BSP eyes burden-sharing with gov't to deal with losses

The Bangko Sentral ng Pilipinas has included among the measures in its proposed Charter amendment a burden-sharing arrangement with the government that would address the central bank's losses, which were largely caused by monetary stabilization efforts. “The BSP’s charter provides for mandatory remittance of 75 percent of its net income to the Bureau of the Treasury. However, there is no burden sharing arrangement with respect to losses incurred. Thus, when the BSP makes a profit, the BSP by law has to share its gains with the national government by remitting 75 percent of its net income to the Bureau of the Treasury as dividends,” the BSP said in a statement issued over the weekend. “However, when the BSP incurs a loss that reduces its capital, there is no arrangement between the BSP and the NG on the replenishment of its eroded capital,” it added. Of the P50 billion that the government is mandated to provide the BSP by the New Central Bank Act of 1993, the government has remitted P40 billion so far, with the balance of P10 billion expected to be given this year. “In turn, the BSP has paid P154 billion in dividends and taxes to the national government since its creation in 1993 and nurtured the BSP into a P4-trillion institution in terms of assets,” the central bank said. Last Thursday, the Bangko Sentral reported that according to its unaudited financial statement, its net loss rose by 183 percent to P95.38 billion in 2012 from P33.69 billion in 2011, the biggest loss since the BSP was established as an independent entity 20 years ago. The net loss last year came about as the central bank’s revenues reached P65.73 billion in 2012 from from P118.74 billion in 2011 and foreign exchange losses amounted to P50.38 billion from P36.2 billion in 2011. Expenses, however, were lower at P110.69 billion in 2012 than in 2011 (P115.97 billion). Finance Secretary Cesar Purisima earlier expressed support for the proposed amendment to the central bank's charter, and said that it would be one of the priority bills the Department of Finance would pursue in the 16th Congress. — BM, GMA News