By Lawrence Agcaoili (The Philippine Star) Updated October 23, 2011
12:00 AM Comments (0)
MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported
that the ratio of bank credit to gross domestic product (GDP) has
remained steady over the past few years amid the economic slowdown in
the US and the debt crisis in Europe.
BSP Governor Amando M. Tetangco Jr. said that bank credit has grown in
line with the activities in the economy as the credit-to-GDP ratio stood
at 39.6 percent as of June this year from about 40.2 percent as of 2006.
"This suggests a relatively stable relationship between economic
activity and credit exposures. The ratio is not too high so as to raise
overheating alarm bells and not too low as to suggest a market without
momentum," Tetangco said.
He pointed out that the BSP expects strong banks to mobilize savings and
then to intermediate the same to borrowers.
"If, however, we take the argument a step further, this relationship
between bank credit and economic growth tells us that banks have the
power of the purse to support the real economy by allocating to
deserving borrowers," he added.
The country's GDP growth slackened to four percent in the first half of
the year from 8.7 percent in the same period last year due to weak
global trade as well as the lack of spending by the government under the
Aquino administration.
This prompted the Cabinet-level Development Budget Coordination
Committee (DBCC) to lower the GDP growth target to 4.5 percent to 5.5
percent from the revised five percent to six percent this year and to
five percent to six percent instead of the revised 5.5 percent to 6.5
percent next year.
Originally, the DBCC penned a GDP growth target of seven percent to
eight percent this year and next year.
Tetangco said the BSP would continue to oversee the banking market
largely along the lines of permissible banking activity and would
provide a framework that balances the competing interests of all parties.
He pointed out that balance is achieved by providing for an enabling
environment.
"Such an environment nurtures entrepreneurial initiatives which can be
achieved with some funding support; protects the rights of the public
who either contribute their saving to the system and/or partake of
products and services; while encouraging innovation so that banks can
address the evolving needs of a differentiated public," the BSP chief said.
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