.2 -2.2 -10.5 -8.6 -9.7 -6.6 -2.6 -2.4 -0.8 1.5

COMMUNICATION -0.1 -0.2 -0.3 -0.4 -0.3 0.1 0.2 0.4 0.5 0.1 0.1 0.0 0.0 0.1 0.0 0.1 -0.1 -0.1 0.0 0.0 0.1 0.2 0.1 0.1


EDUCATION 4.3 4.5 5.1 4.8 4.8 4.7 4.5 4.4 4.4 4.5 4.7 4.7 4.7 4.8 5.1 5.1 5.1 4.7 3.6 3.6 3.6 3.0 1.8 1.8



2 0 1 1

2 0 1 1

2 0 1 1

Year-on-Year Change (in percent)

2 0 1 2

2016

2013

2013

2013

2016

2016

2015

2015

2015

2014

2014

2014

Quarter-on-Quarter Change (in percent)

2 0 1 2

2 0 1 2

4a CONSUMER PRICE INDEX IN METRO MANILA


(2006=100)

Quarterly Average


ALL ITEMS 119.5 120.9 121.2 122.1 122.9 123.7 125.6 125.4 125.7 125.8 126.5 127.8 129.2 130.3 131.4 131.0 131.6 131.6 131.9 132.1 132.0 132.7 133.7 135.1


of which: FOOD ITEMS 131.5 131.7 131.6 134.2 132.7 133.0 136.5 136.3 135.9 135.7 137.6 141.0 142.8 144.9 149.0 149.5 149.4 148.0 150.2 152.1 152.3 153.4 156.1 160.7


NON-FOOD 115.2 117.0 117.4 117.7 119.4 120.3 121.7 121.4 121.7 121.8 122.0 122.6 123.8 124.6 124.6 123.8 124.7 125.1 124.7 124.2 124.0 124.5 124.9 125.1



of which: ELECTRICITY, GAS AND OTHER FUELS 119.1 124.3 124.4 126.8 128.7 130.4 134.3 129.3 127.7 127.2 125.1 129.4 133.1 133.7 127.9 121.2 117.6 116.2 105.8 101.1 99.8 99.5 99.0 98.2



HEALTH 126.7 127.0 128.8 129.0 130.0 130.8 132.4 132.6 134.5 134.7 136.5 136.6 139.7 140.4 143.4 143.6 145.3 145.4 147.0 147.0 147.3 148.0 148.4 148.8

TRANSPORT 110.8 114.3 114.0 113.7 114.9 114.4 113.8 114.3 114.2 113.5 114.2 114.6 115.6 115.6 115.6 113.7 116.5 117.2 116.7 116.9 116.0 115.9 115.9 117.4

of which: OPERATION OF PERSONAL TRANSPORT EQUIPMENT 113.8 118.0 116.8 116.1 118.5 117.4 117.0 119.0 117.8 115.2 118.2 119.6 122.9 122.8 121.6 115.8 109.0 111.2 108.7 107.7 104.6 107.6 107.5 109.7

COMMUNICATION 93.6 93.4 93.3 93.2 93.1 93.7 93.9 93.9 93.9 93.9 93.9 93.9 94.1 94.1 94.1 94.1 94.1 94.2 94.3 94.3 94.3 94.4 94.4 94.4


EDUCATION 130.6 132.2 135.5 135.5 135.5 137.0 140.0 140.0 140.0 142.1 146.2 146.2 146.2 149.0 154.5 154.5 154.5 157.3 163.0 163.0 163.0 164.4 167.3 167.3



ALL ITEMS 1.6 1.2 0.2 0.7 0.7 0.7 1.5 -0.2 0.2 0.1 0.6 1.0 1.1 0.9 0.8 -0.3 0.5 0.0 0.2 0.2 -0.1 0.5 0.8 1.0

FOOD AND NON-ALCHOLIC BEVERAGES 1.3 0.2 -0.1 1.8 -1.0 0.3 2.5 -0.1 -0.2 -0.1 1.3 2.3 1.2 1.4 2.7 0.3 0.0 -0.8 1.4 1.2 0.1 0.7 1.7 2.8

of which: FOOD ITEMS 1.4 0.2 -0.1 2.0 -1.1 0.2 2.6 -0.1 -0.3 -0.1 1.4 2.5 1.3 1.5 2.8 0.3 -0.1 -0.9 1.5 1.3 0.1 0.7 1.8 2.9


NON-FOOD 1.9 1.6 0.3 0.3 1.4 0.8 1.2 -0.2 0.2 0.1 0.2 0.5 1.0 0.6 0.0 -0.6 0.7 0.3 -0.3 -0.4 -0.2 0.4 0.3 0.2


HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 2.3 2.2 0.1 0.6 1.5 0.9 1.3 -0.9 0.1 0.0 -0.4 1.0 1.0 0.6 -1.0 -1.4 0.6 0.2 -1.5 -1.0 -0.4 0.1 0.0 -0.1

of which: ELECTRICITY, GAS AND OTHER FUELS 2.8 4.4 0.1 1.9 1.5 1.3 3.0 -3.7 -1.2 -0.4 -1.7 3.4 2.9 0.5 -4.3 -5.2 -3.0 -1.2 -9.0 -4.4 -1.3 -0.3 -0.5 -0.8



HEALTH 1.4 0.2 1.4 0.2 0.8 0.6 1.2 0.2 1.4 0.1 1.3 0.1 2.3 0.5 2.1 0.1 1.2 0.1 1.1 0.0 0.2 0.5 0.3 0.3

TRANSPORT 3.4 3.2 -0.3 -0.3 1.1 -0.4 -0.5 0.4 -0.1 -0.6 0.6 0.4 0.9 0.0 0.0 -1.6 2.5 0.6 -0.4 0.2 -0.8 -0.1 0.0 1.3

of which: OPERATION OF PERSONAL TRANSPORT EQUIPMENT 6.1 3.7 -1.0 -0.6 2.1 -0.9 -0.3 1.7 -1.0 -2.2 2.6 1.2 2.8 -0.1 -1.0 -4.8 -5.9 2.0 -2.2 -0.9 -2.9 2.9 -0.1 2.0

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

RECREATION AND CULTURE 0.1 -0.1 -0.1 0.0 2.7 0.8 1.3 0.0 0.5 0.9 0.6 0.0 1.0 0.7 0.8 0.3 0.5 0.5 0.7 0.3 0.2 1.4 1.6 0.2

EDUCATION 0.0 1.2 2.5 0.0 0.0 1.1 2.2 0.0 0.0 1.5 2.9 0.0 0.0 1.9 3.7 0.0 0.0 1.8 3.6 0.0 0.0 0.9 1.8 0.0



ALL ITEMS 4.1 4.2 3.9 3.8 2.8 2.3 3.6 2.7 2.3 1.7 0.7 1.9 2.8 3.6 3.9 2.5 1.9 1.0 0.4 0.8 0.3 0.8 1.4 2.3




NON-FOOD 3.9 3.5 3.6 4.1 3.6 2.8 3.7 3.1 1.9 1.2 0.2 1.0 1.7 2.3 2.1 1.0 0.7 0.4 0.1 0.3 -0.6 -0.5 0.2 0.7


HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 4.9 3.3 3.8 5.3 4.5 3.1 4.4 2.8 1.4 0.5 -1.2 0.6 1.6 2.3 1.6 -0.7 -1.1 -1.5 -2.0 -1.6 -2.7 -2.8 -1.3 -0.4

of which: ELECTRICITY, GAS AND OTHER FUELS 9.9 0.0 2.3 9.5 8.1 4.9 8.0 2.0 -0.8 -2.5 -6.9 0.1 4.2 5.1 2.2 -6.3 -11.6 -13.1 -17.3 -16.6 -15.1 -14.4 -6.4 -2.9



HEALTH 4.1 4.1 3.3 3.2 2.6 3.0 2.8 2.8 3.5 3.0 3.1 3.0 3.9 4.2 5.1 5.1 4.0 3.6 2.5 2.4 1.4 1.8 1.0 1.2

TRANSPORT 4.1 6.9 7.2 6.1 3.7 0.1 -0.2 0.5 -0.6 -0.8 0.4 0.3 1.2 1.9 1.2 -0.8 0.8 1.4 1.0 2.8 -0.4 -1.1 -0.7 0.4

of which: OPERATION OF PERSONAL TRANSPORT EQUIPMENT 9.0 10.5 11.3 8.2 4.1 -0.5 0.2 2.5 -0.6 -1.9 1.0 0.5 4.3 6.6 2.9 -3.2 -11.3 -9.4 -10.6 -7.0 -4.0 -3.2 -1.1 1.9

COMMUNICATION -0.1 -0.3 -0.6 -0.6 -0.5 0.3 0.6 0.8 0.9 0.2 0.0 0.0 0.2 0.2 0.2 0.2 0.0 0.1 0.2 0.2 0.2 0.2 0.1 0.1

RECREATION AND CULTURE 1.6 0.7 0.1 -0.1 2.5 3.4 4.8 4.8 2.6 2.7 2.0 2.0 2.5 2.3 2.4 2.7 2.2 2.1 2.0 2.0 1.8 2.7 3.6 3.4

EDUCATION 3.7 3.7 3.8 3.8 3.8 3.6 3.3 3.3 3.3 3.7 4.4 4.4 4.4 4.9 5.7 5.7 5.7 5.6 5.5 5.5 5.5 4.5 2.6 2.6



2 0 1 2

2014

2014

2014

2 0 1 1


2013

2013

2015

2015

2016

2016

2016


2 0 1 1 2013 2015

2 0 1 2

2 0 1 22 0 1 1

4b CONSUMER PRICE INDEX IN AREAS OUTSIDE METRO MANILA


(2006=100)

Quarterly Average


ALL ITEMS 125.8 127.6 128.4 129.3 129.8 131.6 133.0 133.3 134.4 135.5 136.8 138.5 140.4 141.7 143.6 143.8 144.1 144.3 144.6 145.3 146.0 146.8 147.7 149.0




NON-FOOD 118.1 120.3 121.5 122.0 122.8 125.1 126.0 126.1 126.7 127.7 128.6 129.3 130.6 131.2 131.7 131.3 131.2 131.9 131.8 132.1 132.4 133.3 133.9 134.6



of which: ELECTRICITY, GAS AND OTHER FUELS 128.2 134.9 135.6 137.0 140.6 143.4 144.1 142.6 142.4 143.4 143.4 146.9 151.7 151.5 148.9 144.7 139.6 141.3 137.6 135.2 133.2 134.8 134.3 135.9



HEALTH 121.7 122.9 124.0 124.6 125.1 127.2 128.5 129.0 129.7 131.0 131.7 132.3 133.7 134.6 135.5 136.1 136.7 137.1 137.5 138.3 139.5 140.6 141.8 142.4

TRANSPORT 122.9 126.4 127.1 127.4 128.4 130.0 129.1 129.5 130.1 130.0 130.7 130.7 131.4 131.7 132.1 131.0 130.0 131.2 130.9 131.6 130.7 131.5 131.3 132.9

of which: OPERATION OF PERSONAL TRANSPORT EQUIPMENT 124.7 130.1 129.1 129.0 131.4 132.7 130.0 131.5 132.8 132.2 135.5 135.3 138.3 139.0 138.2 132.8 124.2 127.3 125.3 124.3 121.6 124.6 124.4 126.0

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


EDUCATION 125.7 127.7 131.9 132.0 132.1 134.2 138.3 138.3 138.3 140.4 144.9 144.9 144.9 147.1 152.0 152.0 152.0 153.5 156.6 156.7 156.7 157.5 159.1 159.2



ALL ITEMS 2.1 1.4 0.6 0.7 0.4 1.4 1.1 0.2 0.8 0.8 1.0 1.2 1.4 0.9 1.3 0.1 0.2 0.1 0.2 0.5 0.5 0.5 0.6 0.9

FOOD AND NON-ALCHOLIC BEVERAGES 2.9 0.8 0.4 0.9 0.1 0.8 1.3 0.4 0.3 0.3 1.4 2.1 1.8 1.4 2.5 0.6 0.3 -0.2 0.4 0.8 0.6 0.3 0.9 1.2

of which: FOOD ITEMS 3.0 0.8 0.4 0.9 0.0 0.7 1.4 0.3 0.3 0.3 1.5 2.1 1.9 1.4 2.6 0.6 0.3 -0.2 0.4 0.8 0.6 0.3 0.9 1.3


NON-FOOD 1.5 1.9 1.0 0.4 0.7 1.9 0.7 0.1 0.5 0.8 0.7 0.5 1.0 0.5 0.4 -0.3 -0.1 0.5 -0.1 0.2 0.2 0.7 0.5 0.5


HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 2.0 2.5 0.6 0.5 1.3 2.6 0.9 -0.3 0.3 0.9 0.4 1.1 1.5 0.4 -0.2 -0.9 -0.5 0.7 -0.9 -0.3 0.2 0.7 0.3 0.6

of which: ELECTRICITY, GAS AND OTHER FUELS 4.6 5.2 0.5 1.0 2.6 2.0 0.5 -1.0 -0.1 0.7 0.0 2.4 3.3 -0.1 -1.7 -2.8 -3.5 1.2 -2.6 -1.7 -1.5 1.2 -0.4 1.2



HEALTH 0.8 1.0 0.9 0.5 0.4 1.7 1.0 0.4 0.5 1.0 0.5 0.5 1.1 0.7 0.7 0.4 0.4 0.3 0.3 0.6 0.9 0.8 0.9 0.4

TRANSPORT 2.8 2.8 0.6 0.2 0.8 1.2 -0.7 0.3 0.5 -0.1 0.5 0.0 0.5 0.2 0.3 -0.8 -0.8 0.9 -0.2 0.5 -0.7 0.6 -0.2 1.2

of which: OPERATION OF PERSONAL TRANSPORT EQUIPMENT 6.0 4.3 -0.8 -0.1 1.9 1.0 -2.0 1.2 1.0 -0.5 2.5 -0.1 2.2 0.5 -0.6 -3.9 -6.5 2.5 -1.6 -0.8 -2.2 2.5 -0.2 1.3

COMMUNICATION -0.1 0.0 0.0 -0.2 0.0 0.1 0.1 0.0 0.1 -0.1 0.1 -0.1 0.1 0.0 -0.1 0.0 -0.1 0.0 0.0 0.0 0.0 0.1 0.0 0.0


EDUCATION 0.1 1.6 3.3 0.1 0.1 1.6 3.1 0.0 0.0 1.5 3.2 0.0 0.0 1.5 3.3 0.0 0.0 1.0 2.0 0.1 0.0 0.5 1.0 0.1



ALL ITEMS 4.6 5.2 5.0 5.0 3.2 3.1 3.6 3.1 3.5 3.0 2.9 3.9 4.5 4.6 5.0 3.8 2.6 1.8 0.7 1.0 1.3 1.7 2.1 2.5




NON-FOOD 3.6 4.4 4.9 4.8 4.0 4.0 3.7 3.4 3.2 2.1 2.1 2.5 3.1 2.7 2.4 1.5 0.5 0.5 0.1 0.6 0.9 1.1 1.6 1.9


HOUSING, WATER, ELECTRICITY, GAS AND OTHER FUELS 4.8 5.5 5.7 5.7 5.0 5.0 5.3 4.5 3.5 1.7 1.2 2.7 3.9 3.4 2.8 0.8 -1.2 -0.9 -1.6 -1.0 -0.3 -0.3 0.9 1.8

of which: ELECTRICITY, GAS AND OTHER FUELS 10.7 11.2 11.3 11.7 9.7 6.3 6.3 4.1 1.3 0.0 -0.5 3.0 6.5 5.6 3.8 -1.5 -8.0 -6.7 -7.6 -6.6 -4.6 -4.6 -2.4 0.5



HEALTH 2.8 3.2 3.3 3.2 2.8 3.5 3.6 3.5 3.7 3.0 2.5 2.6 3.1 2.7 2.9 2.9 2.2 1.9 1.5 1.6 2.0 2.6 3.1 3.0

TRANSPORT 4.2 6.5 6.8 6.5 4.5 2.8 1.6 1.6 1.3 0.0 1.2 0.9 1.0 1.3 1.1 0.2 -1.1 -0.4 -0.9 0.5 0.5 0.2 0.3 1.0

of which: OPERATION OF PERSONAL TRANSPORT EQUIPMENT 8.3 11.3 11.2 9.7 5.4 2.0 0.7 1.9 1.1 -0.4 4.2 2.9 4.1 5.1 2.0 -1.8 -10.2 -8.4 -9.3 -6.4 -2.1 -2.1 -0.7 1.4

COMMUNICATION -0.1 -0.2 -0.2 -0.3 -0.2 -0.1 0.0 0.2 0.3 0.1 0.1 0.0 0.0 0.1 -0.1 0.0 -0.2 -0.2 -0.1 -0.1 0.0 0.1 0.1 0.1


EDUCATION 4.5 4.8 5.5 5.1 5.1 5.1 4.9 4.8 4.7 4.6 4.8 4.8 4.8 4.8 4.9 4.9 4.9 4.4 3.0 3.1 3.1 2.6 1.6 1.6



2014

2014

2014

2 0 1 2


20152013

2015

2015

2 0 1 2


2 0 1 2

2016

2016

2016

2013

2013

2 0 1 1

2 0 1 1

2 0 1 1

5 MONETARY INDICATORS (DCS CONCEPT: SRF-Based) 1

as of periods indicated

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

A. Liquidity

1. M4 (2+7) 8,215.0 8,351.9 8,523.1 9,050.8 9,016.9 9,126.2 9,334.3 9,888.7 10,031.8 10,254.7 10,459.2 11,206.5

2. M3 : Broad Money Liabilities (3+6) 7,029.4 7,100.1 7,219.2 7,703.9 7,650.0 7,755.4 7,851.4 8,429.9 8,542.0 8,728.1 8,860.7 9,497.9

% to GDP 59.6 58.8 58.6 60.9 59.8 59.8 59.9 63.3 63.1 63.1 62.7 65.7

3. M2 (4+5) 6,795.8 6,864.3 6,949.3 7,396.3 7,344.3 7,434.5 7,510.8 8,067.3 8,219.0 8,412.6 8,525.7 9,137.9

% to GDP 57.7 56.9 56.4 58.5 57.4 57.3 57.3 60.6 60.7 60.8 60.4 63.2

4. M1: Currency Outside Depository Corporations and Transferable Deposits (Narrow Money ) 2,051.6 2,107.2 2,134.1 2,316.4 2,312.1 2,379.2 2,453.3 2,667.6 2,712.4 2,794.2 2,858.8 3,069.6

% to GDP 17.4 17.5 17.3 18.3 18.1 18.3 18.7 20.0 20.0 20.2 20.2 21.2

Currency Outside Depository Corporations (Currency in Circulation) 586.2 580.3 588.0 713.7 658.9 653.8 670.0 791.4 766.3 776.9 795.6 921.2

Transferable Deposits (Demand Deposits) 1,465.4 1,526.9 1,546.1 1,602.6 1,653.2 1,725.4 1,783.3 1,876.2 1,946.1 2,017.3 2,063.2 2,148.4

5. Other deposits included in broad money 4,744.3 4,757.1 4,815.2 5,080.0 5,032.2 5,055.3 5,057.5 5,399.7 5,506.6 5,618.4 5,666.9 6,068.3

Savings Deposits 3,084.4 3,007.0 3,077.0 3,191.8 3,209.8 3,269.9 3,357.5 3,586.9 3,702.9 3,824.2 3,898.5 4,097.6

Time Deposits 1,659.8 1,750.1 1,738.1 1,888.2 1,822.4 1,785.4 1,700.0 1,812.8 1,803.7 1,794.1 1,768.4 1,970.7

6. Securities Other Than Shares Included in Broad Money (Deposit Substitutes) 233.5 235.8 269.9 307.6 305.6 320.9 340.7 362.7 323.0 315.5 335.0 360.0

7. Transferable & Other Deposits in Foreign Currency (FCDU Deposits-Residents) 1,185.6 1,251.7 1,303.9 1,346.8 1,366.9 1,370.8 1,482.8 1,458.8 1,489.8 1,526.7 1,598.6 1,708.6

8. Liabilities Excluded from Broad-Money (Other Liabilities) 1,693.2 1,708.6 1,791.6 1,754.4 1,856.1 1,860.1 2,015.3 1,971.1 2,144.4 2,374.9 2,642.8 2,296.1

B. Domestic Claims 6,332.0 6,473.9 6,605.5 7,053.0 6,997.4 7,114.6 7,387.2 7,861.0 8,075.9 8,328.7 8,603.2 9,193.6

1. Net Claims on Central Government 1,188.5 1,110.2 1,033.6 1,119.1 1,096.9 1,124.5 1,209.0 1,261.7 1,447.1 1,411.2 1,485.4 1,607.5

Claims on Central Government 1,735.0 1,733.2 1,738.6 1,862.7 1,862.6 1,926.4 2,019.0 1,992.6 2,066.8 2,039.6 2,103.7 2,101.5

Less: Liabilities to Central Government 546.5 623.1 705.0 743.7 765.7 801.9 810.0 730.9 619.7 628.4 618.3 494.0

2. Claims on Other Sectors 5,143.4 5,363.7 5,571.9 5,933.9 5,900.4 5,990.1 6,178.2 6,599.3 6,628.8 6,917.5 7,117.9 7,586.1

Claims on Other Financial Corporations 559.5 574.6 613.6 630.3 628.2 628.8 667.9 680.5 689.9 722.7 724.0 771.5

Claims on State and Local Government 73.3 71.9 70.5 71.5 70.5 70.6 74.0 76.6 77.8 80.5 81.9 82.8

Claims on Public Nonfinancial Corporations 265.1 271.2 268.0 269.3 271.9 274.2 281.4 278.0 282.1 286.8 277.2 256.8

Claims on Private Sector 4,245.5 4,446.0 4,619.8 4,962.9 4,929.9 5,016.5 5,154.9 5,564.2 5,578.9 5,827.5 6,034.8 6,475.0

C. Net Foreign Assets 3,576.3 3,586.6 3,709.1 3,752.1 3,875.6 3,871.7 3,962.4 3,998.8 4,100.3 4,300.9 4,498.8 4,309.0

1. Bangko Sentral ng Pilipinas 3,520.0 3,476.6 3,524.1 3,514.4 3,556.8 3,598.5 3,731.8 3,762.8 3,778.5 3,973.9 4,141.6 3,946.4

Claims on Non-residents 3,597.3 3,551.7 3,599.6 3,587.4 3,627.5 3,671.8 3,806.9 3,837.3 3,852.5 4,045.5 4,214.3 4,023.8

Less: Liabilities to Non-residents 77.3 75.2 75.4 73.0 70.8 73.2 75.0 74.4 74.0 71.6 72.8 77.4

2. Other Depository Corporations 56.3 110.0 185.0 237.7 318.9 273.2 230.5 235.9 321.8 327.0 357.3 362.5

Claims on Non-residents 810.2 828.5 864.0 1,028.7 964.1 951.0 985.1 1,023.9 1,070.9 1,108.2 1,134.4 1,211.8

Less: Liabilities to Non-residents 753.9 718.5 679.0 790.9 645.3 677.7 754.5 787.9 749.1 781.2 777.2 849.3

2014 2015 2016

6 SELECTED DOMESTIC INTEREST RATES

for periods indicated; in percent per annum


4.1 4.4 4.7 3.6 2 1.7 0.6 1 1.1 1.5 2 2.5Interbank Call Loans 2.0147 2.0618 2.3356 2.5384 2.5266 2.5225 2.5241 2.5291 2.5289 2.5293 2.5247 2.5074 -2.0853 -2.3382 -2.3644 -1.0616 0.5266 0.8225 1.9241 1.5291 1.4289 1.0293 0.5247 0.0074Savings Deposits 0.5370 0.6270 0.6460 0.7030 0.7170 0.6720 0.7210 0.7270 0.7370 0.7140 0.7290 0.6990 -3.5630 -3.7730 -4.0540 -2.8970 -1.2830 -1.0280 0.12100 -0.2730 -0.3630 -0.7860 -1.2710 -1.8010Time Deposits (All Maturities) 0.9740 0.9870 1.0480 1.3470 1.3760 1.5220 1.4720 1.6290 1.6120 1.5210 1.4450 1.5770 -3.1260 -3.4130 -3.6520 -2.2530 -0.6240 -0.1780 0.8720 0.6290 0.5120 0.0210 -0.5550 -0.9230

Lending Rates

6.7287 6.8083 6.8860 6.7818 6.8698 6.9390 6.9376 6.7607 6.8407 6.7760 6.6280 6.4397 2.6287 2.4083 2.1860 3.1818 4.8698 5.2390 6.3376 5.7607 5.7407 5.2760 4.6280 3.93974.3688 4.3417 4.3861 4.4397 4.5031 4.5183 4.5025 4.3579 4.4055 4.4067 4.2788 4.1097 0.2688 -0.0583 -0.3139 0.8397 2.5031 2.8183 3.9025 3.3579 3.3055 2.9067 2.2788 1.6097

5.5000 5.4780 5.5350 5.5820 5.4280 5.5150 5.6250 5.7390 5.6310 5.6240 5.6840 5.6290 1.4000 1.0780 0.8350 1.9820 3.4280 3.8150 5.0250 4.7390 4.5310 4.1240 3.6840 3.1290

Bangko Sentral Rates 3

… … … … … … … … … .. .. .. … … … … … … … … … .. .. ..3.5000 3.5000 3.7500 4.0000 4.0000 4.0000 4.0000 4.0000 4.0000 3.4902 3.0000 3.0000 -0.6000 -0.9000 -0.9500 0.4000 2.0000 2.3000 3.4000 3.0000 2.9000 1.9902 1.0000 0.5000

… … … … … … … … … 2.5000 2.5000 2.5000 … … … … … … … … … … … …

7-Day … … … … … … … … … 2.5000 2.5000 2.7882 … … … … … … … … … 1.0000 0.5000 0.288228-Day … … … … … … … … … 2.5000 2.5129 2.9071 … … … … … … … … … 1.0000 0.5129 0.4071

Rate on Government Securities Treasury Bills, All Maturities 1.2880 1.5000 1.5000 1.5720 1.6910 2.0780 1.9980 1.7440 1.6130 1.6990 1.5050 1.5630 -2.8120 -2.9000 -3.2000 -2.0280 -0.3090 0.3780 1.3980 0.7440 0.5130 0.1990 -0.4950 -0.9370

1.0650 1.2740 1.2580 1.2860 1.4690 1.9400 1.8610 1.7100 1.5550 1.5970 1.4160 1.4400 -3.0350 -3.1260 -3.4420 -2.3140 -0.5310 0.2400 1.2610 0.7100 0.4550 0.0970 -0.5840 -1.06001.4000 1.5890 1.5820 1.7000 1.7290 2.2070 2.0140 1.6970 1.5800 1.6540 1.4520 1.6890 -2.7000 -2.8110 -3.1180 -1.9000 -0.2710 0.5070 1.4140 0.6970 0.4800 0.1540 -0.5480 -0.81101.5400 1.8630 1.8090 1.8250 1.9480 2.2630 2.2000 1.8970 1.7230 1.8570 1.6790 1.8800 -2.5600 -2.5370 -2.8910 -1.7750 -0.0520 0.5630 1.6000 0.8970 0.6230 0.3570 -0.3210 -0.6200

Government Securities in the Secondary Market 4 3.9 4.4 4.4 2.7 2.4 1.2 0.4 1.5 1.1 1.9 2.3 2.63-Month 1.6917 1.3229 1.7104 2.5409 2.2714 2.0765 1.6817 2.6667 1.7650 1.7567 1.5857 2.0755 -2.2083 -3.0771 -2.6896 -0.1591 -0.1286 0.8765 1.2817 1.1667 0.6650 -0.1433 -0.7143 -0.52456-Month 2.0367 1.4938 1.9479 2.6432 2.5795 2.1980 1.7967 2.9183 1.8950 1.5949 1.2931 2.9464 -1.8633 -2.9062 -2.4521 -0.0568 0.1795 0.9980 1.3967 1.4183 0.7950 -0.3051 -1.0069 0.34641-Year 2.3125 1.8917 2.1729 2.6955 2.6886 2.4297 2.5467 2.3710 1.7313 2.1671 2.0107 2.4520 -1.5875 -2.5083 -2.2271 -0.0045 0.2886 1.2297 2.1467 0.8710 0.6313 0.2671 -0.2893 -0.14802-Year 2.7563 2.8542 2.9813 3.0568 3.1959 2.6999 2.6143 3.9847 3.4700 2.3877 2.2855 3.8676 -1.1437 -1.5458 -1.4187 0.3568 0.7959 1.4999 2.2143 2.4847 2.3700 0.4877 -0.0145 1.26763-Year 3.1650 2.8917 3.3833 3.4500 3.4136 3.0281 3.1016 3.6625 3.6900 3.0660 3.2925 3.5170 -0.7350 -1.5083 -1.0167 0.7500 1.0136 1.8281 2.7016 2.1625 2.5900 1.1660 0.9925 0.91704-Year 3.3917 3.1750 3.5083 3.5705 3.5864 3.7717 3.7263 3.8750 3.2332 3.3067 2.8798 3.8814 -0.5083 -1.2250 -0.8917 0.8705 1.1864 2.5717 3.3263 2.3750 2.1332 1.4067 0.5798 1.28145-Year 3.7479 3.9812 4.2146 3.6795 3.8273 3.8900 3.4923 3.9250 3.4583 2.8997 3.6321 4.7426 -0.1521 -0.4188 -0.1854 0.9795 1.4273 2.6900 3.0923 2.4250 2.3583 0.9997 1.3321 2.14267-Year 3.8615 4.0292 4.1229 4.1475 3.8932 3.7189 4.1617 4.5853 4.2283 2.9197 3.4483 4.8857 -0.0385 -0.3708 -0.2771 1.4475 1.4932 2.5189 3.7617 3.0853 3.1283 1.0197 1.1483 2.285710-Year 4.4562 4.1667 4.3475 4.3705 4.0614 4.3550 3.7995 4.1000 4.6900 4.2183 3.6455 4.6281 0.5562 -0.2333 -0.0525 1.6705 1.6614 3.1550 3.3995 2.6000 3.5900 2.3183 1.3455 2.028120-Year 5.3938 5.3750 5.3125 5.1727 4.9850 4.6511 5.1350 5.5217 5.2317 4.2415 4.6482 5.3771 1.4938 0.9750 0.9125 2.4727 2.5850 3.4511 4.7350 4.0217 4.1317 2.3415 2.3482 2.777125-Year 5.6354 5.4329 5.3750 4.9500 4.7659 .. 4.7280 4.8916 .. .. .. .. 1.7354 1.0329 0.9750 2.2500 2.3659 .. 4.3280 3.3916 .. .. .. ..

1 Nominal interest rate less inflation rate2 Refers to the weighted average interest rate of reporting commercial banks' interest incomes on their outstanding peso-denominated loans3 Beginning 3 June 2016, the BSP shifted its monetary operations to an interest rate corridor (IRC) system. The repurchase (RP) and Special Deposit Account (SDA) windows were replaced by standing overnight lending and overnight deposit facilities, respectively.

The reverse repurchase (RRP) facility was modified to a purely overnight RRP. In addition, the term deposit facility (TDF) will serve as the main tool for absorbing liquidity. Starting 3 June 2016, the interest rates for these facilities were set as follows: 3.5 percent in the OLF

(a reduction from 6.0 percent); 3.0 percent in the overnight RRP rate (an adjustment from 4.0 percent); and 2.5 percent in the ODF (no change from the previous SDA rate). The OLF and ODF will serve as the upper bound and lower bound, respectively, of the IRC system.4 End of Period; (For Q1 2013 to Q1 2015, data refers to PDST-F while for Q2 2015 to present, it refers to PDST-R2)p Preliminaryr Revised

- Not Available

.. No Transaction/No Quotation/No Issue

... Blank

Source: Bangko Sentral ng Pilipinas

REAL INTEREST RATES 1NOMINAL INTEREST RATES

HighLow

364-Day

Overnight Lending Facility (OLF)Overnight RRPOvernight Deposit Facility (ODF)Term Deposit Auction Facility (TDF)

20152014

91-Day182-Day

All Maturities 2

2016201520142016

7 NUMBER OF FINANCIAL INSTITUTIONS 1


Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

T o t a l 28,065 28,094 28,128 28,232 28,331 28,319 28,293 28,471 27,504 27,659 27,891

Head Offices 6,943 6,888 6,840 6,735 6,721 6,685 6,625 6,576 6,328 6,296 6,279

Branches/Agencies 21,122 21,206 21,288 21,497 21,610 21,634 21,668 21,895 21,176 21,363 21,612

Banks 10,020 10,120 10,207 10,361 10,456 10,528 10,538 10,756 10,849 10,936 11,024

Head Offices 667 664 652 648 646 638 634 632 622 618 613


Universal and Commercial Banks 5,514 5,583 5,738 5,833 5,901 5,946 5,946 6,060 6,094 6,133 6,147

Head Offices 36 36 36 36 36 36 36 40 41 41 41


Thrift Banks 1,856 1,878 1,873 1,920 1,927 2,013 1,999 2,086 2,130 2,124 2,180

Head Offices 70 70 69 69 69 70 69 68 66 64 64


Savings and Mortgage Banks 1,219 1,242 1,248 1,280 1,317 1,386 1,356 1,517 1,545 1,548 1,562

Head Offices 28 28 28 28 28 29 28 28 27 26 26


Private Development Banks 437 432 440 444 408 416 417 338 355 363 404

Head Offices 19 19 19 19 19 19 19 18 18 18 19

Branches/Agencies 418 413 421 425 389 397 398 320 337 345 385

Stock Savings and Loan Assns. 171 175 154 165 171 180 195 200 199 182 184

Head Offices 19 19 18 18 18 18 18 18 17 16 16


Microfinance Banks 29 29 31 31 31 31 31 31 31 31 30

Head Offices 4 4 4 4 4 4 4 4 4 4 3


Rural Banks 2,650 2,659 2,596 2,608 2,628 2,569 2,593 2,610 2,625 2,679 2,697

Head Offices 561 558 547 543 541 532 529 524 515 513 508


Non-Banks r 18,045 17,974 17,921 17,871 17,875 17,791 17,755 17,715 16,655 16,723 16,867

Head Offices r 6,276 6,224 6,188 6,087 6,075 6,047 5,991 5,944 5,706 5,678 5,568

Branches/Agencies r 11,769 11,750 11,733 11,784 11,800 11,744 11,764 11,771 10,949 11,045 11,198

Investment Houses 26 25 25 25 25 25 25 25 26 26 26

Head Offices 16 15 15 15 15 15 15 15 16 16 16


Finance Companies 88 88 88 88 88 88 110 110 118 118 93

Head Offices 20 20 20 20 20 20 22 22 22 22 5


ABB Forex Corporations - - - - - - 5 5 5 5 5

Head Offices - - - - - - 5 5 5 5 5

Branches/Agencies - - - - - - - - - - -

Investment Companies 3 3 2 2 2 2 2 2 2 2 2

Head Offices 3 3 2 2 2 2 2 2 2 2 2


Securities Dealers/Brokers 13 13 13 13 13 13 13 13 13 13 13

Head Offices 13 13 13 13 13 13 13 13 13 13 13


Pawnshops 17,584 17,513 17,461 17,422 17,426 17,340 17,278 17,238 16,170 16,237 16,372

Head Offices 6,022 5,971 5,936 5,847 5,835 5,807 5,745 5,698 5,460 5,432 5,420


Lending Investors 1 1 1 1 1 1 1 1 1 1 1

Head Offices 1 1 1 1 1 1 1 1 1 1 1


Non-Stock Savings and Loan Assns. 198 199 199 199 199 201 200 200 199 200 200

Head Offices 71 71 71 71 71 71 70 70 69 69 69


Private Insurance Companies 2 r 110 110 110 99 99 99 99 99 99 99 99

Head Offices r 108 108 108 96 96 96 96 96 96 96 96

Branches/Agencies r 2 2 2 3 3 3 3 3 3 3 3

Government Non-Banks 4 4 4 4 4 4 4 4 4 4 4

Head Offices 4 4 4 4 4 4 4 4 4 4 4


Venture Capital Corporations - - - - - - - - - - -

Head Offices - - - - - - - - - - -


Credit Card Companies 3 3 3 3 3 3 3 3 3 3 3

Head Offices 3 3 3 3 3 3 3 3 3 3 3


Other Non-Bank with QBF 1 1 1 1 1 1 1 1 1 1 1

Head Offices 1 1 1 1 1 1 1 1 1 1 1


Electronic Money Issuer 4 4 4 4 4 4 4 4 4 4 4

Head Offices 4 4 4 4 4 4 4 4 4 4 4


Remittance Agent 1 1 1 1 1 1 1 1 1 1 1

Head Offices 1 1 1 1 1 1 1 1 1 1 1


Credit Granting Entities 9 9 9 9 9 9 9 9 9 9 9

Head Offices 9 9 9 9 9 9 9 9 9 9 9


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.p Preliminary_ zero or nil


2014 2015 2016 p

8 TOTAL RESOURCES OF THE PHILIPPINE FINANCIAL SYSTEM 1


in billion pesos

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

T o t a l 9,522.0 9,797.5 9,981.4 10,633.4 10,772.5 11,285.1 11,820.7 12,814.6 13,032.3 13,339.7 13,488.3 14,446.6 14,322.0 14,453.5 14,779.2 15,381.7 15,559.2 15,963.8 16,212.2 17,028.1

Banks 7,456.0 7,663.3 7,877.5 8,369.0 8,434.7 8,925.1 9,454.8 10,292.8 10,465.2 10,612.2 10,751.0 11,546.2 11,374.2 11,502.7 11,863.2 12,406.3 12,529.9 12,865.9 13,114.3 13,908.8

Universal and Commercial Banks 6,668.0 6,877.6 7,054.3 7,486.6 7,547.6 7,995.5 8,505.4 9,300.4 9,412.5 9,545.6 9,658.0 10,398.4 10,238.9 10,327.9 10,670.8 11,159.2 11,254.8 11,578.5 11,810.5 12,545.3

Thrift Banks 608.6 606.2 622.4 681.5 679.3 739.8 764.6 809.1 825.0 848.7 866.6 916.2 899.3 964.7 979.6 1,034.1 1,055.1 1,064.0 1,080.4 1,104.4

Rural Banks 179.4 179.4 200.8 200.8 207.9 189.8 184.8 183.3 227.7 217.9 226.4 231.6 236.0 210.1 212.8 213.0 220.0 223.4 226.3 226.3 a

Non-Banks 2 2,065.9 2,134.3 2,103.9 2,264.4 2,337.8 2,359.9 2,365.9 2,521.8 2,567.1 2,727.5 2,737.3 2,900.3 2,947.8 2,950.7 2,916.0 2,975.4 3,029.4 3,098.1 3,114.2 3,119.3

1 Excludes the Bangko Sentral ng Pilipinas; amount includes allowance for probable losses.

2 Includes Investment Houses, Finance Companies, Investment Companies, Securities Dealers/Brokers, Pawnshops, Lending Investors, Non Stocks Savings

and Loan Associations, Credit Card Companies (which are under BSP supervision), and Private and Government Insurance Companies (i.e., SSS and GSIS).a

As of end-September 2016p

Preliminary

Notes: Data on Non-Banks are based on Consolidated Statement of Condition (CSOC).

Data on Rural Banks were based on CSOC up to March 2010. Data from April 2010 onwards are based on FRP. Details may not add up to total due to rounding off.


2016 p

(3)

2015

Institutions

(1)

(2)

2012 2013 2014

9 NON-PERFORMING LOANS (NPL), TOTAL LOANS AND LOAN LOSS PROVISIONS OF THE BANKING SYSTEM 1/

end-of-period

in billion pesos

Non-Performing Loans 2 Gross Non-Performing Loans 3 Net Non-Performing Loans 3Total Loans Loan Loss Provisions

UB&KBs TBs RBs Total UB&KBs TBs RBs Total UB&KBs TBs RBs Total UB&KBs TBs RBs Total UB&KBs TBs RBs Total

2006 117.410 20.550 9.045 147.005 2073.698 249.993 83.234 2406.925 97.031 10.138 3.820 110.989

2007 97.634 20.231 9.841 127.706 2195.110 295.499 100.215 2590.824 91.123 9.560 3.587 104.270

2008 88.191 20.107 9.563 117.861 2502.662 303.632 95.892 2902.186 88.201 10.774 3.636 102.611

2009 80.912 23.396 10.157 114.465 2725.200 321.742 97.534 3144.476 90.898 12.097 3.952 106.947

2010

Mar 81.382 25.189 9.363 115.934 2531.003 320.902 99.346 2951.251 91.982 12.702 4.380 109.064

Jun 87.668 25.868 9.491 123.027 2682.230 326.275 100.778 3109.283 95.394 13.723 4.603 113.720

Sep 83.141 28.177 9.417 120.735 2670.645 343.058 97.794 3111.497 97.379 14.500 4.533 116.412

Dec 80.215 26.323 10.249 116.787 2802.041 359.484 103.695 3265.220 95.040 14.123 5.102 114.265

2011

Mar 82.410 25.911 11.838 120.159 2759.938 354.660 117.155 3231.753 99.197 16.645 5.970 121.812

Jun 74.143 22.746 12.198 109.087 3030.631 367.867 119.701 3518.199 93.548 13.420 6.113 113.081

Sep 74.326 22.699 12.127 109.152 3021.051 364.469 121.659 3507.179 91.944 13.618 6.296 111.858

Dec 71.938 21.953 12.263 106.154 3222.105 383.731 120.963 3726.799 90.903 12.946 6.176 110.025

2012

Mar 106.354 26.090 13.940 146.384 18.918 11.550 7.470 37.938 3192.496 402.540 123.740 3718.776 124.968 18.170 7.690 150.828

Jun 102.098 24.360 14.370 140.828 11.393 9.530 7.350 28.273 3388.091 432.990 124.870 3945.951 127.269 18.270 8.230 153.769

Sep 103.420 25.830 14.800 144.050 13.224 11.340 7.060 31.624 3444.161 410.520 128.780 3983.461 128.598 18.560 9.000 156.158

Dec 100.610 26.530 15.850 142.990 11.310 12.220 6.910 30.440 3650.760 449.260 128.580 4228.600 128.460 18.090 10.220 156.770

2013

Mar 99.357 26.930 17.250 143.537 16.245 12.240 8.073 36.558 3625.043 439.240 129.473 4193.756 127.487 18.960 10.420 156.867

Jun 100.912 27.840 15.910 144.662 14.569 12.320 7.420 34.309 3760.891 468.830 128.740 4358.461 131.291 20.130 9.750 161.171

Sep 100.638 28.895 16.400 145.933 16.497 13.088 7.870 37.455 3922.085 490.705 126.790 4539.580 131.338 20.199 9.740 161.277

Dec 90.509 27.729 17.306 135.544 8.050 12.291 8.250 28.591 4256.963 508.199 131.788 4896.950 130.440 20.107 10.327 160.874

2014

Mar 93.323 27.057 18.114 138.494 9.939 13.146 8.800 31.885 4329.734 547.791 137.889 5015.414 131.790 18.771 10.612 161.173

Jun 94.798 27.165 17.867 139.830 12.437 12.931 8.895 34.263 4513.288 562.850 132.888 5209.026 133.317 19.088 10.240 162.645

Sep 96.181 26.049 16.476 138.706 14.129 11.572 8.257 33.958 4704.656 575.778 134.611 5415.045 133.708 19.375 9.486 162.569

Dec 93.055 25.373 16.402 134.830 15.289 11.346 8.104 34.739 5117.884 576.057 138.436 5832.377 132.542 19.468 9.563 161.573

2015 p

Mar 97.365 27.293 16.758 141.416 18.093 12.116 8.407 38.616 4991.914 600.981 139.144 5732.039 134.544 20.460 9.646 164.650

Jun 94.122 29.954 14.254 138.330 15.356 14.141 6.501 35.998 5110.488 638.154 119.780 5868.422 134.924 21.456 8.910 165.290

Sep 95.241 30.503 13.997 139.741 18.006 14.300 5.998 38.304 5244.589 668.457 121.416 6034.462 133.090 22.036 9.196 164.322

Dec 91.598 31.199 13.706 136.503 21.672 14.692 5.513 41.877 5719.665 689.019 118.711 6527.395 129.220 23.045 9.381 161.646

2016 p

Mar 97.112 34.346 14.215 145.673 29.065 16.288 5.741 51.094 5659.766 728.258 122.708 6510.732 129.193 25.001 9.739 163.933

Jun 98.198 36.158 14.473 148.829 30.689 17.388 5.576 53.653 5940.313 731.832 126.088 6798.233 130.708 25.617 10.178 166.503

Sep 98.398 37.414 14.380 150.192 28.399 18.049 5.157 51.605 6144.623 745.564 128.012 7018.199 133.465 26.440 10.499 170.404

Dec 93.801 36.654 14.380 a 144.835 21.264 17.340 5.157 a 43.761 6706.311 778.133 128.012 a 7612.456 135.699 26.775 10.499 a 172.973

1 Data include banks under liquidation, foreign office transactions and interbank loans2 Starting Sept. 2002, for supervisory purposes, computation of NPL was based on BSP Circular No. 351 which defines total loans as gross of allowance for probable losses and interbank loans less loans classified as loss. This has been discontinued in 2013.

For comparability purposes, 2012 was revised based on the new definition (BSP Circular No. 772). 3 Starting January 2013, NPL data are based on BSP Circular No. 772. Gross NPL represents the actual level of NPL without any adjustment for loans treated as "loss" and fully provisioned.

As a complementary measure to computing gross NPL, banks shall likewise compute their net NPLs, which shall refer to gross NPLs less specific allowance for credit losses on the total loan portfolio,

Under Circular No. 772, there are no available data for Gross NPLs and Net NPLs earlier than 2012.a As of September 2016p Preliminary

Details may not add up due to rounding off.


9 RATIO OF NON-PERFORMING LOANS (NPL) AND LOAN LOSS PROVISIONS 1

TO TOTAL LOANS OF THE BANKING SYSTEM

end-of-period, in percent

UBs &KBs TBs RBs Total UBs &KBs TBs RBs Total UBs &KBs TBs RBs Total UBs &KBs TBs RBs Total

2006 5.662 8.220 10.867 6.108 4.679 4.055 4.589 4.611

2007 4.448 6.846 9.820 4.929 4.151 3.235 3.579 4.025

2008 3.524 6.622 9.973 4.061 3.524 3.548 3.792 3.536

2009 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

2012

Mar 3.331 6.481 11.266 3.936 0.593 2.869 6.037 1.020 3.914 4.514 6.215 4.056

Jun 3.013 5.626 11.508 3.569 0.336 2.201 5.886 0.717 3.756 4.219 6.591 3.897

Sep 3.003 6.292 11.492 3.616 0.384 2.762 5.482 0.794 3.734 4.521 6.989 3.920

Dec 2.756 5.905 12.327 3.381 0.310 2.720 5.374 0.720 3.519 4.027 7.948 3.707

2013

Mar 2.741 6.131 13.323 3.423 0.448 2.787 6.235 0.872 3.517 4.317 8.048 3.740

Jun 2.683 5.938 12.358 3.319 0.387 2.628 5.764 0.787 3.491 4.294 7.573 3.698

Sep 2.566 5.888 12.935 3.215 0.421 2.667 6.207 0.825 3.349 4.116 7.682 3.553

Dec 2.126 5.456 13.132 2.768 0.189 2.419 6.260 0.584 3.064 3.957 7.836 3.285

2014

Mar 2.155 4.939 13.137 2.761 0.230 2.400 6.382 0.636 3.044 3.427 7.696 3.214

Jun 2.100 4.826 13.445 2.684 0.276 2.297 6.694 0.658 2.954 3.391 7.706 3.122

Sep 2.044 4.524 12.240 2.561 0.300 2.010 6.134 0.627 2.842 3.365 7.047 3.002

Dec 1.818 4.405 11.848 2.312 0.299 1.970 5.854 0.596 2.590 3.380 6.908 2.770

2015 p

Mar 1.950 4.541 12.044 2.467 0.362 2.016 6.042 0.674 2.695 3.404 6.932 2.872

Jun 1.842 4.694 11.900 2.357 0.300 2.216 5.427 0.613 2.640 3.362 7.439 2.817

Oct 1.816 4.563 11.528 2.316 0.343 2.139 4.940 0.635 2.538 3.297 7.574 2.723

Dec 1.601 4.528 11.546 2.091 0.379 2.132 4.644 0.642 2.259 3.345 7.902 2.476

2016 p

Mar 1.716 4.716 11.584 2.237 0.514 2.237 4.679 0.785 2.283 3.433 7.937 2.518

Jun 1.653 4.941 11.478 2.189 0.517 2.376 4.422 0.789 2.200 3.500 8.072 2.449

Sep 1.601 5.018 11.233 2.140 0.462 2.421 4.029 0.735 2.172 3.546 8.202 2.428

Dec 1.399 4.711 11.233 a 1.903 0.317 2.228 4.029 a 0.575 2.023 3.441 8.202 a 2.272

1 Data include banks under liquidation, foreign office transactions and interbank loans2 Starting Sept. 2002, for supervisory purposes, computation of NPL was based on BSP Circular No. 351 which defines total loans as gross of allowance for probable losses and interbank loans less loans classified as loss. This has been discontinued in 2013.

For comparability purposes, 2012 was revised based on the new definition (BSP Circular No. 772). 3 Starting January 2013, NPL data are based on BSP Circular No. 772. Gross NPL represents the actual level of NPL without any adjustment for loans treated as "loss" and fully provisioned.

As a complementary measure to computing gross NPL, banks shall likewise compute their net NPLs, which shall refer to gross NPLs less specific allowance for credit losses on the total loan portfolio,

Under Circular No. 772, there are no available data for Gross NPLs and Net NPLs earlier than 2012.a As of September 2016p Preliminary

Details may not add up due to rounding off.


Loan Loss Provisions/Total Loans NPL/Total Loans 2 Gross NPL/Total Loans 3 Net NPL/Total Loans 3

10 STOCK MARKET TRANSACTIONS

volume in million shares, value in million pesos

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

Volume 113,135 122,113 155,537 424,409 150,587 68,804 191,792 82,078 97,625 135,028 118,017 91,601

Financials 992 1,341 1,558 1,090 978 1,238 1,154 725 741 1,012 1,906 1,450

Industrial 12,328 13,115 13,644 25,346 10,913 6,133 11,872 5,550 6,153 6,410 11,122 5,345

Holding Firms 5,728 6,984 12,527 12,142 10,844 6,076 25,300 13,115 8,600 11,584 9,081 7,749

Property 12,053 22,136 20,366 15,629 12,138 8,586 7,757 16,680 10,446 11,770 20,015 12,974

Services 7,058 12,923 17,377 32,885 21,263 9,370 8,628 10,202 17,038 17,876 31,139 20,533

Mining & Oil 74,975 64,492 89,992 336,889 94,056 37,160 136,929 35,490 54,421 85,693 44,046 42,982

SME (in thousand shares) 317 1,120,339 71,577 421,612 393,244 239,362 149,843 315,570 222,462 681,589 708,473 565,685

ETF1/ (in thousand shares) 426 668 791 4,748 1,893 2,235 1,715 1,220 2,964 1,008 943 987

Value 457,085 535,924 548,203 588,908 641,594 553,577 517,832 438,408 407,066 524,669 576,329 421,435

Financials 65,888 73,681 69,826 68,898 74,595 88,404 66,529 43,993 51,044 81,396 78,796 64,291

Industrial 104,206 110,557 94,254 119,148 145,948 143,103 150,323 91,553 90,691 88,097 130,479 92,713

Holding Firms 121,554 120,483 131,683 126,267 174,325 136,336 108,947 119,313 98,158 141,840 145,256 106,019

Property 67,867 105,044 79,090 108,390 103,447 75,621 77,548 104,550 74,676 93,801 103,546 75,656

Services 83,835 96,404 143,589 137,725 111,491 85,432 94,494 67,320 74,501 94,777 96,593 64,268

Mining & Oil 13,688 22,756 29,113 24,360 27,328 21,899 17,914 8,583 15,738 17,146 16,669 15,622

SME (in thousand pesos) 5,312 6,927,918 557,346 3,581,718 4,226,414 2,498,500 1,876,456 2,957,202 1,927,800 7,488,170 4,868,616 2,748,376

ETF1/ (in thousand pesos) 42,130 72,183 90,521 539,579 234,748 282,800 200,392 139,155 331,093 123,996 120,654 116,416

Composite Index (end of period) 6428.71 6844.31 7283.07 7230.57 7940.49 7564.50 6893.98 6952.08 7262.30 7796.25 7629.73 6840.64

Sum of details may not add up to totals due to rounding.

1/ Starting 2 December 2013, trading of an Exchange Traded Fund commenced. ETF is an open-end investment company that trades its shares in the stock exchange

Source : Philippine Stock Exchange

201620152014

11 PHILIPPINES: BALANCE OF PAYMENTS

in million U.S. dollars

Growth (%)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q4 2016 p

Current Account 1906 2959 959 1442 730 141 763 -1032 -171.6(Totals as percent of GNI) 2.3 3.3 1.1 1.5 0.9 0.2 0.9 -1.0(Totals as percent of GDP) 2.8 4.0 1.4 1.8 1.1 0.2 1.0 -1.2

Export 25793 26862 26758 26438 26499 27622 29051 26834 1.5

Import 23887 23903 25799 24996 25770 27481 28288 27867 11.5

Goods, Services, and Primary Income -3783 -2818 -4948 -4449 -5179 -6071 -5594 -7517 -69.0

Export 19918 20848 20683 20316 20411 21231 22512 20193 -0.6

Import 23701 23665 25631 24764 25590 27302 28106 27710 11.9

Goods and Services -4047 -3404 -5034 -5369 -5820 -6767 -6129 -8238 -53.5(Totals as percent of GNI) -4.9 -3.8 -6.0 -5.6 -6.9 -7.3 -6.9 -8.3(Totals as percent of GDP) -5.9 -4.6 -7.3 -6.7 -8.4 -8.7 -8.3 -9.9

Export 17635 18534 18261 17833 18024 18860 20088 17830 .

Import 21682 21938 23295 23201 23844 25627 26217 26068 12.4

Goods -5332 -4196 -6328 -7453 -7816 -8347 -7943 -9973 -33.8(Totals as percent of GNI) -6.4 -4.7 -7.5 -7.7 -9.3 -9.0 -8.9 -10.0(Totals as percent of GDP) -7.8 -5.6 -9.2 -9.3 -11.3 -10.8 -10.7 -12.0

Credit: Exports 10567 11234 11170 10226 10183 10709 11933 10619 3.8

Debit: Imports 15899 15430 17499 17679 17999 19057 19876 20592 16.5

Services 1285 791 1295 2084 1995 1580 1814 1735 -16.7

Credit: Exports 7068 7300 7091 7606 7841 8151 8155 7211 -5.2

Debit: Imports 5783 6508 5796 5523 5845 6570 6341 5476 -0.8

Primary Income 264 587 85 920 642 696 535 721 -21.6

Credit: Receipts 2284 2314 2422 2483 2387 2371 2424 2363 -4.9

Debit: Payments 2019 1727 2337 1563 1745 1675 1889 1641 5.0

Secondary Income 5689 5777 5907 5890 5908 6212 6357 6485 10.1

Credit: Receipts 5874 6015 6075 6122 6088 6390 6540 6642 8.5

Debit: Payments 186 238 168 232 180 179 183 157 -32.2

Capital Account 17 22 22 23 24 26 28 24 3.6

Credit: Receipts 24 25 24 26 28 30 32 28 9.1

Debit: Payments 7 4 2 2 3 4 4 4 63.6

Financial Account 130 1750 -506 926 955 -910 849 54 -94.2

Net Acquisition of Financial Assets -20 1886 2066 2205 1686 2279 1446 1653 -25.1

Net Incurrence of Liabilities -150 136 2573 1279 730 3189 596 1599 25.0

Direct Investment 250 -131 -136 -83 -1049 -969 -387 -1829 -2107.4

Net Acquisition of Financial Assets 1127 975 2380 1057 288 1878 1280 253 -76.0

Net Incurrence of Liabilities 876 1106 2516 1140 1337 2847 1667 2082 82.6

Portfolio Investment -431 3540 2106 256 1446 880 -634 -309 -220.9

Net Acquisition of Financial Assets 915 1292 626 510 488 1247 -198 -418 -182.0

Net Incurrence of Liabilities 1345 -2248 -1479 254 -958 367 436 -109 -143.0

Financial Derivatives 2 -31 17 18 -3 59 -11 -78 -530.9

Net Acquisition of Financial Assets -133 -155 -135 -108 -155 -210 -191 -145 -33.9

Net Incurrence of Liabilities -135 -124 -152 -126 -152 -270 -180 -67 46.9

Other Investment 309 -1628 -2493 736 562 -880 1882 2269 208.4

Net Acquisition of Financial Assets -1928 -226 -806 747 1065 -636 555 1962 162.8

Net Incurrence of Liabilities -2237 1402 1687 11 503 244 -1327 -307 -2870.1

NET UNCLASSIFIED ITEMS -916 -424 -1363 270 -8 -233 1073 -1006 -472.3

OVERALL BOP POSITION 877 807 124 809 -210 843 1014 -2068 -355.8(Totals as percent of GNI) 1.1 0.9 0.1 0.8 -0.2 0.9 1.1 -2.1(Totals as percent of GDP) 1.3 1.1 0.2 1.0 -0.3 1.1 1.4 -2.5

Debit: Change in Reserve Assets 888 796 135 798 -199 833 1025 -2079 -360.5Credit: Change in Reserve Liabilities 11 -11 11 -11 11 -11 11 -10 2.9

Details may not add up to total due to rounding.

p Preliminary

r Revised to reflect data updates from official data sources, updated estimates on OF remittances related data, and post-audit adjustments

. Rounds off to zero

Technical Notes:

1. Balance of Payments Statistics are based on the IMF's Balance of Payments and International Investment Position Manual, 6th Edition.

2. Financial Account, including Reserve Assets, is calculated as 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).


2015 r 2016 p

12 INTERNATIONAL RESERVES as of periods indicated

in million US dollars

Mar Jun Sep Dec Mar Jun Sep Dec

Gross International Reserves 80,459 80,644 80,551 80,667 82,977 85,284 86,139 80,692

Gold 7,437 7,378 7,015 6,703 7,765 8,336 8,307 7,259

SDRs 1,168 1,190 1,188 1,173 1,193 1,184 1,182 1,138

Foreign Investments 70,565 70,647 70,800 71,739 71,379 73,295 73,850 68,290

Foreign Exchange 850 985 1,103 613 2,217 2,020 2,342 3,563

Reserve Position in the Fund 439 445 445 439 424 449 458 442

Net International Reserves 80,446 80,642 80,538 80,665 82,964 85,282 86,126 80,689

Details may not add up to total due to rounding


2 0 1 5 2 0 1 6

13 EXCHANGE RATES OF THE PESO

pesos per unit of foreign currency

period averages

2013 42.4462 0.4356 56.3942 66.4139 41.0195 33.9347 5.4725 13.4839 1.3832 0.0041 1.4305 0.0388 6.9048 11.3184 11.5567

Jan 40.7295 0.4580 54.1270 65.0893 42.7556 33.1823 5.2537 13.4143 1.3549 0.0042 1.4011 0.0382 6.5456 10.8608 11.0893

Feb 40.6723 0.4372 54.3618 63.0701 41.9596 32.8469 5.2446 13.1338 1.3647 0.0042 1.3727 0.0374 6.5255 10.8455 11.0736

Mar 40.7127 0.4293 52.8776 61.3734 41.9971 32.6803 5.2477 13.0966 1.3788 0.0042 1.3700 0.0370 6.5492 10.8564 11.0848

Apr 41.1422 0.4221 53.5266 62.9378 42.7442 33.2313 5.2999 13.4866 1.4164 0.0042 1.3793 0.0367 6.6485 10.9711 11.2020

May 41.2976 0.4092 53.5926 63.1389 40.9360 33.0769 5.3210 13.6880 1.3898 0.0042 1.3870 0.0372 6.7247 11.0124 11.2440

Jun 42.9069 0.4406 56.6122 66.4568 40.5481 34.0634 5.5291 13.6649 1.3959 0.0044 1.4334 0.0378 6.9941 11.4413 11.6823

Jul 43.3559 0.4350 56.7089 65.8438 39.7304 34.2142 5.5896 13.6030 1.3950 0.0043 1.4482 0.0385 7.0675 11.5609 11.8044

Aug 43.8639 0.4484 58.4174 67.8155 39.5530 34.4837 5.6559 13.3993 1.3899 0.0042 1.4640 0.0393 7.1644 11.6961 11.9425

Sep 43.8318 0.4420 58.5044 69.4375 40.6011 34.6960 5.6527 13.4795 1.3821 0.0039 1.4785 0.0404 7.1617 11.6874 11.9338

Oct 43.1825 0.4415 58.8668 69.5227 41.0612 34.7164 5.5693 13.5813 1.3850 0.0038 1.4696 0.0405 7.0723 11.5148 11.7573

Nov 43.5546 0.4357 58.7584 70.1141 40.6381 34.9239 5.6184 13.6441 1.3786 0.0038 1.4758 0.0410 7.1480 11.6137 11.8586

Dec 44.1043 0.4276 60.3768 72.1669 39.7100 35.1010 5.6885 13.6152 1.3677 0.0037 1.4864 0.0418 7.2565 11.7602 12.0081

2014 44.3952 0.4208 59.0432 73.1731 40.0974 35.0648 5.7252 13.5828 1.3672 0.0037 1.4659 0.0422 7.2076 11.8363 12.0872

Jan 44.9266 0.4321 61.2469 74.0269 39.8717 35.3263 5.7920 13.6219 1.3657 0.0037 1.4918 0.0422 7.4251 11.9795 12.2323

Feb 44.8950 0.4397 61.3016 74.3135 40.2635 35.4679 5.7867 13.5655 1.3756 0.0038 1.4817 0.0419 7.3893 11.9711 12.2238

Mar 44.7916 0.4381 61.9409 74.4520 40.6363 35.3400 5.7711 13.6530 1.3832 0.0039 1.4738 0.0419 7.2601 11.9437 12.1953

Apr 44.6416 0.4351 61.6350 74.6995 41.6028 35.5664 5.7572 13.7098 1.3815 0.0039 1.4773 0.0428 7.1717 11.9035 12.1542

May 43.9236 0.4314 60.3484 73.9965 40.8495 35.1096 5.6660 13.6035 1.3513 0.0038 1.4582 0.0429 7.0410 11.7116 11.9588

Jun 43.8175 0.4293 59.5975 74.0822 41.0022 35.0303 5.6528 13.6158 1.3474 0.0037 1.4609 0.0430 7.0296 11.6829 11.9300

Jul 43.4665 0.4276 58.9257 74.2780 40.8363 34.9877 5.6085 13.6594 1.3531 0.0037 1.4523 0.0426 7.0096 11.5901 11.8342

Aug 43.7673 0.4258 58.3659 73.2141 40.7390 35.0739 5.6473 13.7637 1.3663 0.0038 1.4599 0.0427 7.1085 11.6701 11.9160

Sep 44.0751 0.4119 56.9349 71.9350 40.0406 34.9299 5.6860 13.7383 1.3708 0.0037 1.4653 0.0427 7.1795 11.7517 12.0001

Oct 44.7979 0.4156 56.8661 72.0912 39.3383 35.1776 5.7746 13.7129 1.3812 0.0037 1.4743 0.0423 7.3101 11.9421 12.1967

Nov 44.9514 0.3875 56.1001 70.9959 38.9172 34.7182 5.7970 13.4555 1.3717 0.0037 1.4646 0.0411 7.3394 11.9815 12.2384

Dec 44.6878 0.3755 55.2554 69.9919 37.0710 34.0494 5.7632 12.8943 1.3589 0.0036 1.4306 0.0405 7.2276 11.9074 12.1666

2015 45.5028 0.3760 50.5291 69.5888 34.2412 33.1266 5.8697 11.7236 1.3308 0.0034 1.4340 0.0403 7.2423 12.1317 12.3892

Jan 44.6044 0.3764 51.8185 67.5228 36.1260 33.3326 5.7531 12.4698 1.3627 0.0035 1.4109 0.0410 7.1705 11.8776 12.1439

Feb 44.2214 0.3728 50.2159 67.7105 34.4404 32.6549 5.7028 12.2812 1.3575 0.0035 1.4017 0.0402 7.0756 11.7850 12.0397

Mar 44.4457 0.3695 48.2323 66.6675 34.4120 32.3068 5.7290 12.1122 1.3638 0.0034 1.4139 0.0400 7.1198 11.8512 12.1011

Apr 44.4136 0.3717 47.9446 66.4142 34.3952 32.9291 5.7303 12.2206 1.3660 0.0034 1.4340 0.0409 7.1605 11.8431 12.0921

May 44.6106 0.3697 49.8209 68.9978 35.2446 33.4497 5.7545 12.4089 1.3334 0.0034 1.4578 0.0409 7.1904 11.8964 12.1456

Jun 44.9831 0.3635 50.4958 70.0355 34.6977 33.4578 5.8023 12.0537 1.3345 0.0034 1.4560 0.0404 7.2488 11.9957 12.2476

Jul 45.2649 0.3674 49.8437 70.4481 33.6277 33.2927 5.8396 11.9158 1.3212 0.0034 1.4535 0.0396 7.2911 12.0702 12.3242

Aug 46.1420 0.3746 51.3555 71.9861 33.7471 33.0760 5.9513 11.4516 1.3053 0.0034 1.4373 0.0393 7.2960 12.3033 12.5633

Sep 46.7504 0.3891 52.5457 71.7659 33.0060 33.0510 6.0323 10.8822 1.2991 0.0033 1.4330 0.0395 7.3395 12.4684 12.7301

Oct 46.3609 0.3860 52.0504 71.0269 33.4019 33.0814 5.9821 10.8995 1.2978 0.0034 1.4287 0.0405 7.2971 12.3660 12.6235

Nov 47.0067 0.3844 50.6537 71.5190 33.5722 33.3169 6.0650 10.9313 1.3159 0.0034 1.4422 0.0409 7.3878 12.5325 12.7995

Dec 47.2303 0.3874 51.3725 70.9713 34.2240 33.5709 6.0936 11.0560 1.3129 0.0034 1.4392 0.0403 7.3302 12.5910 12.8606

2016 47.4925 0.4375 52.5568 64.3793 35.3147 34.4082 6.1185 11.4772 1.3461 0.0036 1.4741 0.0410 7.1506 12.6651 12.9315

Jan 47.5111 0.4021 51.6548 68.4806 33.3269 33.1651 6.1066 10.9323 1.3139 0.0034 1.4228 0.0395 7.2323 12.6654 12.9370

Feb 47.6361 0.4141 52.9010 68.3006 33.9669 33.9074 6.1201 11.4192 1.3378 0.0035 1.4337 0.0393 7.2749 12.7053 12.9705

Mar 46.7240 0.4135 51.9247 66.5513 34.9329 34.0062 6.0204 11.4424 1.3248 0.0036 1.4323 0.0394 7.1776 12.4619 12.7224

Apr 46.2845 0.4215 52.4798 66.2094 35.4511 34.2935 5.9679 11.8771 1.3192 0.0035 1.4320 0.0404 7.1471 12.3449 12.6025

May 46.8023 0.4300 52.9396 68.0290 34.2659 34.1821 6.0285 11.6100 1.3226 0.0035 1.4382 0.0399 7.1690 12.4809 12.7435

Jun 46.4645 0.4396 52.2377 66.2371 34.3588 34.3220 5.9861 11.3847 1.3159 0.0035 1.4375 0.0398 7.0512 12.3922 12.6515

Jul 47.0581 0.4514 52.0597 61.9364 35.3963 34.8462 6.0671 11.7313 1.3431 0.0036 1.4656 0.0412 7.0452 12.5482 12.8131

Aug 46.6809 0.4611 52.3221 61.2008 35.5976 34.6821 6.0190 11.6032 1.3442 0.0035 1.4804 0.0421 7.0226 12.4492 12.7105

Sep 47.4294 0.4657 53.1722 62.3769 35.9735 34.9092 6.1151 11.5624 1.3668 0.0036 1.5073 0.0428 7.1076 12.6480 12.9144

Oct 48.3482 0.4666 53.3734 59.8314 36.8331 34.9908 6.2329 11.5970 1.3798 0.0037 1.5323 0.0430 7.1919 12.8925 13.1645

Nov 49.1550 0.4546 53.0779 61.1309 37.0383 34.8767 6.3375 11.3852 1.3921 0.0037 1.5486 0.0423 7.1866 13.1085 13.3840

Dec 49.8156 0.4300 52.5389 62.2673 36.6355 34.7173 6.4203 11.1822 1.3932 0.0037 1.5589 0.0422 7.2017 13.2843 13.5645


Thai BahtUS DollarJapanese

YenEuro

Pound

Sterling

Singapore

Dollar

Hongkong

Dollar

Malaysian

Ringgit

Australian

Dollar

New Taiwan

Dollar

South

Korean Won

Indonesian

Rupiah

Chinese

YuanSaudi Rial

Emirati

Dirham

13a EXCHANGE RATES OF THE PESO

units of foreign currency per peso

period averages

2013 0.0236 2.2977 0.0178 0.0151 0.0244 0.0295 0.1829 0.0742 0.7230 245.5338 0.6997 25.8055 0.1451 0.0884 0.0866

Jan 0.0246 2.1833 0.0185 0.0154 0.0234 0.0301 0.1903 0.0745 0.7381 237.3247 0.7137 26.1531 0.1528 0.0921 0.0902

Feb 0.0246 2.2870 0.0184 0.0159 0.0238 0.0304 0.1907 0.0761 0.7327 238.0952 0.7285 26.7344 0.1532 0.0922 0.0903

Mar 0.0246 2.3291 0.0189 0.0163 0.0238 0.0306 0.1906 0.0764 0.7253 238.0952 0.7299 27.0040 0.1527 0.0921 0.0902

Apr 0.0243 2.3692 0.0187 0.0159 0.0234 0.0301 0.1887 0.0741 0.7060 236.4865 0.7250 27.2303 0.1504 0.0911 0.0893

May 0.0242 2.4438 0.0187 0.0158 0.0244 0.0302 0.1879 0.0731 0.7195 237.2881 0.7210 26.9162 0.1487 0.0908 0.0889

Jun 0.0233 2.2697 0.0177 0.0150 0.0247 0.0294 0.1809 0.0732 0.7164 229.7461 0.6976 26.4293 0.1430 0.0874 0.0856

Jul 0.0231 2.2990 0.0176 0.0152 0.0252 0.0292 0.1789 0.0735 0.7168 232.0888 0.6905 25.9770 0.1415 0.0865 0.0847

Aug 0.0228 2.2300 0.0171 0.0147 0.0253 0.0290 0.1768 0.0746 0.7195 240.1130 0.6830 25.4567 0.1396 0.0855 0.0837

Sep 0.0228 2.2622 0.0171 0.0144 0.0246 0.0288 0.1769 0.0742 0.7235 256.7237 0.6764 24.7496 0.1396 0.0856 0.0838

Oct 0.0232 2.2651 0.0170 0.0144 0.0244 0.0288 0.1796 0.0736 0.7220 262.1723 0.6805 24.6943 0.1414 0.0868 0.0851

Nov 0.0230 2.2954 0.0170 0.0143 0.0246 0.0286 0.1780 0.0733 0.7254 265.9574 0.6776 24.3813 0.1399 0.0861 0.0843

Dec 0.0227 2.3387 0.0166 0.0139 0.0252 0.0285 0.1758 0.0734 0.7311 272.3147 0.6728 23.9394 0.1378 0.0850 0.0833

2014 0.0225 2.3819 0.0170 0.0137 0.0250 0.0285 0.1747 0.0736 0.7315 267.1980 0.6823 23.7037 0.1388 0.0845 0.0827

Jan 0.0223 2.3140 0.0163 0.0135 0.0251 0.0283 0.1727 0.0734 0.7322 270.9677 0.6703 23.7101 0.1347 0.0835 0.0818

Feb 0.0223 2.2745 0.0163 0.0135 0.0248 0.0282 0.1728 0.0737 0.7269 266.3116 0.6749 23.8692 0.1353 0.0835 0.0818

Mar 0.0223 2.2828 0.0161 0.0134 0.0246 0.0283 0.1733 0.0732 0.7229 255.4745 0.6785 23.8908 0.1377 0.0837 0.0820

Apr 0.0224 2.2981 0.0162 0.0134 0.0240 0.0281 0.1737 0.0729 0.7239 255.7201 0.6769 23.3846 0.1394 0.0840 0.0823

May 0.0228 2.3180 0.0166 0.0135 0.0245 0.0285 0.1765 0.0735 0.7400 261.5193 0.6858 23.3281 0.1420 0.0854 0.0836

Jun 0.0228 2.3295 0.0168 0.0135 0.0244 0.0285 0.1769 0.0734 0.7422 271.7391 0.6845 23.2612 0.1423 0.0856 0.0838

Jul 0.0230 2.3389 0.0170 0.0135 0.0245 0.0286 0.1783 0.0732 0.7390 269.9229 0.6886 23.4480 0.1427 0.0863 0.0845

Aug 0.0228 2.3485 0.0171 0.0137 0.0245 0.0285 0.1771 0.0727 0.7319 266.4797 0.6850 23.4308 0.1407 0.0857 0.0839

Sep 0.0227 2.4279 0.0176 0.0139 0.0250 0.0286 0.1759 0.0728 0.7295 269.9229 0.6824 23.4244 0.1393 0.0851 0.0833

Oct 0.0223 2.4064 0.0176 0.0139 0.0254 0.0284 0.1732 0.0729 0.7240 270.2703 0.6783 23.6559 0.1368 0.0837 0.0820

Nov 0.0222 2.5810 0.0178 0.0141 0.0257 0.0288 0.1725 0.0743 0.7290 270.2703 0.6828 24.3576 0.1363 0.0835 0.0817

Dec 0.0224 2.6630 0.0181 0.0143 0.0270 0.0294 0.1735 0.0776 0.7359 277.7778 0.6990 24.6842 0.1384 0.0840 0.0822

2015 0.0220 2.6606 0.0198 0.0144 0.0292 0.0302 0.1705 0.0855 0.7517 293.6672 0.6974 24.8330 0.1381 0.0825 0.0808

Jan 0.0224 2.6570 0.0193 0.0148 0.0277 0.0300 0.1738 0.0802 0.7338 282.8619 0.7088 24.3937 0.1395 0.0842 0.0823

Feb 0.0226 2.6821 0.0199 0.0148 0.0290 0.0306 0.1754 0.0814 0.7366 287.0091 0.7134 24.9017 0.1413 0.0849 0.0831

Mar 0.0225 2.7067 0.0207 0.0150 0.0291 0.0310 0.1745 0.0826 0.7332 292.9427 0.7072 25.0114 0.1405 0.0844 0.0826

Apr 0.0225 2.6904 0.0209 0.0151 0.0291 0.0304 0.1745 0.0818 0.7320 292.3077 0.6974 24.4310 0.1397 0.0844 0.0827

May 0.0224 2.7048 0.0201 0.0145 0.0284 0.0299 0.1738 0.0806 0.7499 294.1176 0.6860 24.4738 0.1391 0.0841 0.0823

Jun 0.0222 2.7511 0.0198 0.0143 0.0288 0.0299 0.1723 0.0830 0.7493 294.1176 0.6868 24.7350 0.1380 0.0834 0.0816

Jul 0.0221 2.7217 0.0201 0.0142 0.0297 0.0300 0.1712 0.0839 0.7569 294.1176 0.6880 25.2583 0.1372 0.0828 0.0811

Aug 0.0217 2.6698 0.0195 0.0139 0.0296 0.0302 0.1680 0.0873 0.7661 297.3396 0.6958 25.4726 0.1371 0.0813 0.0796

Sep 0.0214 2.5698 0.0190 0.0139 0.0303 0.0303 0.1658 0.0919 0.7698 307.0175 0.6979 25.3287 0.1362 0.0802 0.0786

Oct 0.0216 2.5906 0.0192 0.0141 0.0299 0.0302 0.1672 0.0917 0.7705 298.5075 0.7000 24.6997 0.1370 0.0809 0.0792

Nov 0.0213 2.6014 0.0197 0.0140 0.0298 0.0300 0.1649 0.0915 0.7600 290.9091 0.6934 24.4574 0.1354 0.0798 0.0781

Dec 0.0212 2.5814 0.0195 0.0141 0.0292 0.0298 0.1641 0.0904 0.7617 292.7581 0.6948 24.8334 0.1364 0.0794 0.0778

2016 0.0211 2.2911 0.0190 0.0156 0.0283 0.0291 0.1635 0.0872 0.7432 280.3539 0.6791 24.4247 0.1399 0.0790 0.0774

Jan 0.0210 2.4867 0.0194 0.0146 0.0300 0.0302 0.1638 0.0915 0.7611 293.6858 0.7029 25.2972 0.1383 0.0790 0.0773

Feb 0.0210 2.4147 0.0189 0.0146 0.0294 0.0295 0.1634 0.0876 0.7475 283.5821 0.6975 25.4760 0.1375 0.0787 0.0771

Mar 0.0214 2.4183 0.0193 0.0150 0.0286 0.0294 0.1661 0.0874 0.7548 281.5013 0.6982 25.4022 0.1393 0.0802 0.0786

Apr 0.0216 2.3723 0.0191 0.0151 0.0282 0.0292 0.1676 0.0842 0.7580 284.5528 0.6983 24.7554 0.1399 0.0810 0.0793

May 0.0214 2.3255 0.0189 0.0147 0.0292 0.0293 0.1659 0.0861 0.7561 284.9389 0.6953 25.0597 0.1395 0.0801 0.0785

Jun 0.0215 2.2750 0.0191 0.0151 0.0291 0.0291 0.1671 0.0878 0.7599 286.8318 0.6956 25.0970 0.1418 0.0807 0.0790

Jul 0.0213 2.2154 0.0192 0.0161 0.0283 0.0287 0.1648 0.0852 0.7446 277.7778 0.6823 24.2748 0.1419 0.0797 0.0780

Aug 0.0214 2.1688 0.0191 0.0163 0.0281 0.0288 0.1661 0.0862 0.7439 282.0513 0.6755 23.7709 0.1424 0.0803 0.0787

Sep 0.0211 2.1475 0.0188 0.0160 0.0278 0.0286 0.1635 0.0865 0.7317 278.5146 0.6634 23.3697 0.1407 0.0791 0.0774

Oct 0.0207 2.1433 0.0187 0.0167 0.0271 0.0286 0.1604 0.0862 0.7247 270.2703 0.6526 23.2477 0.1390 0.0776 0.0760

Nov 0.0203 2.1998 0.0188 0.0164 0.0270 0.0287 0.1578 0.0878 0.7183 270.2703 0.6457 23.6490 0.1391 0.0763 0.0747

Dec 0.0201 2.3255 0.0190 0.0161 0.0273 0.0288 0.1558 0.0894 0.7178 270.2703 0.6415 23.6967 0.1389 0.0753 0.0737


Saudi RialEmirati

Dirham

Australian

Dollar

Chinese

Yuan

South

Korean Won

Malaysian

Ringgit

Thailand

Baht

Indonesian

Rupiah

New Taiwan

Dollar

Pound

Sterling

Singapore

Dollar

Hongkong

DollarUS Dollar

Japanese

YenEuro

13b EFFECTIVE EXCHANGE RATE INDICES OF THE PESO1980 = 100

period averages

Overall 1

Advanced 2

Developing 3 Overall Advanced Developing

2013 15.26 12.38 24.45 87.44 81.57 115.85

Jan 15.53 12.43 25.14 91.17 84.88 120.98

Feb 15.72 12.65 25.35 90.71 84.77 120.01

Mar 15.82 12.82 25.37 90.76 84.87 120.03

Apr 15.71 12.81 25.07 90.41 84.79 119.30

May 15.75 12.96 24.97 90.39 85.15 118.89

Jun 15.14 12.27 24.27 87.15 80.87 115.93

Jul 15.08 12.29 24.09 85.75 80.37 113.22

Aug 14.88 12.02 23.92 84.33 78.11 112.32

Sep 14.89 12.07 23.89 84.35 78.23 112.25

Oct 14.97 12.11 24.04 85.06 78.90 113.18

Nov 14.94 12.15 23.90 85.09 79.45 112.66

Dec 14.85 12.10 23.72 84.84 79.26 112.29

2014 14.92 12.24 23.72 87.20 82.50 114.36

Jan 14.67 11.95 23.44 87.94 83.88 114.67

Feb 14.63 11.86 23.46 86.39 81.79 113.25

Mar 14.65 11.85 23.54 85.66 80.46 112.93

Apr 14.68 11.90 23.54 85.92 80.23 113.76

May 14.89 12.07 23.88 87.16 81.07 115.72

Jun 14.96 12.15 23.95 87.81 81.73 116.53

Jul 15.03 12.24 24.02 87.64 82.21 115.66

Aug 14.97 12.26 23.83 87.20 82.03 114.84

Sep 15.06 12.49 23.75 87.29 82.95 114.13

Oct 14.94 12.40 23.55 86.88 82.77 113.38

Nov 15.18 12.79 23.69 88.19 85.48 113.67

Dec 15.46 13.04 24.09 89.30 86.67 114.98

2015 15.68 13.25 24.39 92.12 90.22 117.81

Jan 15.63 13.22 24.30 95.00 94.32 120.30

Feb 15.85 13.44 24.61 94.86 94.18 120.11

Mar 15.93 13.60 24.61 94.28 93.73 119.27

Apr 15.85 13.60 24.39 94.07 93.46 119.06

May 15.75 13.46 24.30 92.87 91.48 118.28

Jun 15.75 13.47 24.29 92.72 91.39 118.03

Jul 15.76 13.44 24.35 91.80 90.76 116.61

Aug 15.65 13.15 24.46 90.91 88.29 116.98

Sep 15.51 12.84 24.50 89.59 85.57 116.69

Oct 15.56 12.94 24.48 90.07 86.49 116.86

Nov 15.48 12.99 24.20 90.11 87.48 115.98

Dec 15.44 12.88 24.24 89.74 86.54 116.06

2016 15.00 12.20 24.01 88.81 84.16 116.34

Jan 15.41 12.67 24.45 93.82 90.98 120.87

Feb 15.18 12.43 24.17 90.50 87.53 116.80

Mar 15.31 12.57 24.32 90.58 87.29 117.21

Apr 15.24 12.48 24.25 90.46 86.51 117.71

May 15.16 12.32 24.25 90.03 84.92 118.33

Jun 15.21 12.29 24.43 90.41 84.79 119.33

Jul 14.98 12.12 24.06 88.20 83.21 115.92

Aug 14.95 12.04 24.08 87.58 82.02 115.71

Sep 14.75 11.88 23.78 86.29 80.59 114.25

Oct 14.60 11.77 23.50 85.49 79.88 113.16

Nov 14.62 11.84 23.47 86.11 80.90 113.50

Dec 14.73 12.07 23.44 86.66 82.26 113.38

2 U.S., Japan, Euro Area, and Australia

3 Hong Kong, Taiwan, Thailand, Indonesia, Malaysia, Singapore, South Korea, China, Saudi Arabia, and U.A.E.

r Revised


Trading Partners Index Trading Partners Index

1 Australia, Euro Area, U.S., Japan, Hong Kong, Taiwan, Thailand, Indonesia, Malaysia, Singapore, South Korea, China, Saudi Arabia, and U.A.E.

N O M I N A L R E A L

14 TOTAL EXTERNAL DEBT 1/



Medium & Medium &

Trade Non-Trade Long- Term Trade Non-Trade Long- Term

Grand Total 2,458 11,630 62,534 76,622 a 2,087 12,440 60,237 74,763 a

Public Sector 517 38,776 b 39,293 801 36,669 b 37,470

Banks 517 3,423 3,940 801 3,119 3,921Bangko Sentral ng Pilipinas 1,346 c 1,346 1,292 c 1,292

Others 517 2,076 2,594 801 1,828 2,629

Non-Banks 35,353 35,353 33,549 33,549NG and Others 35,353 35,353 33,549 33,549

Private Sector 2,458 11,113 23,758 37,329 2,087 11,638 23,568 37,293

Banks 10,847 3,116 13,963 11,450 3,666 15,116

Foreign Bank Branches 4,197 176 4,373 d 4,012 166 4,178 d

Domestic Banks 6,650 2,940 9,589 7,438 3,500 10,938

Non-Banks 2,458 266 20,642 e 23,366 2,087 188 19,902 e 22,177

1 Covers debt owed to non-residents, with classification by borrower based on primary obligor per covering loan/rescheduling agreement/document.

Exclusions

a Residents' holdings of Philippine debt papers issued offshore;

Non-residents' holdings of peso-denominated debt securities

Inclusions

b Cumulative foreign exchange revaluation on US$-denominated

multi-currency loans from Asian Development Bank and World Bankc Accumulated SDR allocations from the IMFd "Due to Head Office/Branches Abroad" (DTHOBA) accounts of branches

and offshore banking units of foreign banks operating in the Philippines

which are considered by BSP as "quasi-equity"e Loans without BSP approval/registration which cannot be serviced

using foreign exchange from the banking system;

Obligations under capital lease arrangements


13,587

1,346

13,139

1,306

2,931 3,123

1 -43

1,172 1,121

30 September 2016 31 December 2016

TotalShort-termShort-term

Total

30 September 2016 31 December 2016

17,121

4,982

16,529

5,506

15 SELECTED FOREIGN DEBT SERVICE INDICATORS



Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Debt Service Burden (DSB) 1 1736 1250 1245 1352 2292 1473 1422 1956

Principal 991 700 544 762 1572 954 711 1355

Interest 745 550 701 590 720 519 711 600

Export Shipments (XS) 2 10567 11234 11170 10226 10183 10709 11933 10619

Exports of Goods and Receipts 24383 25471 25136 24832 24945 26084 27476 25223

from Services and Income (XGSI) 2, 3

Current Account Receipts (CAR) 2 25957 27130 26786 26484 26499 27622 29051 26834

External Debt 75319 74998 75607 77474 77640 77721 76622 74763

Gross Domestic Product (GDP) 68367 74271 69147 80404 69147 77567 73912 83365

Gross National Income (GNI) 83304 89518 84312 96335 84315 92953 89198 99430

Ratios (%) :

DSB to XS 16.43 11.13 11.15 13.22 22.51 13.75 11.92 18.42

DSB to XGSI 7.12 4.91 4.95 5.45 9.19 5.65 5.18 7.75

DSB to CAR 6.69 4.61 4.65 5.11 8.65 5.33 4.89 7.29

DSB to GNI 2.08 1.40 1.48 1.40 2.72 1.58 1.59 1.97

External Debt to GDP 26.06 25.68 25.94 26.49 26.50 26.23 25.46 24.57

External Debt to GNI 21.58 21.28 21.48 21.90 21.90 21.71 21.12 20.42

1 Debt 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 Based on the accounting principle under the Balance of Payments and International Investment Position Manual, Sixth edition (BPM6)3 Includes cash remittances of overseas Filipino workers that were coursed through and reported by commercial banks which are reflected

under Compensation of Employees in the Primary Income account and workers' remittances in the Secondary Income account.p Preliminaryr Revised

Source: BSP

2015 r 2016 p

16 SELECTED FOREIGN INTEREST RATES

period averages; in percent

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

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 3.2500 3.2500 3.2841 3.5000 3.5000 3.5000 3.5119

US Discount Rate 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7500 0.7935 1.0000 1.0000 1.0000 1.0492

US Federal Funds Rate 0.1142 0.1649 0.1570 0.1722 0.1546 0.1140 0.0848 0.0802 0.0767 0.0780 0.0784 0.0930 0.0974 0.1151 0.1323 0.1574 0.3694 0.3831 0.3994 0.4491

LIBOR (90 days) 0.5141 0.4663 0.4239 0.3170 0.2917 0.2750 0.2614 0.2413 0.2358 0.2282 0.2343 0.2363 0.2603 0.2794 0.3142 0.4085 0.6248 0.6433 0.7853 0.9208

SIBOR (90 days)1

0.4375 0.4375 0.4120 0.4063 0.4063 0.4063 0.4063 0.4062 0.4033 0.4038 0.4055 0.4254 0.7503 0.8791 0.9613 1.0921 1.2369 1.0062 0.8807 0.9059

1 SIBOR data refers to SIBOR rates (in Singapore $)

Source: Bloomberg, Asian Wall Street Journal, Reuters

2014 2016 2013 2015 2012

17 BALANCE SHEET OF THE BANGKO SENTRAL NG PILIPINASas of periods indicated

Mar Jun Sep Dec r Mar Jun Sep Dec r Mar Jun Sep Dec p,u

Assets 4,040.9 4,028.2 4,062.2 4,087.6 4,134.4 4,180.5 4,296.4 4,309.9 4,405.5 4,591.3 4,760.7 4,559.1

4,040.9 4,028.2 4,062.2 4,087.6 4,134.4 4,180.5 4,296.4 4,309.9 4,405.5 4,591.3 4,760.7 4,559.1

International Reserves 3,545.2 3,500.3 3,547.2 3,535.8 3,581.1 3,622.1 3,753.7 3,782.4 3,798.6 3,991.3 4,158.0 3,998.0

Domestic Securities 219.0 222.0 222.0 222.4 223.0 223.1 223.4 222.6 224.0 224.2 224.8 223.2

Loans and Advances 85.6 85.2 85.0 85.3 85.1 85.3 85.7 85.5 163.5 154.5 151.7 151.1

Revaluation of International Reserves 0.0 26.1 7.5 41.7 35.9 36.7 0.0 0.0 0.0 0.0 0.0 0.0

Bank Premises and Other Fixed Assets 17.7 17.8 18.1 18.1 18.0 17.9 18.0 18.3 18.1 17.9 18.0 18.1

Derivative Instruments in a Gain/Loss (-) Position 0.0 -0.1 0.7 0.1 1.3 0.4 0.2 0.0 0.0 1.5 1.6 0.0

Other Assets 173.3 177.0 181.8 184.2 190.0 194.9 215.6 201.0 201.3 201.9 206.6 168.8

Liabilities 3,985.3 3,973.5 4,013.3 4,042.7 4,092.5 4,137.3 4,253.9 4,268.7 4,362.9 4,545.3 4,703.4 4,500.7

Currency Issue 708.0 705.0 714.5 929.5 809.7 798.6 817.3 1,005.2 930.5 931.4 942.1 1,124.2

Deposits 2,855.2 2,883.2 2,909.4 2,724.6 2,893.1 2,945.9 2,952.6 2,788.9 2,935.7 2,967.2 2,991.7 2,679.0

Reserve Deposits of Other Depository Corporations (ODCs) 11,116.4 1,251.3 1,285.5 1,386.7 1,277.7 1,324.4 1,373.3 1,456.2 1,427.0 1,393.5 1,559.4 1,631.6

Reserve Deposits of Other Financial Corporations (OFCs) 2 0.5 3.2 4.1 7.7 7.6 7.1 6.8 5.7 4.0 2.7 2.5 1.9

Overnight Deposit Facility 3 1,332.4 1,163.0 1,066.3 845.0 1,052.2 1,008.1 953.7 828.3 1,027.5 1,004.7 634.5 236.6

Term Deposit Facility 3 .. .. .. .. .. .. .. .. .. 90.1 330.1 529.2

Treasurer of the Philippines 4 333.6 390.1 476.7 415.2 478.6 528.0 544.1 426.8 336.3 332.2 318.1 136.9

Other Foreign Currency Deposits 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.1 0.1 0.1

Foreign Financial Institutions 35.5 39.7 39.5 39.5 43.7 44.4 39.3 39.3 108.7 111.1 111.1 111.1

Other Deposits 5 36.9 35.8 37.4 30.4 33.4 33.9 35.3 32.5 31.7 32.9 35.9 31.6

Foreign Loans Payable 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net Bonds Payable 22.9 21.8 22.9 22.4 22.8 22.6 23.9 23.6 23.5 23.5 24.8 24.9

Derivative Instruments in a Loss Position 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 1.8 0.0 0.0 0.0

Derivatives Liability 0.0 0.1 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.2 0.1 0.0

Allocation of SDRs 58.0 56.5 55.8 54.3 51.7 53.2 55.1 54.7 54.3 55.1 56.7 56.1

Revaluation of International Reserves 33.6 0.0 0.0 0.0 0.0 0.0 86.2 73.9 96.2 252.3 371.3 299.5

Reverse Repurchase Facility 3296.5 296.3 299.1 302.3 304.8 306.3 308.5 311.7 309.8 305.0 305.0 305.1

Other Liabilities 10.9 10.5 11.5 9.6 10.2 10.8 10.1 10.6 10.9 10.5 11.6 11.9

Net Worth 55.6 54.7 48.9 44.9 41.9 43.2 42.5 41.2 42.6 46.0 57.3 58.4

Capital 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0

Surplus/Reserves 5.6 4.7 -1.1 -5.1 -8.1 -6.8 -7.5 -8.8 -7.4 -4.0 7.3 8.4

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

1 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 Starting 3 June 2016, the Reverse Repurchase Agreement and Special Deposit Account have been replaced by the Reverse Repurchase Facility and Overnight Deposit Facility, respectively,

and a Term Deposit Facility was introduced in line with the implementation of the Interest Rate Corridor (IRC) system. Includes accrued interest payables.

4 Includes foreign currency deposits.

5Mostly GOCC deposits.

p Based on the preliminary (pre-closing) BSP balance sheet as of end-December 2016 prepared by the Financial Accounting Department (FAD) of the BSP.

r As restated based on the audited financial statements prepared by FAD of the BSP.

u Unaudited

.. No transaction


20162014 2015

18 INCOME POSITION OF THE BANGKO SENTRAL NG PILIPINAS

Q1 Q2 Q3 Q4 r FY r Q1 Q2 Q3 Q4 r FY r Q1 Q2 Q3 Q4 p,u FY p,u

Revenues 10.524 12.961 12.690 13.606 49.781 15.299 16.083 11.806 13.477 56.665 13.167 20.533 23.422 12.085 69.207

Interest Income 7.656 7.908 8.266 9.175 33.005 8.454 9.735 10.226 10.777 39.192 11.495 11.503 11.698 11.288 45.984

International Reserves 5.966 6.045 6.121 6.900 25.032 6.111 7.333 7.639 8.058 29.141 8.824 9.026 9.342 10.553 37.745

Domestic Securities 0.297 0.501 0.792 0.856 2.446 0.941 1.021 1.147 1.240 4.349 1.052 1.023 0.967 0.926 3.968

Loans and Advances 0.513 0.438 0.426 0.441 1.818 0.424 0.417 0.438 0.418 1.697 0.438 0.501 0.417 -0.450 0.906

Others 0.880 0.924 0.927 0.978 3.709 0.978 0.964 1.002 1.061 4.005 1.181 0.953 0.972 0.259 3.365

Miscellaneous Income 2.724 4.767 4.159 4.312 15.962 6.672 5.584 1.184 2.442 15.882 1.263 9.037 11.522 0.741 22.563

Net Income from Branches 0.144 0.286 0.265 0.119 0.814 0.173 0.764 0.396 0.258 1.591 0.409 -0.007 0.202 0.056 0.660

Expenses 15.097 16.010 19.433 18.079 68.619 17.308 18.538 17.993 19.162 73.001 16.684 18.146 16.993 19.364 71.187

Interest Expenses 11.131 10.646 11.982 12.398 46.157 12.022 12.240 12.325 12.202 48.789 11.550 10.986 10.858 10.226 43.620

Legal Reserve Deposits of Banks 0.006 0.006 0.002 0.000 0.014 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

National Government Deposits 1.180 1.383 2.076 2.199 6.838 2.205 2.651 2.614 2.544 10.014 1.828 1.498 1.495 1.301 6.122

Reverse Repurchase Facility 1 2.605 2.619 2.761 3.073 11.058 3.033 3.083 3.140 3.133 12.389 3.148 2.874 2.339 2.338 10.699

Overnight Deposit Facility 1 6.932 6.149 6.637 6.528 26.246 6.291 6.003 6.233 5.803 24.330 6.064 6.010 5.096 2.781 19.951

Term Deposit Facility 1 .. .. .. .. .. .. .. .. .. .. .. 0.085 1.386 3.217 4.688

Loans Payable and Other

Foreign Currency Deposits 0.505 0.474 0.494 0.482 1.955 0.487 0.494 0.326 0.706 2.013 0.500 0.506 0.532 0.577 2.115

Other Liabilities -0.097 0.015 0.012 0.116 0.046 0.006 0.009 0.012 0.016 0.043 0.010 0.013 0.010 0.012 0.045

Cost of Minting/Printing of Currency 0.924 1.467 1.484 2.888 6.763 1.940 1.711 1.585 2.949 8.185 1.284 2.362 1.775 3.819 9.240

Taxes and Licenses 0.241 0.170 1.959 -1.588 0.782 0.355 0.225 0.252 0.256 1.088 0.364 0.251 0.259 0.175 1.049

Others 2.801 3.727 4.008 4.381 14.917 2.991 4.362 3.831 3.755 14.939 3.486 4.547 4.101 5.144 17.278

Net Income/(Loss) Before Gain/(Loss) on FXR Fluctuations and

Income Tax Expense/(Benefit) -4.573 -3.049 -6.743 -4.473 -18.838 -2.009 -2.455 -6.187 -5.685 -16.336 -3.517 2.387 6.429 -7.279 -1.980

Gain/(Loss) on Foreign Exchange Rate Fluctuations 2

8.978 -0.741 0.852 -0.153 8.936 -1.176 3.496 5.333 3.897 11.550 3.673 0.878 4.145 10.413 19.109

Income Tax Expense/(Benefit) 0.000 0.000 0.000 -0.037 -0.037 0.000 0.000 0.002 -0.335 -0.333 0.000 0.000 0.002 0.104 0.106

Net Income/(Loss) After Tax 4.405 -3.790 -5.891 -4.589 -9.865 -3.185 1.041 -0.856 -1.453 -4.453 0.156 3.265 10.572 3.030 17.023

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

1 Starting 3 June 2016, the Reverse Repurchase Agreement and Special Deposit Account have been replaced by the Reverse Repurchase Facility and Overnight Deposit Facility, respectively,

and a Term Deposit Facility was introduced in line with the implementation of the Interest Rate Corridor (IRC) system.

2 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.p

Based on the preliminary (pre-closing) BSP income statement as of end-December 2016 prepared by the Financial Accounting Department of the BSP.r

As restated based on the audited financial statements prepared by FAD of the BSP.u

Unaudited..

No transaction



201620152014

LEVELS (in billion pesos)

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