Diokno: Bangko Sentral can be 'supportive' and 'independent' from gov't


Posted at Mar 06 2019 10:18 AM | Updated as of Mar 06 2019 05:00 PM

President Rodrigo Duterte shakes hands with newly-appointed Bangko Sentral ng Pilipinas Governor Benjamin Diokno on the sidelines of a cabinet meeting in Malacañang on March 4, 2019. Richard Madelo, Presidential Photo

MANILA -- The Bangko Sentral ng Pilipinas can be "supportive" of government without losing its independence, incoming Governor Benjamin Diokno said Wednesday, as he deflected criticism on his being a central bank outsider.

Diokno, an economics professor at the University of the Philippines who served Presidents Rodrigo Duterte and Joseph Estrada as budget secretary, said no one has the "birth right" to the BSP governorship.

"I know how government works. I know where we want to go. I'm familiar with the program of the government," Diokno told reporters.

"Our BSP is supposed to be independent, but that does not mean it has to be against. It has to understand what the administration is trying to to do. If you have to be supportive, you support but without losing your independence," he said.

With a PhD in economics, Diokno said "I know exactly what's going on. That cannot be said of other BSP governors... I don't buy that concept as if the central bank governorship is the prerogative of those from the inside."

Asked if politics would influence his decisions at the BSP, Diokno said: "Number one I am not a politician. In other countries, it's normal that you get the chairman of the Fed or the governor of the central bank to come from the academe."

"What is bad is when you appoint a banker... You don't want a banker to be central bank governor because then you appoint one of the boys to the central bank and that's bad for the economy," he said.

Diokno recalled a conversation with Finance Sec. Carlos Dominguez and Socioeconomic Planning Sec. Ernesto Pernia on who would succeed the late BSP Gov. Nestor Espenilla.

Dominguez, who had the authority to recommend to Duterte, suggested to Diokno that he take over, according to the incoming governor.

"He (Dominguez) said, why not you? So I said, sure why not. That's it. But it's really up to the President. We went through the vetting process, there were many names considered as many as 8," Diokno said.


Diokno said he would be "more circumspect" in his new role, mindful of the fact that the governor's every word could influence financial markets.

He said concerns over his perceived support for a weak peso were "overblown" since it was based on his position as UP professor 2 decades ago.

"I'm not supposed to be accessible to everyone. Instead of making frank, to the point, blunt statements like I do here, my statements have to be measured... Not necessarily a monk but more private than usual," he said.

Diokno said policy decisions under his watch will be "evidence-based." He said he would meet with the monetary board later this week.

"We have to be very very careful in adopting policy," he said.

He said he would continue pursuing "steady and strong" economic growth and financial inclusion. Cyber-security is the "number one threat" to the world's financial systems, he said.

Espenilla, who succumbed to tongue cancer in February, raised the overnight borrowing rate by 175 basis points in 2018 to tame inflation, which returned to the BSP's 2 to 4 percent target range last month.