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PIA Press Release
2008/11/13

Salceda urges P40-B infusion for BSP, P10-B for PDIC to counter bleak economic future

by Mar Arguelles

Legazpi City (13 November) -- The country's economic situation faces a bleak future in the advent of the United States of America's new administration focusing its economic policy towards a more domestic direction, an economic analyst said yesterday.

Albay Gov. Joey Salceda, one of the country's economic analysts, said the US under the new administration of President-elect Barack Obama, has an evolving tendency towards strengthening their domestic economy.

Salceda said the new US administration's economic policy which is directed towards an inward looking domestic orientation would greatly affect developing countries like the Philippines.

He said: "I am greatly disturbed by the prevalent complacency of the US towards an inward-looking domestic orientation economic policy in protecting its economic turf."

He said the US under the Democratic Party-led administration would implement a more domestic-oriented economic policy by strengthening their local industries at the expense of other countries.

He cited the new administration's move of bailing out the US automobile industry which is in the brink of collapse.

"I don't know if this industry is a 'systemic' institution, but as an analyst I see it us a move protecting their own turf," Salceda pointed out.

To counter the global economic meltdown, Salceda said the government should initiate an aggressive economic measure by building a strong financial system.

This can be attained by infusing more funds to the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corporation (PDIC).

With this situation he urged Congress to approve the proposal of increasing bank deposit insurance coverage by the Philippine Deposit Insurance Corporation (PDIC) to safeguard depositors and cushion the current effect of the global economic meltdown.

Salceda's proposal calls for an increased capitalization of Bangko Sentral ng Pilipinas by P40 billion and PDIC by P10 billion thereby giving substantial guarantee to bank depositors across the country.

Salceda said Congress should swiftly look into this plan to increase insurance coverage of bank depositors from P250,000 to P1 million. This way it would bring back depositors' confidence to the banking institutions.

Aside from bringing back the confidence of bank depositors it would also help the banking institution in terms of more investments thus improving the economy.

"Economic survival depends on a strong financial system, and the best measures to improve the economy is now in the court of Congress so I am hopeful they will take positive action on this matter of great significance," he said.

He cited the United States, European Union, Japan, Malaysia and Singapore, countries that give 100 per cent guarantee on bank deposits for five years thus stabilizing the financial situation triggered by the global economic crush.

"People would rather deposit their money in countries where banks are giving full guarantees," Salceda said.

The financial infusion to the BSP and PDIC is the most important and urgent measure that the government needs to cushion the effect of the global economic problems, he explained.

The plan is more of a preventive economic measure, as things taking place are not looking good "it is better to have something when you don't need it, than asking for something you don't have when you need it," Salceda said.

"This is a pre-emptive rather than responding measure to counter this crisis triggered by the United States' financial crash which would surely affect the country," Salceda said. (PIA) [top]

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