The BSP anomaly
A PUFF piece on the Bangko Sentral ng Pilipinas by Stephen CuUnjieng, a colleague here in The Manila Times, and a director of Marcos’ pipe-dream Maharlika Investment Fund, prodded me to write a column that I had been holding on to since last year for personal reasons.
CuUnjieng, a banker for most of his working life, praised to high heavens the Bangko Sentral ng Pilipinas “as the best example of what effective and clean government can be in the Philippines.” CuUnjieng makes the BSP out as if it is a place where angels work, while the rest of the country’s bureaucrats and all its officials, from president to Cabinet members to legislators, are demons. This avowed empiricist, however, did not mention crucial empirical information about the BSP, which, like a bolt of lightning, could explain why the BSP cannot be a model for clean government and, to a certain extent, explain why it is “clean.” According to Commission on Audit reports, BSP officials are by far the highest-paid public servants in the country, their salaries five to even 10 times that of other officials in the country — which, of course, cannot be replicated anywhere else in the bureaucracy. Only in the Philippines is the BSP governor’s annual P48 million salary bigger than the President of the Republic’s P5.2 million.
Presumably to reflect the high salaries of its officials, the salary scale of the BSP’s other staff is at the very least double that of civil servants in the rest of the bureaucracy. We don’t know: the BSP is the most opaque of our institutions. It hasn’t even explained to the public why it sold its gold reserves in 2024 for P100 billion when prices were low. If it had sold it instead in 2025, it would have gotten P150 billion instead.
Remolona’s six colleagues in the Monetary Board, four of whom were either former CEOs or directors of the country’s biggest banks, receive P26 million per annum. Deputy governors have salaries of P22 million, four times the P3.5 million Cabinet secretaries and heads of departments get.
Would you believe the BSP governor’s compensation, equivalent to $826,000, is bigger than the $250,000 of the US Federal Reserve chairman, who determines monetary policy over a vastly bigger and more complex economy?
Spokesman
Remolona and his spokesman Coco Alcuaz say that the P48 million is an exaggerated figure since the COA interpreted “business expenses” as the governor’s emoluments. Who are they kidding? While the COA listed P12 million as “basic salary,” P38 million comprised ”allowances, bonuses, and incentives,” which obviously are income that goes to the governor’s pocket, not for dinners with bankers.
It’s an anomaly that salaries of the President of the Republic and Cabinet members — even those in high-pressure, high-load positions, such as the secretaries of justice and of public works — get just 22 percent of the BSP deputy and assistant governors’ salary of P25 million per year.
Alcuaz said such high rates are necessary to attract the best bankers and experts from the private sector. That’s total bullshit, a myth spread by BSP. A cursory review of past Monetary Board members, which has included a mediocre agricultural economist and the chief of staff of the finance secretary of that time. So much for CuUnjieng’s idea that high salaries discourage corruption: Two board members were asked to resign after having been found to employ ghost employees. They weren’t charged, as the BSP didn’t want to make public that even its most highly paid officials resort to corruption.
Rather than from the private sector, nearly all of the BSP officials spent most of their working lives going up the ladder in the organization (and getting scholarships it provided) or came from the public sector. Bernadette Romulo Puyat was one of our best tourism secretaries, although her compensation was just P3.5 million a year, compared to the P19 million she is getting as deputy governor. Monetary Board member Romeo Bernardo could have been a better and more experienced finance secretary than Ralph Recto. Of course, he chose to stay at the BSP with a P25 million per annum salary rather than the P6 million for that Cabinet post.
It was Karl Marx who said: “The state is the executive committee of the ruling class.” This is so true in the case of the BSP and its Monetary Board. Rather than having been attracted to the BSP because its salaries were competitive with the private sector, most Monetary Board members were in the twilight of their banking, or in a few cases, their academic careers. In the case of bankers, I suspect their former employers lobbied for their appointment in order to have an inside track into planned monetary policy or banking regulators.
Represented
The two biggest banks in the Philippines are “represented,” as it were, in the Monetary Board: Romeo Bernardo, who has been a BPI director for 22 years, while Walter Wassmer, who was with BDO for 27 years.
In the US, no banker has ever been appointed as members of the Federal Reserve System’s seven-man board of governors. It consists of academics of PhD level specializing in banking and monetary policy and longtime heads of the US treasury. This tradition has been in place in order to assure the total independence of the Federal Reserve from the banks, even in their philosophies.
There’s a unique reason why BSP officials have been able to get astronomical salaries. The International Monetary Fund pressured the Philippines to pass a new law, the Central Bank Act of 1993, purportedly to make the monetary authority autonomous and independent from politics. Purportedly in pursuit of this, the law exempted its officials and staff from the government’s Salary Standardization Law, although the president has to approve the salaries, which only the BSP and no other authority recommends to him.
Authorized by the new law, Gabriel Singson, who had been governor since 1992, recommended to then-president Ramos that his salary be increased 2.5 times from P60,000 per month to P150,000, which also pulled up drastically the salaries of the MB members and other officials of the bank.
Getting salaries 2.5 times that of the president was certainly not enough for succeeding governors. The salaries were increased every time a new governor came in, from governor Amando Tetangco’s 3x that of the president’s to Remolona’s nine times.
The BSP salary structure’s implications for the rest of the bureaucracy are puzzling. The government certainly will not be able to match the BSP salaries for the entire bureaucracy. Furthermore, while it may have helped reduce corruption in it, the BSP already had a reputation for being largely graft-free even before salaries drastically zoomed up. And despite its high salaries, two Monetary Board members proved to be corrupt by hiring ghost employees for their staff.
Or perhaps, the BSP case of raising salaries could be mimicked in certain crucial areas of the bureaucracy that are the most corrupt: the public works and transport departments, as well as the bureaus of customs, internal revenue and immigration.
It seems that with their high salaries, BSP officials want their offices to reflect their station in life. The MB approved earlier this year a plan to build a new headquarters. How much would it cost? P50 billion. At a time when Filipinos are suffering from floods and fallen bridges due to infrastructure scams, the BSP wants P50 billion of its income to be used for building an edifice that would rival the Senate’s P35 billion new offices. That one will be for Wednesday.
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The BSP anomaly
Source: Breaking News PH
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