Salary, perks of a BSP governor

The next Bangko Sentral ng Pilipinas (BSP) governor, who will be appointed by the President anytime now, will be earning the government’s highest salary and perks on record. And, unless the next BSP chief will ask President Ferdinand R. Marcos Jr. for a raise, the new governor will also receive the same salary and allowances as BSP Governor Felipe M. Medalla. Medalla, whose term will expire in less than 20 days or until July 3, presumably receives the same salary that the previous governor, now Finance Secretary Benjamin E. Diokno, had. This is usually the tradition and procedure in the central bank, the same pay for the incoming and immediate predecessor. As per a Commission on Audit (COA) report on Salaries and Allowances, Diokno received P41,811,528 when he was still BSP governor in 2021. A BSP governor’s take home pay is the highest salary and allowances given for a government official, based on COA reports in recent years. Diokno, the previous administration’s former budget secretary, received a pay increase after he was appointed in 2019. By 2021, he was getting salary and allowances that was double or more than 98 percent higher than his predecessor, the late Nestor A. Espenilla Jr. BSP sources said that when Diokno’s request for an adjusted base pay was approved by former President Rodrigo R. Duterte, the rest of the Monetary Board members’ salaries were also raised. The Monetary Board exercises the powers and functions of the BSP and is composed of seven members, including a Cabinet member designated by the President of the Philippines. The other five members are from the private sector. The BSP governor and Monetary Board members’ salary and allowances become the ceilings. How much the BSP governor’s monthly salary is of course confidential information and is internal to the Human Resources department of the BSP. Meanwhile, Diokno was appointed BSP’s fifth governor on March 4, 2019. In 2020, he received P19,791,846 versus what he got during his first year in the BSP in 2019 of P14,700,889 as salary and allowances, based on COA audit. Espenilla whom Diokno replaced in 2019 had a salary and allowances of P21,047,795 in 2018. His predecessor who retired in July 2017, Amando M. Tetangco Jr., had P15,912,063 in 2016. Espenilla was appointed in mid-2017 as BSP’s fourth governor but he did not finish his term. He died of cancer on Feb. 23, 2019. Three of Espenilla’s six-year term was served by Diokno while one year was by Medalla. On top of monthly salary, the BSP governor also receives bonuses mid-year, year-end, and during the central bank anniversary which is July 3. There are also productivity-related bonuses, numerous international trips and conferences, and several seats as the chair or co-chair in various local and foreign agencies and organizations. In addition, the BSP governor has a confidential or intelligence fund which is “not subject to audit,” according to sources. The COA does review the allocation and uses of discretionary funds, which include extraordinary and miscellaneous expenses such as meetings, seminars and conferences, public relations funds, among others.

STATURE

The BSP governor is not a Cabinet member, but the stature of the BSP governor is considered better than a Cabinet member since he or she has autonomy and he or she will only be governed by the BSP Charter, which became a law in 1993 (New Central Bank Act) according to provisions in the 1987 Philippine Constitution. The BSP is the successor of the bankrupted Central Bank of the Philippines, the central monetary authority from 1948 until it was replaced as BSP in 1993. Despite the fact that a BSP Governor is a political appointee, the BSP governor should not be beholden to whoever appointed him or her, therefore he or she does not answer to the President of the Philippines on issues that are crucial to the monetary and financial stability of the country. In fact, once appointed, the BSP chief does not need to go through a Commission on Appointments process.

BSP’s NEXT CHIEF?

Marcos can still  reappoint Medalla. Diokno could also return to BSP if Marcos will appoint him despite his previous announcement that he does not intend to cross again the bridge, which literally exists between the DOF and the BSP buildings. Whoever the next BSP governor will be, he is expected to support the administration's agenda and economic goals including Marcos' Maharlika Investment Fund but not at the expense of BSP's independence from the executive branch. The BSP governor position is a fixed six-year term and it is a position that will not be easy to unseat unless specified under the BSP charter. The next BSP chief will outlast Marcos’ administration. The financial markets have been expecting an announcement since March this year. Fortunately, Marcos cannot sit on this important appointment, unlike the long wait for the Department of Agriculture secretary. Just recently, after a year in office, he finally named long overdue appointments to the Department of Health and the chief of the National Defense. Medalla said he will consider it a blessing if he’s given a fresh mandate to lead the BSP. He’s eligible to be reappointed under the BSP law, despite two terms as Monetary Board member. Based on the BSP charter, Section 6, no Monetary Board member may be reappointed more than twice, but this does not apply to the governor position. Medalla’s possible reappointment is not covered by this restriction. Medalla assumed the governorship when Marcos unexpectedly appointed Diokno, who was BSP governor from 2019 to 2022, to the DOF to lead his economic team. Before the BSP, Diokno served two administrations as budget secretary.
Medalla, on the other hand, was finishing his two-term stint as Monetary Board member when he was called to serve as BSP’s sixth governor. It was not a surprise that he was a choice because of his 11-year experience as Monetary Board member, the most powerful policy-making body of the central bank. His previous government job was as socioeconomic planning chief and Director- General of the National Economic Development Authority. As the highest-ranking economic cabinet official, Diokno will have to recommend to Marcos the next BSP chief. When asked of his preference, Diokno said he “won’t tell until announced by OP (Office of the President)” and this is “protocol”. This could mean Marcos has already chosen but still seeking affirmation of his choice.

OTHER CANDIDATES

If Medalla is not reappointed and Diokno stays in the DOF, there is another list of BSP insiders that could make it to the top spot. There may be two more lists that contain dark horses, including private sector bankers and politicians. The talk around BSP is that at least two Monetary Board members are in the short list, including Eli M. Remolona Jr. He is new to the BSP, appointed only in August of 2022 as Monetary Board member to serve Medalla's remaining one year. However, he is considered one of the giants in the finance and central banking arena in and outside of the country, having worked for the Bank for International Settlements and the US Federal Reserve Bank of New York. Another list includes two BSP deputy governors, Chuchi G. Fonacier and Francisco G. Dakila Jr. Dakila is from the BSP monetary stability sector where the two former governors also came from, while Fonacier is from the banking supervision sector, same as Espenilla. They are on the list because, as the central bank history would show, most of the BSP governors were career central bankers such as the late Gabriel C. Singson, the first governor under the amended BSP law in 1993. Other BSP insiders that became governors were Tetangco and Espenilla. Diokno has said that the next BSP chief should not be a banker. He also said in the past that politicians should not be in BSP as well. However, there was one notable BSP chief that was from the private sector, the late Rafael B. Buenaventura, who served from 1999 until 2005. He was former president of Equitable PCI Bank (later merged with BDO Unibank Inc.) and appointed after Singson. Diokno and Medalla, before they were in BSP and after their state jobs, also worked as bank directors. Both were employed by Asia United Bank. Remolona, meanwhile, was with Bank of the Philippine Islands as independent director before joining BSP last year.