By Flor G. Tarriela
My five-year grandson, RB is moving to Grade One soon. I remember when his Ate CJ , 6, had to go through the same change, leaving her small village pre-school to attend a bigger school. It must have been daunting. Change is often this way. A little frightening but exciting at the same time. With change, there are so many possibilities for growth.
2016 was a year of change and surprises, domestically and globally. Brexit, US political developments, the US Fed rate hike, Chinese economic rebalancing, weather upsets, and other headwinds.
Despite these challenges, the Philippines grew by an impressive 7.1 percent in the third quarter of 2016 — the highest in the region! What accounts for this? For years now, the foundations for stability were being built. We are reaping the benefits of strong macroeconomic buffers that helped us withstand shocks our economy was not immune to, but was ready for.
With the Bangko Sentral ng Pilipinas’ shift to inflation targeting in 2002, inflation has been stable and low. Business expectations have been well-managed, with investment and consumption decisions grounded in consistent and credible monetary policy. The Philippine banking system is sound, liquid, and adequately capitalized. We were even recently recognized by the Economist Intelligence Unit as one of the global leaders in advancing financial inclusion, next to Columbia, Peru, and India.
2017 is a year also of change. Governor Amando “Say” Tetangco’s term is ending in July. An 8th time awardee as one of the World’s Best Central Bankers by Global Finance Asia, his shoes will be very difficult to fill.
Who will succeed him has caused some uncertainty, with the market being quelled by the announcement that he was asked to stay on for a third term. All eyes are now on Congress on whether the law will be amended to allow this. A third term for Governor Tetangco is strongly recommended by Finance Secretary Carlos “Sonny” Dominguez. Governor Tetangco was quoted as saying that he does not want to preempt Congress. A very wise move. He was also quoted that he prefers his successor to be a a seasoned Central Banker. Two possibilities are Deputy Governors Nestor Espenilla Jr. and Diwa Guinigundo. Continuity and stability are assured with any of these technocrats at the BSP’s helm.
In the event of a Governor THIRDtangco appointment (a term coined at the ING FINEX CFO event ), change is something still to be reckoned with as the economic headwinds we will face are strong. But we bankers are confident that the Philippine economy and financial system will remain resilient.
Many ideas hold much promise. Just after Christmas, there was news that DOF is considering that government agencies and state-owned companies will be allowed to continue to maintain deposit funds in private banks. This proposition considers giving government agencies ease of transactions for logistical reasons as government banks are not physically present in all areas. PNB Vice Chair Rico Alfiler says this is also in keeping with allowing greater economic efficiency and the sound principles of allowing free market competition. From a larger vantage point, and in the long run, government agencies would be able to leverage for better banking terms (i.e. lower loan rates, more creative services, etc.), improving services. More winners from both sectors – private and public – will emerge from this change, the economy being the biggest victor of all.
At any rate, even currently, the banking system is more than adequate to service the requirements of any individual or corporation, including government agencies and instrumentalities. It is no wonder then that as the main provider of domestic credit, third party credit watchers recognize the Philippine banking system as a source of sovereign strength.
Strength is also found elsewhere. Chit Juan reminded me that women make 80% of purchase decisions (Men know this!). And in doing so, women contribute significantly to GDP. Chit said that six leading women groups in business recently formed an alliance called Philippine Women’s Economic Network or PHIL WEN with Boots Garcia, former BCDA Chair nominated as President. The lead convenor is the Women’s Business Council in the Philippines with VP Atty Dick Du-Baladad as representative. Other members are: Filipina CEO Network (Christina Concepcion); SPARK (Vicky Garchitorena); NEW (Myren Garcia); Women Corporate Directors ( Sharon Dayoan and Chit Juan);and BPW Makati (Jeannie Javelosa and Camile Escudero).
Two women were recently elected to head two prestigious organizations. Congratulations to Marife Zamora, MAP President and Atty. Dick, as FINEX President.
Thus, in the financial inclusion drive, women are not to be ignored but constitute a major part of our country’s achievement of the UN’s Sustainable Development Goals.
A Prosperous New Year!
Ms .Tarriela is Chairman of Philippine National Bank and Director of FINEX. She was formerly Undersecretary of Finance and the FIrst Filipina Vice President of Citibank N.A.