September 18, 2023 | 12:04 am
Introspective by Romeo
Bernardo
As reported in the news, I have been appointed
by President Marcos Jr. as a Member of the Monetary Board. I received this news
from Governor Eli Remolona while on a long postponed family vacation overseas.
I understand that he, Prime Minister Cesar Virata, and my former bosses in the
Department of Finance (DoF) as well as prominent leaders in the private sector
and the legislature recommended me. I am most honored, delighted, and grateful
for the opportunity to go back to my first love — public sector policy
work.
To ensure no conflict of interest, I am
obligated to say goodbye to private institutions/corporations and
colleagues/friends I worked with. I do so with a tinge of sadness. They are the
captains of industry and professional executives who make the investments that
generate jobs that improve our people’s lives, and for whom I have the highest
respect. At the end of day, they are the drivers of our economy.
Among these institutions is BusinessWorld (BW).
I have had the privilege of writing a monthly column for over a decade, as part
of our “Introspective” rotating crew (all Board Directors of the Institute for
Development and Econometric Analysis, established by dear friend, now departed,
UP Economics Professor Dondon Paderanga). “Introspective” featured Dondon
together with his fellow professors Raul Fabella, Noel de Dios, Calixto
Chikiamco (my Foundation for Economic Freedom co-founder, political economist,
and net entrepreneur) and me.
In line with the highest ethical standards
instituted by BW founder Raul Locsin to ensure that there is
not even the impression of conflict of interest or lack of independence, this
will be my last column.
With your permission dear readers, I reproduce
below remarks I made on Sept. 14 to introduce Dr. Dante Canlas at the
Philippine Center for Economic Development (PCED) 50th anniversary
lecture series on “The Philippine Economy and the UP School of Economics
(UPSE): Academics and Policymaking.” Dante and other distinguished former UPSE
professors who served as Socio-Economic Planning Secretaries were requested by
the PCED to share lessons for scholars, practitioners, and the general public, to
upgrade the quality of discourse on and execution of Philippine economic policy
making.
In this final column, I will also share
some preliminary thoughts on the work ahead for the Bangko Sentral ng Pilipinas
(which I believe Dante also shares).
ON THE HONORABLE
(SMALL ‘H’) DANTE CANLAS
Let me start with an apology that I cannot be
personally present to introduce our featured lecturer. But it is not my fault.
As some may know, it is my first day on the job.
I won’t devote much time enumerating the
outstanding academic, government service record and awards of our speaker. Many
here know of them. They are a matter of public record and downloadable from the
web.
What I would like to do is introduce to you
the man behind the accomplishments and awards, what we who worked with him and
his students know.
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First, Dante as the impervious college
heartthrob.
He was already a member of the faculty when I
was a student. According to the female students, there were two in the faculty
who qualified for the title “crush ng bayan.” One told me that she
would sit in front of their classes, doubtless because of their pedagogical
skills (not because of their looks daw). Our speaker was thought of
as the Harrison Ford of UPSE — Ford as Hans Solo of the original Star
Wars, not the old guy in the latest Indiana Jones movie.
There was one difference between him and the other “crush ng bayan”
I was told. Our speaker had no idea that he was good looking and a heartthrob,
and “that made him all the more attractive” (said one who is now married to a
faculty member and former top official).
Second, NEDA (National Economic and Development
Authority) Undersecretary Dante, as the quiet modest achiever and ideal
collaborator.
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I had the good fortune and privilege of being
his counterpart at the DoF during the Ramos Administration. We worked with
ultra-competent professionals like then Budget Undersecretary Emy Boncodin,
then Central Bank (later BSP) Director for Research Say Tetangco, and others.
One could not have wished for better teammates, with abundant intelligence,
integrity, industry, and zero fanfare and zero ego. This quite efficient
technical teamwork allowed our bosses to attend to the more political aspects
of economic governance even as we, the most senior technicians, attended to the
knitting, including various inter agency committees, debt negotiating panels,
and donor conferences.
Our speaker chaired the Investment
Coordination Committee (ICC) technical board with me as his co-chair. The ICC
had the difficult task of putting together an investment program to fund
enormous infrastructure and social expenditure requirements, at a time when
interest payments alone ate up 20% to 30% of the budget and the foreign
component a substantial part of export receipts. Mind you, this was when we
were still reeling from the debt crisis, with no access to capital markets, and
still finding our bearings politically as a nation. I would like to think we
got the job done with the support of the donor and financial community
which saw the Philippine macro and structural reform program as worthy of
support. These reforms included accession to the WTO (World Trade
Organization), a comprehensive tax reform program and privatization effort that
raised tax and overall revenues to record highs as shares of GDP, breaking up
of monopolies and partnering with the private sector in delivering public
services especially in power and water, and the creation of an independent
monetary authority to replace the bankrupt old central bank. All these led to
the country’s eventual exit from IMF (International Monetary Fund)
surveillance.
Our speaker was very much on top of putting
those programs together and with the Department of Finance, coordinating — one
can say lobbying — and securing support of bilateral, multilateral institutions
to fund the same. There is a saying that nothing is impossible for the man who
does not care who gets the credit. This describes Dante.
Third, for Secretary Dante, it is principles
over principal. Given his personal and professional virtues were known by all,
it was no surprise when President Gloria Macapagal-Arroyo tapped him, her
dissertation adviser, to be her “Economist in Chief.” I was no longer in
government then, but from all I know, had she listened to him on a key
infrastructure project, the deeply flawed North Rail project, the Philippines
would have been spared some $185 million in public money that we had to pay
China as a creditor, with nothing to show for it.
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He left government over that issue. What is
not clear to me is whether his resignation was accepted as a matter of “loss of
confidence,” a prerogative of the President, or whether this was a case of
Dante being just ahead of the curve, 2-1/2 years ahead of the Hyatt 10.
Dante knew he owed his principals his best
advice — and he gave it even when this may not have been what they wanted to
hear and may cost him his job. To have done otherwise would have been a
disservice to them, and a betrayal of his principles, of who he is. And
ultimately a betrayal of our ultimate principals— the Filipino people.
It is in the best interest of our leaders to
listen more to people like Dante. History will be kinder to them if they did.
Finally, may I publicly reveal a fervent wish
to be able to work with Dante soon.
ON MY NEW JOB
It is the country’s good fortune that
Professor Eli Remolona is heading our central bank during these times of
heightened global economic uncertainties clouding the Philippine economic
outlook (see my column “A 5% economy?” Aug. 28, 2023 https://www.bworldonline.com/opinion/2023/08/28/541704/a-5-economy/).
My now former GlobalSource Partners fellow analyst Christine Tang and I
described him as being “preeminently qualified” in our report to subscribers,
being personally aware of his deep academic and hands-on experience, dating
back to 1986 when he was country risk expert reporting directly to the
legendary New York Fed Chairman Gerry Corrigan. Mr. Corrigan was instrumental
in helping the Philippines reach final settlement with its consortium of creditor
commercial banks at the height of our debt crisis. I was part of the Philippine
delegation led by Finance Secretary Cesar Virata, later Secretary Jimmy Ongpin
and Governor Jobo Fernandez. Governor Remolona would later be closely involved
in crafting what would be the definitive solution to the emerging market debt
crisis — the Brady Plan.
Since that period, armed with distinguished
degrees from UP and Stanford, he would chalk up impressive experience and
credentials in central banking at the NY Fed for 14 years and the Bank for
International Settlements (BIS), the central bank of central banks, ending a
19-year career retiring as head of BIS regional office in Asia. Our paths would
cross again as fellow board directors in the Bank of the Philippines Islands,
even as he was concurrently teaching courses as Director of Central Banking at
the Asia School of Business in Kuala Lumpur and in Williams College, Mass., my
MA alma mater.
I mention all these to underscore that the
country’s financial system is in the best of hands. Supported by a solid
monetary board composed of professionals with diverse backgrounds and by the
best career officials and staff in the Philippine bureaucracy, we can sleep
soundly knowing that monetary policy and financial system supervision can
withstand headwinds all around.
I am most honored to join their ranks. And
intend to be fully supportive of the Governor’s announced priorities. As he
said in his remarks to the banking community on July 28 (see https://www.bis.org/review/r230731f.htm):
“(We will) work hard in pursuing our mandate of ensuring price stability, financial
stability, and a safe and efficient payment system. We will do this through
greater investment in our research and operational capacities to become a more
responsive, efficient, agile, and future-ready institution.” He also expressed
the intent “to deepen Philippine capital markets and consider a framework for
sustainability that includes financial inclusion.”
If I may be allowed to add, aside from its
conventional usage, financial inclusion should also cover banking
regulatory policies that give primacy to job creation and poverty elimination.
For example, to enable our banks to continue to lend so we will have secure and
affordable energy to fuel Philippine development — a subject I have written on
in this space, most recently: “It’s not easy being green: Balancing energy
security and decarbonization for an emerging economy,” in November 2021 (https://www.bworldonline.com/opinion/2021/11/07/408820/its-
not-easy-being-green-balancing-energy-security-and-decarbonization-for-an-emerging-economy/).
Financial inclusivity can also be brought
about by reducing regulatory and other costs that cause Philippine banks to
have the highest operating cost ratios (mandated lending, reserve ratios,
etc.). Lower costs mean greater ability to take on risk and reach broader
markets. Similarly, arbitrary caps on interest rates reduce inclusivity and
access, as banks ration limited funds and exclude marginal clients, driving
them to the unregulated grey market that charges much much more.
Romeo L. Bernardo was principal Philippine
adviser to GlobalSource Partners (globalsourcepartners.com). He has served as a
board director in leading companies in banking and financial services, energy,
telecommunications, education, food and beverage, real estate, and others. He
had a 20-year run in the public sector, including stints in the Department of
Finance (Undersecretary), the IMF, World Bank, and the ADB.
romeo.lopez.bernardo@gmail.com
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