## Philippines: Financial System Stability Assessment-Press Release and Statement by the Executive Director for the Philippines

_IMF Staff Country Reports, April 9, 2021_

## Source details

**Canonical URL:** [Philippines: Financial System Stability Assessment-Press Release and Statement by the Executive Director for the Philippines](https://www.imf.org/en/publications/cr/issues/2021/04/08/philippines-financial-system-stability-assessment-press-release-and-statement-by-the-50347)

## Other formats

- [Markdown version](/en/publications/cr/issues/2021/04/08/philippines-financial-system-stability-assessment-press-release-and-statement-by-the-50347/index.md)
- [Structured JSON version](/en/publications/cr/issues/2021/04/08/philippines-financial-system-stability-assessment-press-release-and-statement-by-the-50347/index.json)
- [Bundle manifest](/en/publications/cr/issues/2021/04/08/philippines-financial-system-stability-assessment-press-release-and-statement-by-the-50347/bundle-manifest.json)

## 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.*

---

## Content in this bundle

- **1phlea2021001**
  - [1phlea2021001 (Markdown version)](/-/media/files/publications/cr/2021/english/1phlea2021001.pdf.md){rel="alternate" type="text/markdown"}
  - [1phlea2021001 (PDF)](/-/media/files/publications/cr/2021/english/1phlea2021001.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/cr/issues/2021/04/08/philippines-financial-system-stability-assessment-press-release-and-statement-by-the-50347_