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AFTER incurring losses last year due to its defense
of the dollar against a rapidly appreciating peso, the Bangko
Sentral ng Pilipinas (BSP) will get a shot in the arm, as the
national government has agreed to recapitalize the banking industry
regulator.
BSP Deputy Gov. Diwa C.
Guinigundo said the central bank and the Department of Finance are
set to sign an agreement this week to raise the P40 billion capital
for the regulator.
“The signing will be anytime,
may be next week,” Guinigundo told reporters last Friday.
The amount represents the
remaining seed money out of the P50 billion that the government is
obliged to invest in the BSP under the latter’s charter.
Under the stabilization
program, the finance department will raise the amount through a
special purpose trust , which will float P20 billion worth of bonds
in two tranches. The debt paper sale will be backed by the
government’s written commitment to allot funds over the next 10
years.
The scheme will allow the
BSP to immediately get the money this year while the cost to the
government will be staggered over a 10-year period.
The BSP has been incurring
net losses due to heavy intervention in the foreign exchange market.
It posted a P62.5 billion net loss last year.
To manage the high foreign
exchange inflows, the BSP had relaxed its special deposit account (SDA),
allowing government financial institutions and banks’ trust
departments to invest in this facility.
This month, the BSP decided
to wind down some of the short-term windows of the SDA while cutting
the rates offered by the remaining ones in a bid to encourage banks
to invest in other instruments, such as government debt papers
auctioned off every other week.
Financial market players had
blamed the SDA for the government’s failure to secure short-term
money during the regular Treasury bill auctions since the central
bank facility, which offered higher rates, had been luring
investors.
--Maricel E. Burgonio
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