Inequality is the enemy, says BSP’s Guinigundo

(First of a series)

As the foremost economic mind of the nation’s top financial industry regulator, Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo has helped oversee an unprecedented period of growth for the country once known as “the Sick Man of Asia.”

Over the last decade, however, fiscal reforms and adept monetary policy maneuvers— combined with the period of the lowest global interest rates in history—helped the Philippines become one of the fastest-growing economies in the world, lifting millions out of poverty and improving the quality of life of many of its citizens.

Despite the impressive numbers, Guinigundo will be the first to admit that the country is, by no means, out of the woods and that lingering structural problems continue to threaten the economic wellbeing of 100 million Filipinos, especially those at the lower strata of society.

“The wealth of the nation has grown, but inequality has also risen,” he said during a recent interview with the Inquirer. “Everyone’s condition has improved, but if you examine the data closely, you will really see the wealthiest pulling away from the rest of the population.”

For Guinigundo—who is among the candidates being considered by President Duterte to head the BSP when the current governor, Amando Tetangco Jr., retires in July—the government, and specifically the central bank, can and should do more to reduce the level of inequality among Filipinos.

And despite economists often being caricatured as isolated in their ivory towers surrounded by books and charts, Guinigundo’s pro-poor bias is apparent, perhaps due in part to his days as an activist in his youth. He was editor of Ateneo’s Pandayan (The Guidon) in 1973 for which he was expelled. He moved to the University of the Philippines and became editor of the Philippine Collegian in 1975 and chair of the UP Student Conference in 1976 (later to become the Student Council) for which he was arrested and detained in Fort Bonifacio.

Guinigundo graduated, cum laude, at the top of his AB Economics Class at the UP School of Economics. He earned a Master of Science degree in Economics at the London School of Economics as a scholar of the defunct Central Bank of the Philippines, predecessor of the BSP.

His 38-year professional career is a story of a steady linear progression within the central bank, rising from the ranks to become deputy governor for the monetary stability sector.

At present, he is in charge of the BSP’s monetary policies and operations, international relations and operations, loans and credit, currency management and regional operations of 19 branches and three regional offices. He was assistant governor for monetary policy and international operations prior to his appointment as deputy governor in 2005.

He has also served as alternate executive director at the International Monetary Fund in Washington, D.C., as well as research head at the Southeast Asian Central Banks (Seacen) Centre in Kuala Lumpur.

Guinigundo—who is also a Christian pastor—is acutely aware of the need to make more Filipinos feel the benefits of the country’s strong economic growth that have been touted by the administrations of Presidents Arroyo, Aquino and now Duterte.

And although the BSP has had an unprecedented level of success in keeping the prices of goods and services in check over the last decade, he believes that more can be done for the average Filipino.

“The threat of inequality is real and the citizens are feeling frustrated because of it,” he said, explaining that structural reforms that the central bank wants to implement for the Philippine financial system will help citizens gain access to cheaper financing, better investment returns and greater financial awareness.

For Guinigundo, the ultimate goal is ambitious, but achievable: “The goal is to empower the Filipino.” (To be continued)