BSP Governor Diokno

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The sudden appointment of Budget Secretary Benjamin Diokno as Governor of the Bangko Sentral ng Pilipinas (BSP), the country’s central monetary authority, came as a surprise late Monday night. Based on news reports, Diokno was informed by the President of his new assignment during the Cabinet meeting at around 7 p.m. He, of course, accepted the appointment for the unexpired term of the brilliant and well-loved Gov. Nestor Espenilla. I bet that the vast responsibilities, tasks and demands necessary for this role have not yet fully sunk into Diokno despite his extensive experience and impeccable record in government service.

What most people do not know is that central banking is a profession all in itself, very different from banking per se. Central bankers are of a different breed and the key difference lies in the fact that the BSP is more or less shielded from political influences, thanks to the reforms instituted in 1993 upon the enactment of the New Central Bank Act or Republic Act 7653. There is an urban legend in the BSP that certain leaders, some 30 to 40 years ago, used the then-Central Bank as their personal piggy bank before flying for shopping sprees abroad. (As to who that was, your guess is as good as mine). Now, the BSP is seen as a professional institution, with the strictest “no gift policy” unlike in any other government office. For those who do not know, not even calendars, umbrellas and company shirts are accepted by BSP employees. It is amazing how this culture was cultivated by the past BSP governors.

I should know since I worked in BSP before joining my current office. During my stint in BSP, I witnessed how BSPers were always on time and disciplined they are in attending the flag-raising ceremony every Monday morning, where all would recite in unison the BSP mission and vision. I left right before the end of the second term of Governor Amando Tetangco Jr. and I was able to assist him and then newly appointed Governor Espenilla in the initial stages of the new BSP charter, recently signed into law by President Duterte. Notably, the powers of BSP increased in this new charter, including an increased number of deputy governors from three to five and Diokno will have first dibs in this.

As such, I can sense some uneasiness in the BSP complex in Malate, the BSP Security Plant Complex on East Avenue, Quezon City and the BSP regional offices and branches around the Philippines. To this I say that they should not be concerned much since Diokno’s track record speaks for himself and he has spent a lot of time with BSP’s top brass to know well enough what he is getting into. In 2017, I was fortunate enough to join the Philippines’ economic team in a road show in New York and at the World Bank-International Monetary Fund annual meetings in Washington DC, where I saw how Diokno and the BSP contingent, led by Deputy Governor Diwa Guinigundo, worked perfectly fine together.

If there is anything we can get from this specific appointment, it is that Diokno still enjoys the trust and confidence of the President, who effectively shrugged away all the accusations thrown against Diokno. The appointment to BSP brings Diokno out of the realm of politics and deep into economics, his natural habitat, though we can say that he is not yet completely off the hook since the House may choose to continue its inquiries into the supposed anomalies in the budget. We should also see how he will ease into the BSP as he is used to “spending” for the government. One of his known accomplishments in the Department of Budget and Management is his elimination of underspending and allocation of significant amount of funds into infrastructure. In BSP, Diokno won’t be spending much; instead, he would have to manage the country’s reserves, as the Philippines’ top banker.

Further, this news comes as a huge surprise because of the fact that there is no budget yet for 2019. To recall, in the last few weeks, President Duterte signed almost all bills pending on his desk into law, except for the General Appropriations Act (GAA) of 2019. Sen. Ping Lacson may have his own theories on why it has remained unsigned, but the fact remains that the Philippines has been operating on a reenacted budget for the third month now.

Eyes are now on who the next Budget secretary will be. The candidates can be categorized into someone who was or is currently in politics, meaning he (or was) an elected official, or someone who is a career government official heavily exposed in the fields of finance and budgeting. It is also a question on how soon the appointment will arrive. Will it be before or after the President’s signing of the GAA 2019? Will it be before or after the midterm elections? Whenever it will, we’ll be closely watching, since the pick would inevitably have a target, the same way how Diokno seemingly had a bullseye drawn on his forehead by certain politicians. Let the guessing game begin.

Email: darren.dejesus@dejesuslegal.com

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