Understanding Philippine Economy

BACHELOR OF ARTS IN ECONOMICS PA 118 – ECONOMIC SYSTEM AND PUBLIC ADMINISTRATION

Pangasinan State UniversitySocial Science Department – PSU Lingayen

Chapter 2 UNDERSTANDING PHILIPPINE ECONOMY1st Semester, S.Y 2014 – 2015



A. Economy DefinedB. Two Parts of the Economy: Public Sector and Private SectorC. Government and the EconomyD. Economic Functions of the GovernmentE. Fiscal and Monetary PolicyF. Four Sectors of the EconomyG. Expanded Circular Flow Diagram: Three-Sector ModelH. Macroeconomic GoalsI. Economic CycleJ. Phases of Economic CycleK. Economic IndicatorL. Classifications of Economic IndicatorsM. Three Sectors of the EconomyN. Economy of the Philippines: Facts and StatisticsO. National Economic Development Authority (NEDA)P. Bangko Sentral ng Pilipinas (BSP)Q. The Philippine Development Plan

Course Outline



Economy

An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area.

An economy may also be described as a spatially limited and social network where goods and services are exchanged according to demand and supply between participants by barter or a medium of exchange with a credit or debit value accepted within the network.



In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state.

The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal. Examples of public sector activity range from delivering social security, administering urban planning and organizing national defense.

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Two Parts of the Economy:Public Sector vs. Private Sector



Private Sector is part of the economy where firms in response to the demand or consumers’ needs and wants make production decisions. In the private sector individuals are allowed to own the factor of production.

Public Sector is responsible for the supply of public goods & services and merit goods. These goods are provided free when used and are paid by taxes e.g. roads, healthcare, street lighting. The central or local government makes decisions regarding resource allocation in the public sector. In public sector, the state owns a significant proportion of production factors.

Two Parts of the Economy:Public Sector vs. Private Sector



Government is a crucial institution in any economy. It acts as a consumer as well as a producer and taken as a whole, it becomes the largest single “business” in a nation. When asked about the government, a lot of us would think of the nation’s President and other politicians. However, we must consider the government as a whole consisting of the various offices, departments, and bureaus rather than the individuals representing said sectors.

The government is also called the public sector, wherein decision making is collective. The government’s role is to replace individual decisions with collective decisions that make everybody better off.

The Government and the Economy



Government’s Role in Managing the Economy

In every country, the government takes steps to help the economy achieve the goals of growth, full employment, and price stability. In the United States, the government influences economic activity through two approaches: monetary policy and fiscal policy. Through monetary policy, the government exerts its power to regulate the money supply and level of interest rates. Through fiscal policy, it uses its power to tax and to spend.



1. Allocative Role – Because individual choices are not always in the group’s best interest, the government must improve the allocation of resources to be able to maximize economic welfare. This also ensures the proper utilization of scarce resources.

2. Distributive Role – Aside from allocating the resources, another issue is on the equitable distribution of the resources. Considering all the members of the economy, other questions to be pondered upon is on who gets the resource, how much of it should be given, and when shall it be given?

Economic Functions of the Government



3. Regulatory Role – For the market economy to function efficiently, there needs to be the formulation and proper implementation of policies and laws to guide and regulate the individual units in the market economy. This is significant because of the existence of market failures.

4. Stabilization Role – The government also has the role to moderate inflation and unemployment effects on the economy. Stabilization includes finding a tolerable balance between and among the various macroeconomic problems, such as balancing the rate of inflation with that of unemployment.

Economic Functions of the Government



Fiscal Policy and Monetary Policy

Fiscal policy involves the use of government spending, taxation and borrowing to affect the level and growth of aggregate demand, output and jobs or influence macroeconomic conditions.

Monetary Policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.



Four Sectors of the Economy

1. Household (Consumers) Consuming unit of the economy

2. Business Firms (Producers) Producing unit of the economy

3. Government (Public sector) Implementer of economic policies

4. Foreign Sector International trade and net exports



An Expanded Circular – Flow Diagram: How Money Flows Through the Economy



A circular flow of funds connects the four sectors of the economy households, firms, government, and the rest of the world—via three types of markets: the factor markets, the markets for goods and services, and the financial markets. Funds flow from firms to households in the form of wages, profit, interest, and rent through the factor markets. After paying taxes to the government and receiving government transfers, households allocate the remaining income—disposable income—to private savings and consumer spending. Via the financial markets, private savings and funds from the rest of the world are channeled into investment spending by firms, government borrowing, foreign borrowing and lending, and foreign transactions of stocks.




In turn, funds flow from the government and households to firms to pay for purchases of goods and services. Finally, exports to the rest of the world generate a flow of funds into the economy and imports lead to a flow of funds out of the economy. We can determine the total flow of funds by adding all spending—consumer spending on goods and services, investment spending by firms, government purchases of goods and services, and exports—and then subtracting the value of imports. This is the value of all the final goods and services produced in a country.




1. To maintain full employment

2. To ensure price stability

3. To achieve high level of economic growth

4. To achieve favorable balance of trade

Macroeconomic Goals



Full employment a condition of the national economy, where every member of the labor force who wants to work is able to find work. This goal is commonly indicated by the employment of labor resources (measured by the unemployment rate). The economy benefits from full employment because resources produce the goods that satisfy the wants and needs that lessens the scarcity problem.

It is also described either as absolutely 0% rate of unemployment or as the level of employment rates when there is no cyclical unemployment.

Full employment



Price stability is achieved by avoiding or limiting fluctuations in price level of goods and services. Stability seeks to avoid the recessionary declines and inflationary expansions of business cycles. The goal of price stability is to prevent increases in the general price level known as inflation, as well as decreases in the general price level known as deflation. Maintaining stability is beneficial because it means uncertainty and disruptions in the economy are avoided. It means consumers and businesses can safely pursue long-term consumption and production plans. Policies makers are usually most concerned with price stability and the inflation rate.

Price Stability



Economic growth is achieved by increasing the economy's ability to produce goods and services. This goal is best indicated by measuring the growth rate of production. If the economy produces more goods this year than last, then it is growing.

Economic growth is also indicated by increases in the quantities of the economic resources used to produce goods. With economic growth, society gets more goods that can be used to satisfy more wants and needs--people are better off; living standards rise; and scarcity is less of a problem.

Economic Growth



The four macroeconomic goals of full employment, stability, economic growth, and balance of trade are widely considered to be beneficial and worth pursuing. Each goal, achieved by itself, improves the overall well-being of society. Greater employment is typically better than less. Stable prices are better than inflation. Economic growth is better than stagnation. However, the pursuit of one goal often restricts attainment of others. For example, policies that promote economic growth might create unemployment or policies that improve stability might limit economic growth. Macroeconomic goals are also often in conflict with the microeconomic goals of efficiency and equity.

Tradeoffs of Macroeconomic Goals



Economic Cycle (Business Cycle)

Economic cycle refers to the recurrent ups and downs in the level of economic activity, which extend over several years. It describes the fluctuations in the economy between growth (expressed in rising real GDP) and stagnation (expressed in falling real GDP).



Phases of Economic Cycle

1. Peak or prosperity phase

2. Contraction or recession phase

3. Trough or depression phase

4. Expansion or recovery phase



Peak or prosperity phase. At the peak of a business cycle, real GDP is at a temporary high. Real output in the economy is at a high level, unemployment is low and domestic output may be at its capacity. Inflation also may be high.Contraction or recession phase. If real GDP decreases, the economy is said to be in a contraction. Real output is decreasing and the unemployment rate is rising. As contraction continues, inflation pressure fades. If the recession is prolonged, price may decline (deflation). The government determinant for a recession is two consecutive quarters of declining output.




Trough or depression phase. The low point in real GDP, just before it begins to turn up. Output and unemployment are “bottom out”. This phase may be short-lived or prolonged. There is no precise decline in output at which a serious recession becomes a depression.

Expansionary or recovery. The recovery is the period when real GDP is rising; it begins at the trough and ends at the initial peak. Real output in the economy is increasing and the unemployment rate is declining. It is the upswing part of the cycle.




Economic indicators provide a snapshot of the economy's health. Just as a doctor checks the vital signs of a patient, an economist might check the vital signs of the economy by looking at Gross Domestic Product , Consumer Price Index, or the unemployment rate.

An economic indicator is a statistic to determine the state of economic activity. It allows analysis of economic performance and predictions of future performance. Economic indicators include various indices, earnings reports, and economic summaries.

Economic Indicator



Economists categorize economic indicators as leading, lagging or coincident. These categories help them see where the economy is in terms of the business cycle, which shows the rising and falling of economic conditions over time.

1. Leading indicators anticipate the direction in which the economy is headed.

2. Coincident indicators provide information about the current status of the economy.

3. Lagging indicators change months after a downturn or upturn in the economy has begun and help economists predict the duration of economic downturns or upturns.

Categories of Economic Indicator



Common stock or share prices New orders for consumer durables Money supply Building permits Business inventories Index of consumer expectations

Leading Economic Indicators



Gross Domestic Product industrial production personal income less transfer payments Manufacturing and trade sales Employment levels Employees on nonagricultural payrolls

Coincident Economic Indicators



The Gross National Product (GNP) The average duration of unemployment The value of outstanding commercial and industrial loans The change in the Consumer Price Index The change in labor cost per unit of output The ratio of manufacturing and trade inventories to sales The ratio of consumer credit outstanding to personal

income The average prime rate (interest rates) charged by banks

Lagging Economic Indicators



Selected Economic Indicators Defined

1. Gross Domestic Product (GDP)2. Gross National Product (GDP)3. Unemployment Rate4. Per Capita Income5. Inflation Rate6. Population rate7. Net Exports8. Imports and Exports



Economic Indicators Defined

Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity encompassing every measure of the economy, measuring the total value of final goods and services produced during a specific period.

Gross National Product (GNP) is the total market value of all final goods and services produced by the citizens of a country in a given year.

Per Capita Income (PCI) refers to income per head. PCI is obtained by dividing the national income by the number of population.



Unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force

Inflation rate is a measure of inflation, the rate of increase of a price index. It is the percentage rate of change in price level over time. The rate of decrease in the purchasing power of money is approximately equal.

Consumer Price Index is a measure of the average price level of a fixed basket of goods and services purchased by consumers. changes in the CPI represent the rate of inflation.




Trade balance measures the difference between exports and imports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade.Exports are sales of domestically produced goods which are by a domestic country sold to the foreign countries or rest of the world

Imports are sales of foreign products bought by a domestic country from the rest of the world

Exchange rate is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency.




Poverty threshold (poverty line) is the minimum level of income deemed adequate in a given country. The poverty threshold is useful as an economic tool with which to measure such people and consider socioeconomic reforms such as welfare and unemployment insurance to reduce poverty.

Government budget deficit is the amount by which some measure of government revenues falls short of some measure of government spending.




Three Economic Sectors of the Economy

1. Primary Sector (Agriculture Sector)

2. Secondary Sector (Industrial Sector)

3. Tertiary Sector (Service Sector)



Primary Sector (Agriculture Sector)Primary sector is the sector of an economy making direct use of natural resources. This includes agriculture, forestry and fishing, mining, and extraction of oil and gas.

The primary sector of the economy extracts or harvests products from the earth. The primary sector includes the production of raw material and basic foods. Activities associated with the primary sector include agriculture (both subsistence and commercial), mining, forestry, farming, grazing, hunting and gathering, fishing, and quarrying. The packaging and processing of the raw material associated with this sector is also considered to be part of this sector.



Secondary Sector (Industrial Sector)Secondary sector of the economy or industrial sector includes those economic sectors that create a processed, tangible product: production and construction.

This sector generally takes the output of the primary sector and manufactures finished goods. These products are then either exported or sold to domestic consumers and to places where they are suitable for use by other businesses. This sector is often divided into light industry and heavy industry. Many of these industries consume large quantities of energy and require factories and machinery to convert the raw materials into goods and products. They also produce waste materials and waste heat that may pose environmental problems or cause pollution.



Tertiary Sector (Services Sector)Tertiary sector of the economy is the service industry. This sector provides services to the general population and to businesses. Activities associated with this sector include retail and wholesale sales, transportation and distribution, entertainment (movies, television, radio, music, theater, etc.), restaurants, clerical services, media, tourism, insurance, banking, healthcare, and law.



Goldman Sachs estimates that by the year 2050, the Philippines will be the 14th largest economy in the world, Goldman Sachs also included the Philippines in its list of the Next Eleven economies.

According to HSBC, the Philippine economy will become the 16th largest economy in the world, 5th largest economy in Asia and the largest economy in the Southeast Asian region by 2050.

Economy of the Philippines



The Philippines is considered as a newly industrialized country, which has been transitioning from being one based on agriculture to one based more on services and manufacturing.

The 40th largest in the world, according to 2013 International Monetary Fund statistics, and is also one of the emerging markets in the world.

According to the World Bank ICP 2011, the estimated 2011 GDP (purchasing power parity) was $543.7 billion.




Primary exports include semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, and fruits. Major trading partners include the United States, Japan, China, Singapore, South Korea, the Netherlands, Hong Kong, Germany, Taiwan, and Thailand. The Philippines has been named as one of the Tiger Cub Economies together with Indonesia, Malaysia and Thailand. It is currently one of Asia's fastest growing economies. However, major problems remain, mainly having to do with alleviating the wide income and growth disparities between the country's different regions and socioeconomic classes, reducing corruption, and investing in the infrastructure necessary to ensure future growth.




Capital ManilaCurrency Philippine Peso (PHP)

GDP$272.018 billion nominal (2013), $456.418 billion PPP (2013)

GDP growth 7.2% (2013), 5.7% (1Q 2014)GDP per Capita $2,790 (2013) (nominal 126th)

GDP by sectoragriculture (12.3%), industry (33.3%), services (54.4%) (2011)

Inflation (CPI) 2.1% (Aug 2013)Population 96.71 milion (2012)

Population below poverty line less than $1.25 / 10.41% (2009) less than $2 / 25.2% (2012)Poverty rate 22.30%Gini coefficient 43.0 (2009)

Labor Force by Occupationservices (52%) agriculture (33%), industry (15%) (2010 est.)

Unemployment rate 7.5% (January 2014)

Philippine Economy (Statistics)



RegionGRDP (in

billion PHP)

% of GRDPAgriculture (in billion

PHP)% of GRDP

Industry (in billion

PHP)% of GRDP

Services (in billion

PHP)% of GRDP per capita

GRDP

Metro Manila 3,479.91 35.744 17.891 0.51 591.035 16.98 2,870.98 82.5 288,062Cordillera 210.079 2.158 21.082 10.04 116.522 55.47 72.474 34.5 127,614Ilocos 293.918 3.019 75.097 25.55 79.448 27.03 139.372 47.42 71,076Cagayan Valley 167.492 1.72 71.769 42.85 17.805 10.63 77.919 46.52 51,100Central Luzon 882.806 9.068 145.975 16.54 373.25 42.28 363.58 41.18 85,186CALABARZON 1,644.84 16.895 108.94 6.62 1,015.50 61.74 520.401 31.64 126,589MIMAROPA 176.176 1.81 48.028 27.26 65.135 36.97 63.013 35.77 62,995Bicol 206.619 2.122 57.728 27.94 44.855 21.71 104.036 50.35 37,526Western Visayas 395.417 4.062 115.613 29.24 66.238 16.75 213.565 54.01 54,870Central Visayas 601.88 6.182 51.89 8.62 213.968 35.55 336.023 55.83 86,880Eastern Visayas 242.594 2.492 58.434 24.09 104.207 42.96 79.952 32.96 58,335

Zamboanga Peninsula 200.883 2.063 66.206 32.96 51.762 25.77 82.915 41.28 57,815

Northern Mindanao 467.1 4.798 115.283 31.4 102.251 27.85 149.566 40.74 93,628

Davao Region 408.45 4.195 104.792 25.66 112.821 27.62 190.837 46.72 89,552SOCCSKSARGEN 261.548 2.687 97.932 37.44 71.445 27.32 97.171 35.24 62,080Caraga 99.037 1.017 30.248 27.56 26.583 24.22 52.934 48.22 44,472

Muslim Mindanao 86.048 0.884 58.287 67.74 3.641 4.23 24.12 28.03 26,004Total 9,735.52 100 1,245.20 12.79 3,056.47 31.4 5,433.86 55.81 103,366

Gross Regional Domestic Product (GRDP) for the year 2013

Gross Domestic Product (Regional Accounts)



Exports $53.98 billion (2013)Export goods semiconductors and electronic products, transport equipment,

garments, copper products, petroleum products, coconut oil, fruits

Main export partners

Japan 19.0% ; United States 14.2% ; China 11.8%; Hong Kong 9.2% South Korea 5.5%; Thailand 4.7% (2012 est.)[

Imports $61.71 billion (2013)Import goods electronic products, mineral fuels, machinery and transport

equipment, iron and steel, textile fabrics, grains, chemicals, plastic

Main import partners

United States 11.5%; China 10.8%; Japan 10.4%; South Korea 7.3% Singapore 7.1%; Thailand 5.6%; Saudi Arabia 5.6%; Indonesia 4.4% Malaysia 4.0% (2012 est.)

Exports and Imports



Main industries

electronics assembly, Business Process Outsourcing, garments, footwear, pharmaceuticals, chemicals, wood products, food processing, petroleum refining, fishing

Exports $53.98 billion (2013)

Export goods

semiconductors and electronic products, transport equipment,garments, copper products,petroleum products, coconut oil,fruits

Imports $61.71 billion (2013)

Import goods

electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains, chemicals, plastics

Trade OrgnizationsAPEC, ASEAN, WTO, EAS, Asian Development Bank, ASEAN Plus Three, and others

Classification (WB) Lower middle income

Philippine Economy (Statistics)



Budget Allocation Millions of Pesos(PHP)

Millions of US Dollars(USD)

%

Department of Education ₱238,800 $5,513.7 13.15Department of Public Works and Highways 126,400 2,918.5 6.96

Department of National Defense 108,100 2,496.0 5.95

Department of Interior and Local Government 99,800 2,304.3 5.50

Department of Agriculture 61,400 1,417.7 3.38Department of Social Welfare and Development 48,800 1,126.8 2.69

Department of Health 45,800 1,057.5 2.52Department of Transportation and Communications 34,700 801.2 1.91

State Universities and Colleges 25,800 595.7 1.42Department of Finance 23,600 544.9 1.30Department of Environment and Natural Resources 17,500 404.1 0.9

Government Budget

2012 Philippine national government budget



Year

GDP growth in percent (Constant

Prices, Base Year=2000)

GDP (I Php Billion)

GDP (In USD

Billion)

GDP per capita (In

USD, Current Prices)

GDP (In USD

Billion, PPP)

GDP per capita (in

USD, PPP)

Peso vs Dollar

(Exchange Rate)

1985 -7.31 633.6 34.1 623 77.9 1426 18.611986 3.42 674.6 33.1 591 82.4 1471 20.391987 4.31 756.5 36.8 641 88.4 1540 20.571988 6.75 885.5 42 715 97.6 1663 21.091989 6.21 1025.3 47.3 786 107.6 1791 21.71990 3.04 1190.5 48.9 796 115.2 1873 24.331991 -0.58 1379.9 50.2 797 118.6 1882 27.481992 0.34 1497.5 58.7 912 121.8 1891 25.511993 2.12 1633.6 60.2 914 127.1 1929 27.121994 4.39 1875.7 71 1052 135.5 2007 26.421995 4.68 2111.7 83.7 1224 144.8 2118 25.241996 5.85 2406.4 93.5 1336 156.1 2232 26.221997 5.19 2688.7 92.8 1297 167.1 2336 28.981998 -0.58 2952.8 73.8 1009 168.1 2297 40.021999 3.08 3244.2 83 1110 175.8 2352 39.092000 4.41 3580.7 81 1053 187.5 2437 44.19

Gross Domestic Product



Year

GDP growth in percent (Constant

Prices, Base Year=2000)

GDP (I Php Billion)

GDP (In USD

Billion)

GDP per capita (In

USD, Current Prices)

GDP (In USD

Billion, PPP)

GDP per capita (in

USD, PPP)

Peso vs Dollar

(Exchange Rate)

2001 2.89 3888.8 76.3 971 197.3 2511 50.992002 3.65 4198.3 81.4 1014 207.8 2591 51.62003 4.97 4548.1 83.9 1025 222.7 2720 54.22004 6.7 5120.4 91.4 1093 242.7 2905 56.042005 4.78 5677.8 103.1 1209 261 3061 55.092006 5.24 6271.2 122.2 1405 283.5 3255 51.312007 6.62 6892.7 149.4 1684 309.9 3493 46.152008 4.15 7720.9 173.6 1919 329 3636 44.472009 1.15 8026.1 168.5 1851 335.4 3685 47.642010 7.63 9003.5 199.6 2155 365.3 3945 45.112011 3.64 9706.3 224.1 2379 386.1 4098 43.312012 6.82 10564.9 250.2 2611 419.6 4380 42.232013 7.16 11546.1 272.2 2792 454.3 4660 42.45

Gross Domestic Product



National Economic Development Authority

National Economic and Development (NEDA) is an independent cabinet-level agency of the Philippine government responsible for economic development and planning.

As the central planning body of the government, the NEDA is the responsible for the formulation and updating of long and short-term national development plans as well as for the identification and coordination of economic policies and measures that will bring about the optimal use of scares resources, thus affording maximum development in the Philippines.



History of NEDA

Presidential Decree No. 1 – issued on September 24, 1972, otherwise known as as the Integrated Reorganization Plan (IRP), was the provision for an integrated organizational complex for development planning program implementation to correct the deficiencies of the of the system.

P.D 107 – as promulgated, dated January 24, 1973, creating the NEDA as mandated in the 1973 Constitution. Dr. Gerardo Sicat served as the first director general when NEDA was established in 1973.



History of NEDA

Executive Order No. 5 – was issued by Pres. Corazon Aquino on March 12, 1986, directing a government-wide reorganization to promote economy, efficiency and effectiveness in the delivery of public services

Executive Order No. 230 – was issued on July 22, 1987 , reorganizing the NEDA. Implementation of this EO was completed on Feb. 16, 1988 when the NEDA commenced operations under its reorganized setup



Functions of NEDA

1. Advise the President on matters concerning the status and progress of the economy.

2. Formulate, in consultation with the private sector and other appropriate government agencies, definite inconsistent long range and annual economic social development plans and programs.

3. Coordinate the formulation and implementation of national policies on fiscal, budgetary, credit, tariff, investment, production, price, manpower, trade population,, land use, water resources use, and other economic matters.



Functions of NEDA

4. Analyze, coordinate and initiate, with the approval of the President, major development projects requiring the utilization of funds available to the government.

5. Coordinate the implementation of approved national and and regional development plans and programs.

6. Coordinate and integrate foreign economic and technical assistance programs from United Nations economic agencies, international and economic organizations, foreign government and private organizations dealing with the government and its agencies and instrumentalities.

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Functions of NEDA

7. Establish and maintain working relationships with the various international financial institutions and assist government and private entities in tapping foreign resources for credit or other forms of assistance.

8. Establish priorities and programs in the utilization of public funds, manpower, equipment and other available resources.

9. Review and recommend to the President for approval the Investment Priority Plan, Export Priorities Plan and Public Utilities prepared by the Board of Investment.



Functions of NEDA

10.Coordinate statistical activities of all agencies, formulate statistical standards and methodology, and prescribe their use by the government agencies.

11. Provide general policies for the operations of the agencies attached to and under administrative supervision of NEDA.



The Bangko Sentral ng Pilipinas is the central bank of the Philippines with the main function of implementing monetary policy aimed at influencing money supply, consistent with its primary objective to maintain price stability.

It was rechartered on July 3, 1993, pursuant to the provision of the 1987 Philippine Constitution and the New Central Bank Act of 1993. The BSP was established on January 3, 1949, as the country’s central monetary authority.

Bangko Sentral ng Pilipinas (BSP)



1. Liquidity management. Formulate and implement monetary policy aimed at influencing money supply, consistent with its primary objective to maintain price stability.

2. Currency issue. The BSP has the exclusive power to issue the national currency. All notes and coins issued by the BSP are fully guaranteed by the Government and are considered legal tender for all private and public debts.

3. Lender of last resort. Extend discounts, loans and advances to banking institutions for liquidity purposes.

Roles and Functions of BSP



4. Financial Supervision. Supervise banks and exercise regulatory powers over non-bank institutions performing quasi-banking functions.

5. Management of foreign currency reserves. Maintain sufficient international reserves to meet any foreseeable net demands for foreign currencies in order to preserve the international stability and convertibility of the Philippine peso.

6. Determination of exchange rate policy. Determine the exchange rate policy of the Philippines. Currently, the BSP adheres to a market-oriented foreign exchange rate policy.




8. Be the banker, financial advisor and official depository of the Government, its political subdivisions and instrumentalities and GOCCs.

9. Reasonably responsible for the faults of the people behind it get the blame of the opposition to which it is grouped.




The Philippine Development Plan (2011 – 2016)

The Plan, anchored on President Benigno S. Aquino III’s 16-point “Social Contract with the Filipino People,” envisions inclusive growth for the country. Inclusive growth means growth that is shared by all and opposed to the trickle down, jobless growth that we have seen over the recent years. The plan is prepared by NEDA.



The Philippine Development Plan (2011 – 2016)

The Plan comprises 10 chapters, namely:

1. Introduction: In Pursuit of Inclusive Growth2. Macroeconomic Policy3. Competitive Industry and Services Sectors4. Competitive and Sustainable Agriculture and Fisheries Sector5. Accelerating Infrastructure Development6. Towards a Dynamic and Resilient Financial Sector7. Good Governance and the Rule of Law8. Social Development9. Peace and Security10. Conservation, Protection and Rehabilitation of the

Environment and Natural Resources Towards Sustainable Development

Understanding Philippine Economy

Education

Transcript of Understanding Philippine Economy