Senator Win Gatchalian urged the Bangko Sentral ng Pilipinas (BSP) to prioritize the increase of its own capitalization pursuant to RA 11211 or the Act Amending the New Central Bank Act amid a proposal to tap the monetary regulatory agency as a source of the Maharlika Investment Fund (MIF).
Under the proposed measure, the BSP would have to give up all of its dividends in favor of the MIF in the first two years of the fund and then 50% of its dividends in the years after. BSP Deputy Governor Francisco Dakila, Jr. said it would take around 14 years to achieve the P200 billion capitalization of BSP should its dividends be used to fund MIF.
Gatchalian emphasized that a delay in the BSP’s target of increasing its capitalization to P200 billion runs counter to arguments made by the central bank when RA 11211 was being deliberated at the Senate.
Gatchalian said RA 11211, which was approved in February 2019, essentially seeks to increase the BSP’s capitalization from P50 billion to P200 billion.
“When you were arguing to increase your capitalization to P200 billion, you emphasized the need for a stronger BSP to adapt to the changing times because the economy has grown and to enable BSP to better manage the risks in its operations. Now that we’re almost back to normal, why are you foregoing 2 years or more to increase your capitalization? Where is the sense of urgency now?” Gatchalian asked Dakila at a recent Senate hearing on the proposed measure creating the MIF.
According to Gatchalian, voting in favor of the proposal to fund the MIF partly from BSP dividends means a green light to forego more than two years of using its dividends to ready BSP in meeting the challenges of the economy and financial system. “We were made to understand that there was a sense of urgency because we need a strong regulator. In effect, we would be contradicting our vote,” said Gatchalian, referring to the Senate’s approval of Republic Act 11211,”
Gatchalian added that BSP stands to lose about P10 to P20 billion of funds for its capitalization every year if it will be mandated to contribute to the MIF under the proposed measure. He further noted that three years after RA 11211 was enacted into law, BSP’s capitalization, which currently stands at P60 billion, has increased only by P10 billion and is way too far from its capitalization target of P200 billion.