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PIA Press Release
2008/10/10

Presidential economic adviser bats for P50 billion financial infusion to BSP and PDIC

by Mar Arguelles

Legazpi City (10 October) -- Albay Gov. Joey Salceda proposed a P50 billion financial package increasing the capitalization of Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit and Insurance Corp. (PDIC).

Salceda's proposal calls for an increase capitalization of BSP by P40 Billion and PDIC by P10 Billion thru the national government Multi-Year Obligatory Authority (MYOA).

Salceda said, "I have submitted this proposal to President Gloria Macapagal Arroyo and she is quite amenable to this plan."

Salceda said this measure would boost the real economy by protecting bank depositors who invested their hard earned money in their choice banks thereby also assisting these banks.

In his proposal, the BSP, the Securities and Exchange Commission (SEC) and the Insurance Commission (IC) shall have an integrated financial oversight and supervision to close regulatory gaps versus current banks, investment houses under these regulatory bodies.

He said the BSP and PDIC should not engage in bailing out financially distressed banks and investment institutions but rather initiate measures to protect depositors by increasing their deposit insurance coverage.

The proposal calls for a gradual increase in the deposit insurance coverage to P500,000 from the current P250,000 coverage, which according to records 95 percent of savings and current accounts are under the P250,000 insurable coverage of bank deposit accounts, "this represents only 14 percent of the insurable amount," he 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.

He also stressed "we can run but we can't hide from the impact of an imminent global recession which is being conveyed by the crash in global markets."

Salceda, one of the top economic advisers of President Arroyo averred that "If we must assist banks, then we have to protect depositors, neither the lenders nor borrowers."

He also recommended the setting up of an Economic stimulus package up to P75 B to strengthen the country's real economy.

The Eco-package would shield the poor thru direct income transfer, increase food production thru DA interventions and expand productive capacity thru infra acceleration.

He explained that part of the eco-stimulus is the minimum wage exemption giving the middle class relief which could reach P36 billion if retroactive from January.

On top of the P75 billion a massive income transfer to the poor of at least P30 billion would be beneficial. (PIA) [top]

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