THE Bangko Sentral ng Pilipinas (BSP) was warned Thursday against overselling its gold reserves in the midst of the Covid-19 pandemic.
Sen. FrancisTolentino raised the alarm on learning that the BSP intends to “sell a small portion of the country’s gold reserves in the wake of “the current health crisis.”
Tolentino conveyed his intention at the Senate Finance Committee’s deliberation on the Palace proposed P4.5-trillion national budget for 2021 amid reports that the BSP is mulling over options to “sell parts of its gold reserves” to reduce its share from the country’s gross international reserves (GIR).
He noted in a statement that based on BSP’s records, the country’s international gold reserves have reached a record-high $98.6 billion.
The senator, however, reminded the BSP, through Deputy Governor Francisco Dakila, that certain provisions of Republic Act 7653 or the New Central Bank Act of 1993 may limit the selling of the country’s gold reserves during emergency situations.
Tolentino cited Section 72 of RA 7653 or the Act’s provision on “Emergency Restrictions on Exchange Operations,” stating that “during an exchange crisis, or in time of national emergency and to give the Monetary Board and the Government time in which to take constructive measures to forestall, combat, or overcome such a crisis or emergency, the Monetary Board, with the concurrence of at least five (5) of its members and with the approval of the President of the Philippines, may temporarily suspend or restrict sales of exchange by the Bangko Sentral, and may subject all transactions in gold and foreign exchange to license by the Bangko Sentral.”
The lawmaker said “the BSP family should be aware of RA 7653 specifically Section 72 and I quote, emergency restrictions on exchange operations…they may temporarily suspend or restrict the sales of gold.”
In turn, Deputy Governor Dakila explained, “it is not really the majority of the gold portion of the reserves that are going to be sold.”
He recalled that BSP Governor Benjamin Diokno earlier clarified “the guidance now is for about 10 percent of the country’s GIR” to be allocated to gold, noting that changes are based on market conditions.
Dakila likewise clarified the planned selling of gold reserves is not only at the discretion of the BSP’s treasury department, but it is also “guided by the policy of the Monetary Board.”
Tolentino, however, cautioned the Deputy Governor that the BSP and the Monetary Board may be “violating the law for its action since country is currently under a “national emergency,” adding that “any action taken, the discretionary actions taken by the Treasury Department even if it is pursuant to a Monetary Board resolution, should take into account the national emergency we are in right now.”
The BSP should consider the pertinent provision of RA 7653 in connection with the supposed selling gold reserves, since during times of crisis or national emergencies, similar to this Covid-19 pandemic, “we might need the gold reserves later on,” Tolentino said.
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