MANILA, Philippines – The goal of the Bangko Sentral ng Pilipinas (BSP) to increase its capitalization to P200 billion would take 14 years, or twice as long, if the Maharlika Investment Fund (MIF) is established.

In a Senate hearing on Wednesday, February 15, BSP Deputy Governor Francisco Dakila Jr. said the central bank would remit 100% of its dividends for the first two years to the sovereign wealth fund and 50% thereafter, delaying its capitalization goal to 14 years.

The goal would only take seven years without the funding requirement of the MIF.

In 2018, then-president Rodrigo Duterte had signed amendments to the BSP’s charter. The provisions included raising the central bank’s capitalization to P200 billion to promote greater price and financial stability.

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Despite this, Dakila said they are still backing the MIF, as the BSP’s balance sheet has “improved.” The central bank’s capitalization is currently at P60 billion, an improvement from the P50 billion in 2018.

Higher capital covers potential losses in the BSP’s monetary operations.

Senator Sherwin Gatchalian, who was among those who deliberated on and passed the amendments to the BSP charter, questioned Dakila over the central bank’s turnaround, as it earlier stressed the urgency of the changes.

“We really need to review the mandates in the charter…. We need a strong regulator. There’s a sense of urgency at that time in 2016. Now, you will lose your dividends for two years, during which it wouldn’t go towards your capitalization. Where’s your sense of urgency?” Gatchalian asked. – Rappler.com