COA says BSP has P448-B currency shortfall

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) said Tuesday, September 9, it was in “catch-up mode” to produce Philippine peso notes in various denominations after a Commission on Audit (COA) report revealed a production shortfall amounting to P448.3 billion.

The central bank assured the COA that the shortfall would be fully addressed by the end of this year.

The COA 2013 audit report showed that as of December 2013, peso notes were short by 1.69 billion pieces.

The COA said the problem started in 2011, when the BSP put the “new generation currency” series in circulation.

The BSP’s Currency Management Sub-Sector Procedures Manual requires a 3-month buffer stock of both currency notes and coins of all denominations or 25% of the yearly actual average withdrawal for the preceding 3 years. On the other hand, its Currency Issue and Retirement Office (CIRO) is required to maintain “at all times” 3 months’ worth of contingency reserves for high-denomination notes.

The BSP’s regional offices are supposed to have a 4-month buffer stock and BSP branches, a two-month buffer supply of currency notes.

The COA said the BSP has not complied with these rules as printing and delivery problems left “cash holdings below the ideal manageable currency level.”

“Review and analysis of the reports on the status of banknote production and deliveries to CIRO and audit of the level of inventory maintained by the Unissued Currency Division disclosed that there were undelivered banknote and coin orders for CY 2011to 2013 which totaled to P448.32 billion,” the commission said.

In terms of value, the biggest shortfall was in P1,000 bills totaling P258.7 billion (258.7 million pieces), followed by P500 worth P130.975 billion (261.95 million pieces).

At least 3 BSP branches have resorted to re-circulating currency notes.

“In BSP Bacolod Branch, out of 52 requisition requests, only 19 were actually shipped. The branch resorted to the reclassification of deposits subject to verification by lowering the standard of classifying the unfit notes received from banks,” the COA reported. The other branches were BSP Ozamis and BSP Cagayan de Oro. – Rappler.com