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3 months ago
Philippines picks central bank insider Espenilla as next governor
May 8, 2017 / 11:06 AM / 3 months ago

Philippines picks central bank insider Espenilla as next governor

FILE PHOTO: Deputy Central bank Governor Nestor Espenilla is pictured during a meeting at the Bangko Sentral ng Pilipinas complex in Manila, Philippines March 31, 2017.Karen Lema

MANILA (Reuters) - The Philippines named Nestor Espenilla as its next central bank governor on Monday, promoting a deputy to signal a smooth handover from a widely respected incumbent who for years kept the country in a sweet spot of strong growth and low inflation.

The much anticipated announcement comes ahead of a policy meeting on Thursday, and ends months of speculation about what could be the most important appointment of Rodrigo Duterte's presidency.

The 58-year-old Espenilla, the deputy governor in charge of banking supervision, will replace the much-praised career central banker Amando Tetangco, who steps down in July as Bangko Sentral ng Pilipinas (BSP) chief after 12 years, having served a maximum two terms.

Overseen by Tetangco, monetary policy and reforms kept the Philippines' banks sound, the peso stable, inflation stable and sustained the country's strong economic growth.

Tetangco thanked Duterte for choosing Espenilla as his successor, saying he was respected among central bankers and regulators at home and abroad.

"The choice of an insider in the person of deputy governor Espenilla ensures the continuity of policy and thought process in the BSP," Tetangco said in a text message to media.

"I am confident that with him at the helm, the BSP will continue to be a pillar of support to the economy, that should remain among the top performing economies in the world."

There has been considerable suspense over who Duterte would choose for what was regarded as the most crucial economic appointment.

Espenilla will take over as the Duterte administration prepares for a six-year, $180 billion spending spree on infrastructure, in a bid to sustain galloping growth.

The stimulus would help offset the impact of possible protectionist U.S. policies on remittances from overseas Filipinos, and on American investment in business process outsourcing (BPO) to the Philippines, a vital sector for the economy.

Duterte's closest source of economic counsel, Finance Secretary Carlos Dominguez, said Espenilla was a "very wise choice" and praised Tetangco, who had "carefully trained his potential successors".

WELCOME DECISION

As the BSP's head of banking supervision, Espenilla has driven many of the country's recent banking reforms, including raising minimum capital requirements, improving financial transparency, and overhauling mismanaged banks.

ANZ economist Eugenia Victorino said the BSP was set for a seamless transition and Espenilla "will likely hit the ground running."

The president of the Philippine bankers' association, Nestor Tan, said Espenilla was "extremely capable", while independent economist Paul Joseph Garcia called his promotion "an inspired appointment".

Espenilla headed a shortlist of candidates that also included fellow deputy governor Diwa Guinigundo, East West Banking Corp (EW.PS) chief executive Antonio Moncupa and former monetary board member and ex-trade minister Peter Favila.

The Philippine economy has long left behind its reputation as a regional laggard, with remittances and BPO revenue helping to fuel retail spending and maintain growth at an average 5.5 percent under Tetangco.

In 2016, it reported annual GDP growth of 6.9 percent, among the fastest in Asia.

This year growth is expected to be in the middle of the government's 6.5-7.5 percent target.

The Philippine central bank is widely expected to leave its benchmark interest rate unchanged at 3.0 percent on Thursday. It has not tweaked policy settings since it raised the main rate by 25 basis points in September 2014.

Additional reporting by Neil Jerome Morales, Enrico dela Cruz and Manolo Serapio Jr; Editing by Martin Petty & Simon Cameron-Moore

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