Press Release
May 11, 2009

THERE IS NO BETTER TIME TO REFORM OUR
FINANCIAL WAREHOUSE THAN NOW - ANGARA

Identifies key financial reform efforts

Senator Edgardo J. Angara today said that during this time of global financial slump, the country should continue its financial reforms in order to better position itself against the adverse impacts of the crisis and prepare for the expected global rebound in the future.

"Last week, the world's finance ministers gathered at the International Monetary Fund and the World Bank meetings, where they faced a staggering $4.1 trillion projected loss from the global economic crisis. Acknowledging the depth of the worldwide economic upheaval and the challenge facing both national and international institutions, the IMF called for continued decisive and effective action by governments and banks to prevent the system from going further into a downward spiral," said Angara who chairs the Senate Committee on Finance.

He added, "The 1.25 percent slump in world trade for 2009 - the first global trade decline since the Second World War - will similarly upset the country's trade performance. IMF's growth outlook for the Philippines showed a contraction in exports and imports and a bleak outlook for remittances."

Angara added, that earlier into the crisis, he convened an emergency consultative meeting with officials from the Bangko Sentral ng Pilipinas, the Department of Finance, the National Economic and Development Authority, and several other banking and financial organizations. "They assured us," he shared, "that the Philippine financial system is capable of weathering the global financial turbulence, at least for the time being."

According to BSP, the strength of domestic demand would help the country withstand the ongoing crisis, and that personal consumption, which accounts for more than two-thirds of the economy, will remain firm.

Angara, however suggested, that there is no better time than now undertake badly needed reforms in our financial system. He added that the global crisis demands us to make structural reforms in the financial market and taxation to ensure that our financial system remains resilient.

He then continued on identifying the key reform efforts in our country's financial system.

Angara said that our tight-fisted credit system has limited the access to vital credit by entrepreneurs who create jobs and generate income for the country. Hopefully, the ratification of the Credit Information System Act late last year will remedy this, he said, by setting the standards for credit reporting operations, it seeks to improve the ability of creditors to assess risk and allocate credit more efficiently.

Other key reform measures include:

  • BSP charter amendments for stronger prudential supervision;

  • The Corporate Recovery Act to modernize the insolvency law;

  • The Collective Investment Schemes Law to update the mutual fund law;

Also awaiting House action are the following:

  • The Real Estate Investment Trust (REIT) to inject liquidity and stability to the property market;

  • And the Pre-Need Code to provide the regulatory framework to this important financial subsector.

"These financial reforms will complement our fiscal efforts in creating the necessary stimulus to enable our economy to endure the global crisis," added Angara.

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