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Insider policymaker as next BSP chief pushed


By Lee C. Chipongian

Banking, finance and academe sectors are calling on President Duterte to appoint an experienced monetary policymaker, competent in the workings of a central bank, and has been in the forefront of battling high inflation during critical economic times here and abroad as the next Governor of the Bangko Sentral ng Pilipinas (BSP).


MB file photo.

MB file photo.

“I am for continuing the practice that has earned for the BSP the confidence and respect of the international financial community and the general public. And that is, the appointment to its highest post of only a highly qualified professional who has integrity, a firm grasp of monetary policy, and no record of being a captive of vested interests,” said economist and former socio-economic planning chief, Emmanuel Esguerra. “The next BSP governor should preferably be a career central banker who is already familiar with the role of a central monetary authority.”

Based on private surveys conducted by some big banks as well as an informal poll of BSP employees, there is a preference for contenders from within the central bank itself. These BSP “insiders” are the three deputy governors: Diwa C. Guinigundo, Ma. Cyd Tuano-Amador and Chuchi G. Fonacier.

Guinigundo, the most senior, heads the monetary stability sector (now called Monetary and Economics Sector), a post held previously by former Governor Amando M. Tetangco Jr., while Tuano-Amador used to be Guinigundo’s assistant governor until she was called back by Tetangco in 2017 after she retired from the BSP in 2014. She currently heads the BSP’s Corporate Services Sector and the Monetary Board-designated officer-in-charge. Fonacier, on the other hand, is the head of the Financial Supervision Sector, and the assistant governor of the supervision and examination sector when the late Governor Nestor A. Espenilla Jr. was deputy governor.

Guinigundo, who was Tetangco’s natural successor from the monetary stability sector, and Espenilla were both appointed deputy governors in 2005, while Tuano-Amador and Fonacier were promoted in 2017.

Ma. Socorro Gochoco-Bautista, an open economy macroeconomics and monetary theory and policy professor at the UP School of Economics (UPSE), stressed the importance and need for an independent monetary authority, free of political interference. “I believe that someone who has worked at the institution for many years is a far superior choice for governor than anyone from outside the institution who will undoubtedly face a steep learning curve on all fronts,” she said.

UPSE professor and former dean, Emmanuel de Dios, said the administration is “well advised not to tamper with a good thing.”

“In choosing a new BSP governor, the Duterte administration should avoid appointing persons perceived to be cronies or identified with obvious political or financial interests,” said de Dios. “Continuity and stability will be served if the new governor comes from the ranks of qualified professionals who are not beholden to vested interests, including the appointing power. In the present circumstances, he or she should preferably be drawn from the the ranks of the BSP itself, from other parts of the civil service, or from the academe,” he added.

UPSE Center for Financial and Monetary Economics Head, Margarita Debuque-Gonzales, agreed with her colleagues. She said it’s reasonable to expect “a lot of macroeconomic turbulence in the months ahead” and that “we need somebody experienced and apolitical enough to maintain confidence in our financial system and in our economy as risks continue to rise.”

Debuque-Gonzales said the BSP is known internationally as a professionally-run and “highly credible institution and it would serve the country best not to jeopardize this strong reputation, which we know is a vital prerequisite for macro stability (in terms of inflation and GDP growth).”

“Given the challenges we continue to face, now is certainly not a good time to experiment with the way monetary policy is being implemented, and somebody who already knows the ropes and who is recognized and respected by their peers in the international monetary policy circles will certainly be much preferred,” said Debuque-Gonzales.

A prominent banker, requesting anonymity, said that in the banking community, the preference is to appoint someone who is familiar with the various reform programs, effective monetary policy, pro-active banking supervision and financial inclusion. “A knowledgeable and steady hand at the helm would be a strong positive signal to the investor community,” the banker said.

In a bank-initiative survey, where the bank polled its clients and officials, of the three career central bankers, Guinigundo leads in this survey with 67 percent, followed by Fonacier with 33 percent. It is the same sentiment inside the BSP, among the rank and file, and within the management and officers’ group, according to an official. The other candidates — Tuano-Amador, Monetary Board member Peter B. Favila, who is a former bank president and trade chief, and former Philippine president and now House Speaker Gloria M. Arroyo — each got zero percent.

Among financial and market analysts, in analyzing the “short list” of qualified candidates, First Grade Finance Inc. President and Managing Director Astro del Castillo stressed, “it’s best to get within the (BSP) organization given that in the banking and financial industry, it’s a well-known fact that people in the BSP are more competent and generally more experienced. The deputy governors are really right for the post, and should be someone who has been in the thick of things, has had more exposure and internationally-known.”

Regina Capital Development Managing Director Luis Limlingan will go for anyone “who’s currently working for the BSP already.” He said the deputy governors “are better at this post. But, the one who will be the next BSP chief should be someone with the balanced view – whether dovish or hawkish – that can help with inflation pressures. I don’t think the next governor should listen much to the market as these are just investors. They should look at the economy and make pro-poor policies.”

Gochoco-Bautista said the BSP “has done a tremendous job since its creation” and has survived the Asian Financial Crisis, the Mexican crisis, the Russian crisis, the Euro-debt crisis, and the Global Financial Crisis, “in large part because of its institutional abilities and credibility.”

“That markets have remained calm even in the face of Governor Espenilla’s extended leaves for medical treatment and his subsequent passing is testament to the credibility and ability of the BSP as an institution to conduct appropriate monetary policy and for market participants to acknowledge this by continuing to engage in their daily activities,” she said. “It is necessary to have the right person at the helm of the BSP. The job of BSP Governor is not easy. Together with the new BSP law, over the years, the BSP has succeeded in building a tremendous talent pool from within the institution.”

“It is not all intellectual smarts either,” Gochoco-Bautista added. “It also takes someone who has been near the helm of the institution to understand the ethos of an institution, what it takes to administratively run such an institution, and one who has built up the social capital needed to inspire his co-workers to push the envelope of knowledge, to work doggedly hard and always with integrity, and overall, to do their best for their country.”

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