The Bangko Sentral ng Pilipinas (BSP) remains committed to support the economy during the coronavirus disease 2019 (Covid-19) pandemic, but policymakers must also be watchful and implement structural reforms moving forward, its chief said on Friday.
Bangko Sentral ng Pilipinas Governor Benjamin Diokn PHOTO BY ENRIQUE AGCAOILI
At a virtual roundtable discussion with the National Resilience Council and hosted by the Makati Busienss Club on Friday, BSP Governor Benjamin Diokno said that, at the onset of the global health crisis, the central bank “promptly implemented measures to ease liquidity, and sustain flow of credit that have calmed down market jitters.”
These measures include interest rate cuts; large-scale asset purchases; forward guidance; targeted liquidity and lending operations; measures to support micro, small and medium enterprises; operational relief for foreign exchange transactions; and regulatory relief.
“The BSP [is] yet to exhaust the conventional monetary instruments in its toolkit to support the liquidity requirements of the economy, should conditions warrant,” Diokno said.
Policymakers were, nevertheless, reminded to remain vigilant as they prepare for the reopening of the economy because the risks posed by Covid-19 remain high.
“The crisis has bared the vulnerabilities and gaps in existing processes and systems that we need to swiftly deal with to cover lost momentum because of Covid-19,” Diokno said.
With this, the Bangko Sentral chief underscored four critical structural reform imperatives for policymakers.
“First on the list is the modernization of the country’s health system to ensure efficient public health infrastructure and resilient crisis preparedness framework,” he said.
This would require giving incentives, overhauling the health-care supply-chain management, and initiating the formulation of a national preparedness and response framework for disease outbreaks and pandemics.
Second is the need for massive upgrading of the information and communications technology (ICT) infrastructure system and processes “as technology will play a pivotal role in reshaping the means of production and the delivery of goods and services in the post-Covid world,” Diokno said.
Third is the modernization of Philippine agriculture and the government’s supply-chain management system with the aid of digital technologies.
“This will help ensure that food and other essential goods and services are available, accessible and affordable,” Diokno said.
“For example, an efficient logistics system for agriculture facilitates the transport of agricultural inputs including farm equipment and machinery to farmers to keep food production uninterrupted,” he added.
Last, the BSP head emphasized the need for a stronger educational system, sustained upskilling and adequate health protection to future-proof the workforce, so that the country’s productive capacity can benefit more strongly from its favorable demographics.