The National Government is depositing the last P10-billion capitalization for the Bangko Sentral ng Pilipinas (BSP) this year completing the P50-billion resources that BSP should have received 20 years ago.
Finance Secretary Cesar V. Purisima yesterday said the budget department has already programmed the P10 billion capital infusion and it will be remitted by December.
The government has put in a total of P30 billion or P10 billion in 2011 and P20 billion in 2012. “We are proud to be the only administration that has added capital to the central bank since its formation and (under the Aquino government) they will be fully capitalized at P50 billion starting December,” Purisima said on the sidelines of the Philippines Investment Forum by Euromoney Conferences in Makati yesterday.
Purisima said the NG will consider additional capital for the BSP when there is a requirement. The improving budget deficit level enabled the finance and budget departments to deposit the BSP capitalization after two decades of waiting. At the end of 2012 the deficit gap as a ratio to GDP has been reduced to 2.3 percent at P242.8 billion from 2.6 percent of GDP in 2011 and for this year the target is two percent.
“A stronger capitalized central bank is good for the country and if there is a need to increase capital then we will be supportive,” he said. “The BSP is operating in a very dynamic environment and we’ve been working together to ensure that the country is stable and it is conducive to investments.”
BSP Governor Amando M. Tetangco Jr. said the central bank is currently reviewing amendments to the BSP charter and is considering an increase in capitalization. “That will be part of the review of the exsiting provisions and the formulation of proposed amendments that we’ll be presenting to congress when it convenes in July,” he said.
The additional capitalization is being reviewed at the moment. Tetangco said the update is needed because when the P50 billion capitalization was set in 1993, the economic condition and the global situation was very different then.
“The (local and global) economy has expanded. The P50 billion capital was set 20 years ago and during all these period the economy has grown (and we have) to consider that financial and economic requirements have increased so we’ll take that into account,” he said.
The mode of addressing the BSP capitalization has gone through several processes which started during the time of President Arroyo. One of discussions then was the proposed issuance of securities which will be eligible for open market operations.
In 1993, when Congress restructured the central bank’s finances with the passage of the New Central Bank Act, which had a provision for a P50-billion capitalization, the government deposited only P10 billion. The next P10 billion was remitted 18 years later.
Based on data, the BSP has been incurring losses for the past three years. With continued losses, the central bank has not been able to remit dividends to the NG. The last time it posted an income gain was in 2009 of P13.13 billion and paid dividends of P9.85 billion to the NG.