Bangko Sentral losses balloon to P86B
Philippine Daily Inquirer
The Bangko Sentral ng Pilipinas incurred a bigger loss in the first 11 months of 2012 as it had to contend with falling revenues and foreign-exchange losses.
The decline in revenues was partly due to the substantial drop in the amount of gold it was able to buy from small miners and sell to the international market.
The foreign exchange losses were attributed mainly to the appreciation of the peso, which adversely affected the agency’s income from investments in foreign currency-denominated securities.
The BSP reported a net loss of P86.32 billion in January-to-November last year, up 167 percent from P32.29 billion in the same period of the previous year, the latest income statement of the BSP showed.
Revenues reached P61 billion, down 46 percent from P113 billion.
Central bank officials said the BSP suffered from a steep decline in the amount of gold being sold to it by small-scale miners and traders for more than a year now. Small-scale miners are required by law to sell all the gold they produce to the BSP. However, there was suspicion that many of them were smuggling gold out of the country following the stricter collection of taxes by the Bureau of Internal Revenue.
Total expenditures, led by those for purchasing of dollars and payment of interests, exceeded the revenues to reach P100.95 billion. This was slightly down from P107 billion in the same period of the previous year.
Expenditures, therefore, exceeded revenues by P39.96 billion.
Dollar purchases were one of the biggest expenses of the BSP. The central bank buys dollars from the market in cases of substantial appreciation pressures on the peso. The BSP has a policy of allowing the exchange rate to be generally determined by market forces, but intervenes from time to time to avoid sharp and sudden volatility of the peso.
Last year, the peso appreciated by nearly 7 percent against the dollar. Market players said the peso could have been stronger were it not for the central bank’s dollar purchases.
Expenses of the BSP were also driven higher by interest payments. Amid the rising liquidity in the economy, officials said the BSP had to accommodate more deposits from banks, and thus pay the corresponding interest, to help maintain a sufficient amount of liquidity in the economy and avoid runaway inflation.
Placements in the central bank’s special deposit account (SDA) facility alone stood at about P1.7 trillion last year. The BSP paid an interest rate of a little more than 3.5 percent on SDAs.
The BSP’s foreign exchange losses reached P46.34 billion, which added to the P39.96 billion in excess expenditures and caused the net loss to hit P86 billion.
Officials said the losses of the BSP were partly a consequence of its mandate to help keep the right amount of liquidity in the economy and avoid steep volatility in the exchange rate. Michelle V. Remo