MANILA, Sept 21 (Reuters) - The Philippine central bank is seeking a a capital increase of 150 billion pesos ($3.5 billion) as an additional buffer for warding off increasing risks locally and globally, a move that is part of Manila’s priority legislation, a senior official said on Saturday.
The Bangko Sentral ng Pilipinas (BSP) also asked for tax exemptions to further boost its finances in the bill submitted to Congress this week, said Vicente Aquino, deputy BSP governor for resource management, as the monetary authority continued to post losses for more than three years running.
“What image will the Philippines have if the BSP is financially weak? It will not be able to perform its constitutional and legal mandate to promote price stability,” Aquino told reporters, adding the capital hike will enhance the central bank’s administrative and fiscal autonomy.
The BSP recorded a net loss of 19.2 billion pesos in the first half, substantially narrower than a net loss of nearly 50 billion pesos in the same period a year earlier, after it introduced measures aimed at narrowing access to its short-term special deposit account (SDA) facility that attracted huge funds and contributed to its financial losses.
As of end August, money parked with the central bank’s SDA window was 1.6 trillion pesos, down from a record 1.98 trillion pesos posted in mid-April.
Aquino said the BSP was seeking a tax exemption to preserve its capital and allow it to pay higher dividends to the government, adding central banks in other countries were tax exempt.
The central bank was given an initial 50-billion-peso capital after its 1993 reorganisation from the old, debt-laden Central Bank of the Philippines, but the government still has to deliver the remaining remaining balance of 10 billion pesos to complete the amount.
The government gave an initial 10 billion pesos to the BSP upon its 1993 creation, with the second capital infusion of the same amount coming only 18 years after or in 2011.
In December last year, the government infused another 20 billion pesos, as the BSP posted a record net loss of 95.4 billion pesos in 2012, its third straight year of being in the red. ($1 = 43.05 Philippine pesos) (Reporting by Rosemarie Francisco; Editing by Ron Popeski)