The Financial Stability Coordination Council (FSCC) led by the Bangko Sentral ng Pilipinas cautioned about rising global economic uncertainties while emphasizing the Philippines’ economic strength.
FSCC Chairman and Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. noted the fresh rounds of uncertainties in advanced economies since the end of 2023. He said developments in various countries were likely to affect the Philippines in different ways.
“While global markets have been very fluid, the Philippines has shown its resilience by expanding at a pace that exceeds that of most other economies in the world. The FSCC recognizes that expectations at the end of 2023 of early rate cuts by the US Federal Reserve have been tempered by recent US data,” Remolona said.
“That said, the council weighs the potential spillovers coming from abroad versus the resilience that the local market continues to exhibit,” he said.
The council assessed during its 38th executive committee meeting the funding needs of the corporate sector. Estimates suggest that there is sizable portion of corporate bonds and loans maturing in 2024. Given the nature of these debts, the FSCC expects a significant amount to be refinanced.
The council said the banking sector has been able to provide much of the corporate funding through the years, but it also looks to a stronger capital market to complement the banking sector and to better manage various risks.
It said that over the medium-term, the FSCC looks forward to seeing concrete developments in the fixed income market leading to more access by Philippine corporations to the bond market.
“Enhancing the capital market is an issue that is shared by all members of the FSCC. We recognize that regulators must take a more proactive role in market development and encourage deliberate collaboration among stakeholders,” the FSCC said.
The FSCC said it would continue to assess the funding requirements of corporations. This is a core function in its continuing objective to further economic growth while avoiding possible surprises that can have adverse consequences on the economy.
The FSCC was first convened in October 2011 as a voluntary initiative of the BSP, in partnership with the Department of Finance, Insurance Commission, Philippine Deposit Insurance Corp. and Securities and Exchange Commission. Executive Order No. 144 institutionalized the role of the council in managing systemic risks in the Philippines in July 2021.