Philippines: Financial System Stability Assessment-Press Release and Statement by the Executive Director for the Philippines
IMF Staff Country Reports, April 9, 2021
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Bibliographic details
- Published: April 9, 2021
- Series: IMF Staff Country Reports
Summary findings
- GDP contracted by 9½ percent in 2020—a much steeper decline than during the Asian Financial Crisis (AFC)—but it is now recovering with the easing of containment measures and economic policy support.
- Banks are closely connected to the corporate sector through high credit exposures and conglomerate ownership linkages.
- The Financial Action Task Force (FATF) may list the Philippines as a jurisdiction with serious Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) deficiencies in 2021.
- The country is vulnerable to climate change (physical) risks, especially the destruction of physical capital from typhoons.
Financial sector stability and linkages
- High credit exposures between banks and the corporate sector increase interconnectedness and potential transmission of stress.
- Conglomerate ownership linkages amplify corporate–bank interdependence and may concentrate risk within financial institutions.
AML/CFT assessment and implications
- The Financial Action Task Force (FATF) may list the Philippines as a jurisdiction with serious AML/CFT deficiencies in 2021, indicating heightened international scrutiny and potential implications for cross-border financial activity.
Climate and physical risks
- Physical risks from climate change—particularly destruction of physical capital from typhoons—pose vulnerabilities to the financial system and broader economy.
Policy context and outlook
- Economic recovery is underway as containment measures ease and economic policy support continues, following the 9½ percent contraction in 2020.
- Financial sector resilience considerations include addressing high bank–corporate exposures, conglomerate ownership linkages, AML/CFT deficiencies, and climate-related physical risks.
Philippines: Financial System Stability Assessment-Press Release and Statement by the Executive Director for the Philippines, April 9, 2021.
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