BSP remits P6 billion in dividends to government

MANILA, Philippines - After generating a net income of P8.927 billion in 2008, the Bangko Sentral ng Pilipinas (BSP) has remitted P6 billion in dividends to the government.

BSP Governor Amando M. Tetangco Jr. said the BSP made the annual dividend payment to the government last week after it was cleared by the Commission on Audit.

According to Tetangco, the BSP has so far remitted around P120 billion to the government since1993, including dividend payments, taxes and interest rebates.

Under the law, the central bank is required to remit 75 percent of its net income to the government because it was covered by Republic Act 7656 which required all government owned or controlled corporations (GOCCs) to declare dividends.

Unlike other GOCCs which are required to remit only 50 percent of their income, however, the BSP was required to remit 75 percent.

The BSP has a pending proposal for the national government to exempt its open market operations from taxation, saying that the shelter was needed for financial and monetary stability purposes.

The BSP said central banks are normally not taxed elsewhere in the world but the BSP was exempted only from the documentary stamp taxation.

According to Deputy BSP Governor Diwa Guinigundo, exempting the BSP from taxes would enable the national government to have full flexibility in the use of the dividends paid by the BSP every year.

Guinigundo reasoned that exempting the BSP from taxation would enable it to remit more dividends that it could then use for its own purposes instead of having the funds go into the national treasury which are eventually disbursed through the general appropriations.

In effect, Guinigundo said the funds paid by the BSP in the form of taxes were eventually divided between the government and local governments. If paid in the form of dividends, it would go to the NG budget and be spent on NG programs.

“Other central banks get to decide whether they would remit to their national governments or not,” Guinigundo said. “We have no problem with paying dividends as long as there are provisions or reserves against foreign exchange movements.”

The BSP is also still hoping for the government to fully pay up its P50-billion capitalization since it was still P40 billion short of the amount mandated by the BSP charter.