The interagency Financial Stability Coordination Council (FSCC) has identified debt servicing and credit risks as the two most pressing concerns in the financial industry today.
In its risk statement on Friday, the FSCC said that since the 2019 coronavirus disease (Covid-19) pandemic has reduced expected income, the balance between income and debt is the main risk. down today.
“Covid-19 has created similar problems around the world and loss of income is the most common scar in this pandemic-recession,” said Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, who is also the president of the FSCC.
“This has made borrowers vulnerable because their ability to service their debts has been jeopardized,” he also noted.
Diokno further stated that the impact of the pandemic on income is the major risk fueling other risks, which is more evident in industries that rely on consumer traffic, such as retail, events , entertainment and ancillary activities; as well as those in the informal sector, which already depend heavily on economic dynamics.
“That” this crisis is different “speaks not only of the depth, but also of the scale and the variability of the impact of the pandemic between the various stakeholders”, he also underlined.
In addition, the SCCF also highlighted the threats advanced economies (EAs) pose to emerging markets and developing economies (EMDEs), such as the Philippines.
Diokno said: “Although every jurisdiction has a scar from Covid-19, the scars differ from jurisdiction to jurisdiction. While all forecasts point to a better year in 2021, the global economy is recovering at several speeds and that in itself unfortunately creates spillover risks. from AE to EMDE. “
The FSCC is made up of the BSP, the Ministry of Finance, the Insurance Commission, the Philippine Deposit Insurance Corp. and the Securities and Exchange Commission. It is the place where financial market authorities identify, monitor, manage and mitigate the build-up of systemic risks in the Philippine financial system.