Monday, 22 June 2009

Philippine central bank BSP to remit P5-billion dividend to national govt

Manila Bulletin

The Bangko Sentral ng Pilipinas (BSP) is remitting P5-billion as dividend payments to the National Government based on its 2008 income.

BSP’s dividend payments will be included in the agenda of the next Monetary Board meeting for notification.

In 2007, the BSP did not pay dividends since it lost P87-billion and P113-billion more from its foreign exchange and liquidity management operations – for example dollar buying – to temper the exchange market volatility.

BSP has to remit 75 percent of its net earnings to NG based on Section 2 of Republic Act 7656 or the law requiring government owned or controlled corporations (GOCCs) to declare dividends under certain conditions to the NG. Except for BSP, all GOCCs and government financial institutions remit only 50 percent of its net income to the main government.

The Commission on Audit (CoA), referring to the same law, said the BSP has been under-declaring its dividend payments to the NG for several years.

As of 2007, CoA said the BSP has back dividends that it has to pay NG in the amount of P16 billion. The Department of Finance agrees with CoA and has been in discussion with central bank officials for the payment of this amount.

But, as argued by the BSP citing Republic Act 7653 or the New Central Bank Act (in Sections 43, 44 and 132), the central bank has authority to maintain reserves “as necessary” and may deduct amounts in favor of maintaining reserves when calculating its net profit.

According to sources citing official documents, the BSP posted an unaudited net income of around P7 billion last year, a sharp reversal to the P87-billion loss the institution suffered in 2007.

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