Bureau of the Treasury backs measure amending BSP charter

MANILA, Philippines - The Bureau of the Treasury (BTr) supports the proposed bills amending the charter of the Bangko Sentral ng Pilipinas (BSP) but expressed reservations on certain provisions such as those affecting the fiscal agency function of the government.

In a position paper submitted to Congress, the BTr said proposals that would amend the current BSP charter and restore the fiscal agency functions of government to the BSP would undermine the country’s credibility with the international community of providing the Bangko Sentral its independence as the central monetary authority.

“We believe that when the current law provided for the transfer of the fiscal agency functions from the Bangko Sentral to the Department of Finance and to the BTr, this was to effect the separation of the fiscal agency functions from that of the monetary policy. The separation would focus theBangko Sentral on its primary objective of monetary policy,” National Treasurer Roberto Tan said.

Tan believes that if the intent of the bill is to transfer the fiscal agency functions back to the BSP, it would be better to retain this to the Department of Finance and to the Bureau of the Treasury so that the central bank can concentrate on the country’s monetary environment.

Bills have been filed seeking to amend the Bangko Sentral Act of 1993 or Republic Act 7653. One proposed amendment is a new mechanism for the payment of unpaid national government subscription to the capital of Bangko Sentral.

According to the amendment, the balance shall be paid for in cash available to the government or through the issuance of readily marketable government securities.

However, Tan said the new mechanism would limit the government from sourcing the funds for capital subscription.

“The directive to pay the unpaid subscription to the capital of Bangko Sentral under the proposed bill will undermine the constitutional mandate of the Executive Department to proposed the correct budget for the operation of the government,” Tan said.

He said that funding the unpaid capital subscription is part of the operations of the government and thus should be included in the annual budget proposal of the Executive Department to be submitted to Congress.

Another proposed amendment is the elimination of government-owned banks as depository of the government.

Tan said the proposed amendment did not consider that national collections due to the government are deposited in the deposit account of the Treasurer of the Philippines as the fiscal agent of the government.

“The fiscal agency function includes the authority to engage the services of other government-owned or controlled banks and other domestic banks to support the fiscal operations of the government as Bangko Sentral does not have offices or agencies adequately equipped to perform said fiscal operations,” it said.