Keep BSP politics-free
An unprecedented third term for the globally recognized governor of the Bangko Sentral ng Pilipinas is now off the table, and the jockeying for his post is expected to intensify soon. This early, the Duterte administration must be reminded that the BSP is an independent institution and must be kept free of politics if it is to function effectively.
For the past 12 years, Amando Tetangco Jr. has steered the country to monetary stability as BSP governor. He was the only governor of the central bank to be reappointed to a second term. He was named to the post by then President Gloria Arroyo in 2005 and again by then President Benigno Aquino III in 2011. His current term will end on July 2.
Tetangco was hailed by the New-York-based Global Finance magazine as one of the world’s top central bankers for the eighth time last year. He has been acknowledged both here and abroad as one of the world’s best central bankers for keeping Philippine monetary conditions stable and conducive to growth.
Tetangco has occupied various positions in the central bank for more than 40 years, having started working there in 1974. Before he headed the BSP, he was the deputy governor in charge of the banking services sector, economic research, and treasury. As governor of the BSP, he also chairs its policymaking Monetary Board as well as the Anti-Money Laundering Council.
President Duterte earlier said he was considering appointing Tetangco to an unprecedented third term as central bank governor, but that move would require Congress to amend the BSP’s charter. Last week, Senate President Aquilino Pimentel III doused that possibility, claiming there was no more time to amend the law and allow it. While a number of bills were introduced last year in the House of Representatives to allow a third term for Tetangco, none progressed ahead of Congress’ Christmas break.
The next BSP governor will have big shoes to fill and will take charge of monetary policy at a time when the country faces strong headwinds from rising US interest rates and the consequent outflow of foreign funds from emerging markets, uncertainty caused by Britain’s leaving the European Union, and rising inflation in China, among others.
Who then should succeed Tetangco as BSP chief? Four names have cropped up: BSP Deputy Governors Diwa Guinigundo and Nestor Espenilla, EastWest Bank president Antonio Moncupa, who heads the ruling party’s PDP-Laban Research Planning and Development Institute, former banker and Monetary Board member Peter Favila, and Foreign Secretary and Duterte classmate Perfecto Yasay Jr.
While the top BSP post is on the wish list of many private bankers, the pillars of the private sector want only continuity in monetary policy, which has kept the financial system stable in the past decade. Philippine National Bank director Leonilo Coronel, for instance, was quoted by CNN as saying that he hoped the next BSP governor would pick up where Tetangco left off. Coronel also said he wanted more of continuity and stability of policies—the premium qualities desired by the market.
Finance Secretary Carlos Dominguez III, head of the Duterte economic team, has frowned on the possible appointment of a former banker to head the BSP. Last December, Dominguez said it would be “weird” for a private banker to be governor of the central bank, noting that a monetary chief usually came from either the ranks or the academe, as is the practice in many developed countries.
To help President Duterte pick a new BSP governor, Tetangco’s statement last December is worth repeating: “For a seamless transition, the next BSP governor should be one with central banking experience.” He had earlier expressed his intention to decline the offer to remain in his post in favor of one of his deputies, stressing that his successor must have a background of having worked at the BSP. That seems clear enough.
