MANILA, Philippines - The International Monetary Fund (IMF) has expressed its support to the strengthening of the capabilities of the Philippine Deposit Insurance Corp. (PDIC) as a co-regulator of the banking system through the amendment of its charter.
The IMF Staff Report for the 2008 Article IV Consultation released on Dec. 22, 2008 called on a number of measures to enhance the institutional and financial capabilities of the state deposit insurer to support the doubling of the maximum deposit insurance coverage (MDIC) from P250,000 to P500,000.
The Senate had earlier approved Senate Bill 2964 to amend the PDIC Charter while the House of Representatives passed on second reading recently its own version. Upon approval by the House of the PDIC bill on third and final reading, both chambers of Congress will convene as a bicameral conference committee to reconcile the two bills and endorse for joint resolution a final PDIC bill.
The measure is seen to boost the state deposit insurer’s capacity to protect depositors of the Philippine banking system through an increase in MDIC and the adoption of corollary measures that will reinforce the institutional and financial capabilities of the PDIC.
The IMF team, led by IH Lee, released its financial strengthening recommendations that included enhancements in the deposit insurance system in IMF Public Information Notice (PIN) No. 09/21 dated Feb. 17, 2009. The PIN summarized the results of the IMF consultations with key Philippine economic officers and private sector representatives that included Finance Secretary Margarito Teves, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr., Budget Management Secretary Rolando Andaya, and National Economic Development Authority Secretary General Ralph Recto.
The consultations, held in Manila on Nov. 5 to 14, 2008, focused on near-term financial sector and macroeconomic policies to safeguard domestic and external stability in the face of adverse global financial spillovers.
The IMF recommendations include the doubling of the MDIC, the creation of a bridge bank as a bank resolution method, and the recapitalization of PDIC. The IMF also noted that PDIC must be given the flexibility to temporarily raise the MDIC amidst a turbulent financial sector. IMF likewise recommended enhanced legal protection for PDIC staff.
“We are pleased that the IMF recommendations are in consonance with the PDIC Charter Amendments which will soon be taken up in a bicameral conference committee of the Senate and House of Representatives,” PDIC president Jose C. Nograles said. “This gives a strong signal that we are in the right track with our aim to strengthen PDIC which, in turn, will help promote stability and confidence in the banking system,” Nograles added.