MBC cheers new term for Tetangco

MANILA, Philippines -  The Makati Business Club (MBC), cheered the re-appointment of Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. by President Aquino to another fresh six-year term when his first term expires in July.

MBC said in a statement posted on its website that the Philippine economy sailed through the recent global financial crisis relatively unscathed under Tetangco’s watch who was a career central banker before he was appointed as BSP governor in July 2005.

“The true effectiveness of central bankers is tested in times of crisis, and we believe that Governor Tetangco has proved his mettle,” MBC stressed.

The group publicly declared its support to the reappointment of Tetangco to a second six-year term amid clamor from various groups for President Aquino to reconsider the re-appointment.

“As the crisis hit the bottom and the global economy started to recover, the Philippine economy grew more than seven percent on the back of solid macroeconomic fundamentals, timely and effective policy responses, and purposeful reforms. Moreover, this strong growth was achieved in a low-inflation environment,” MBC added.

The country’s domestic output as measured by the gross domestic product (GDP) posted its strongest growth in 34 years after expanding by 7.3 percent last year exceeding the government’s revised GDP growth target of five percent to six percent.

The Philippines barely escaped recession after its GDP growth slackened to 1.1 percent in 2009 from 3.8 percent in 2008 due to the full impact of the global financial crisis.

Despite the strong growth, monetary authorities managed to control the increase in inflation at 3.8 percent last year from 3.2 percent in 2008 - well within the BSP target of 3.5 percent to 5.5 percent for 2010.

The BSP sees inflation averaging 4.4 percent this year and 3.5 percent next year or well within the target of three percent to five percent for 2011 to 2014.

Likewise, MBC said the country’s external payments position continued to strengthen while the exchange rate remained stable despite heavy capital inflows into developing countries including the Philippines during Tetangco’s watch.

BSP data showed that the country’s gross international reserves (GIR) surged 36.8 percent to a record level $62.371 billion last year from $45.03 billion in 2009. For the month of January, the country’s foreign exchange reserves jumped 39.5 percent to a new all-time high of $63.61 billion from $45.591 billion in the same month last year.

The GIR which is the sum of all foreign exchange flowing into the country is expected to range between $68 billion and $70 billion this year.

On the other hand, the country’s balance of payments (BOP) surplus jumped 124.3 percent to hit a new record level of $14.4 billion from $6.42 billion in 2009 due mainly to a lower than anticipated merchandise trade deficit wherein actual exports grew larger than forecast and higher-than-projected overseas Filipino workers (OFW) remittances.

The BOP – the difference of foreign exchange inflows and outflows on a particular period and represents the country’s transactions with the rest of the world - posted another surplus of $1.606 billion in January or $374 million higher than the $1.232 billion surplus booked in the same month last year.

This year, the BSP sees the country posting a BOP surplus of between $6 billion and $8 billion.

MBC said the country’s strong external payments position helped the Philippines get a credit rating outlook upgrade from New York-based Moody’s Investors Service the other day as well as a credit rating upgrade from Standard and Poors last November 12.

Moody’s upgrade the country’s credit rating outlook to positive from stable while S&P raised the credit rating for the government’s long-term, foreign currency-denominated debt issuances by a notch, or from three to two notches below investment grade. 

Moody’s, S&P, and London-based Fitch Ratings are closely watching the economic and fiscal developments in the Philippines.

However, Moody’s has yet to upgrade the country’s sovereign credit rating that is currently pegged at three notches below investment grade. S&P and Fitch, on the other hand, rate Philippine debt at two notches below investment grade with a stable outlook.

Earlier, fund managers led by American banking giant Citibank and Dutch-owned ING cheered Tetangco’s reappointment.

Tetangco took up AB Economics at the Ateneo de Manila University where he graduated cum laude. He took up graduate courses in business administration in the same institution. As a central bank scholar, he took up his MA in Public Policy and Administration (concentration in Development Economics) at the University of Wisconsin in Madison, USA. 

He assumed office as BSP governor in July 2005 after occupying different positions in the organization in a span of over three decades. He served as Deputy Governor in-charge of the Banking Services Sector, Economic Research and Treasury.