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Choices for BSP helm now on Duterte’s desk

Posted on May 05, 2017

YOKOHAMA/MANILA -- President Rodrigo R. Duterte is just a signature away from making his most important public appointment yet -- the choice of the next central bank governor -- now that the names of candidates are on his desk.

President Rodrigo R. Duterte presides over the 10th Cabinet meeting at the State Room in Malacañan on January 9, 2017. --
The President will make the appointment on the recommendation of Finance Secretary Carlos G. Dominguez III, who confirmed yesterday from Yokohama that he has submitted the short list to Mr. Duterte.

The Finance chief, who is currently attending the 50th Asian Development Bank annual meeting in Yokohama, Japan, replied in the affirmative when asked if he has submitted the list of potential replacements for Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr., but could not recall when.

The 64-year-old outgoing central bank chief steps down in early July after two six-year terms beginning 2005.

In Manila, Presidential Spokesperson Ernesto C. Abella separately confirmed yesterday that the ball is now in Malacañang’s court.

Mr. Duterte had been keeping his cards close to his chest, telling reporters on April 27 that the Finance chief had not yet submitted any name when asked for an update.

Mr. Dominquez’s affirmation yesterday and that of Mr. Abella signaled the search for Mr. Tetangco’s successor is drawing to a close.

“[M]eron na siyang naibigay na mga pangalan (Mr. Dominguez has submitted the names to the President),” Mr. Abella said in an interview with BusinessWorld yesterday.

“I’m sure alam na ng Presidente (the President knows of the list) but I’m sure the President is also weighing... tinitimbang-timbang niya kung sino tatanggapin. (Mr. Duterte is considering carefully whom he should choose for the job),” the palace spokesman added.

Mr. Dominguez said separately in an interview with Bloomberg Television on Thursday in Yokohama: “I’m pretty sure the announcement will be made in a couple of days.”

Mr. Tetangco’s “successor is going to have large shoes to fill,” Mr. Dominguez told Bloomberg Television. “We’re going to have one named soon.”

In the running for the top central bank job are BSP deputy governors Diwa C. Guinigundo and Nestor A. Espenilla, Jr.; Peter B. Favila, a former banker, trade secretary and member of the central bank’s Monetary Board; and East West Banking Corp. Vice-Chairman Antonio C. Moncupa, Jr.

Mr. Moncupa has been backed by Mr. Duterte’s ruling PDP-Laban (Partido Demokratiko Pilipino-Lakas ng Bayan) party, but Mr. Tetangco has repeatedly expressed his preference for an “insider” to succeed him.

Whoever is chosen faces the task of steering the Philippine financial system through potentially rough seas due to more interest rate increases in the United States and subsequent moves by other countries to keep up, consequent volatile capital flows, continued low commodity prices and the threat of protectionism spreading across the globe.

If the president comes around with his decision now, his pick -- if an outsider -- would just have two months to prepare for a transition. Keeping the suspense over naming his pick would raise speculation that Mr. Duterte’s choice has narrowed down to “between the two deputies since there would seem to be no concern about adjusting into the job,” a C-suite level banker said.

A number of senior bankers have expressed preference for a BSP insider to succeed Mr. Tetangco in order to ensure a smooth transition and policy continuity amid increasingly uncertain global market conditions.

“My feel now is that there’s now an 80% chance that it will be an insider,” an official from a universal bank said.

“Markets will welcome that.” -- W. G. Reyes, I. N. P. Cigaral and JMDS