House banking panel chair against BSP proposal to issue debt notes

Leyte Rep. Sergio Apostol, chair of the House committee on banks and financial intermediaries, is not in favor of the proposal of the Bangko Sentral ng Pilipinas (BSP) to issue debt papers, now valued at around P10 trillion. Apostol told reporters Wednesday that allowing the central bank to sell its own debt papers will add to the country’s heavy debt burden. Apostol spoke with reporters at the sidelines of activities marking the 58th annual national convention of the Rural Bankers Association of the Philippines. “The government sector already has too much debt," Apostol said. He pointed out that more than 200 legislators at the House of Representatives favor the idea of closely monitoring the debt activities of government-owned and -controlled corporations, including the central bank. “Anyway, the BSP can always print money," Apostol hastened to add. Camarines Sur Rep. Luis Villafuerte, however, supports the proposal as the measure would help stabilize prices, according to BSP deputy governor Diwa Guinigundo. The proposed central bank’s security papers will be short-dated to convince lawmakers that the purpose was clearly for monetary management rather than creating more public debt. “This was why [Camarines Sur] Representative Luis Villafuerte supports the proposal," Guinigundo told reporters in a phone interview. At present, the BSP is not allowed to issue its own debt papers. Should it be allowed, monetary authorities could manage the level of liquidity in the system, Guinigundo said. BSP deputy governor Nestor Espenilla, moreover, said issuing debt papers will make marketable the securities that bank and financial institutions trade among themselves. The BSP is only allowed to engage in open market operations, which is essentially the buying and selling of government securities to and from the banks. - JE/OMG, GMA News