Philippine Central Bank Faces Potential Shake-up Amid Ghost Staff Scandal
The inquiry is anticipated to conclude in the coming weeks, raising concerns about potential vacancies within the seven-member Monetary Board
A scandal involving fictitious employees at the Philippine central bank poses a significant threat to its credibility and operational stability, particularly amidst critical policy decisions amid soaring inflation and a weakened currency.
Initiating investigations in April following a whistleblower's report, the Bangko Sentral ng Pilipinas (BSP) is scrutinising allegations that two members of its rate-setting panel had individuals on their payrolls who were not employed by the central bank, as per two anonymous BSP officials. The inquiry is anticipated to conclude in the coming weeks, raising concerns about potential vacancies within the seven-member Monetary Board.
Despite requests for comment, the central bank's investor relations department has yet to issue an official statement on the matter.
The controversy, also echoed in local media reports, casts doubt on the integrity of the central bank and its policy-making entity, entrusted with overseeing monetary policy and financial system supervision. This issue surfaces amid Southeast Asia's grappling with its highest borrowing costs in 17 years, a currency nearing historic lows, and persistent inflationary pressures.
Dan Roces, Chief Economist at Security Bank Corp. in Manila, highlights the potential ramifications of removing the implicated board members, emphasising the importance of timely replacements to maintain diverse perspectives within the board, particularly amidst current economic challenges.
Addressing the fraudulent activities, the BSP plans to remove the ghost employees from its payrolls and seek reimbursement for salaries received over several years. However, the fate of the implicated policy board members ultimately rests with President Ferdinand Marcos Jr., in accordance with the provisions outlined in the New Central Bank Act, allowing the president to dismiss any Monetary Board member for actions detrimental to BSP's interests.
Monetary Board members, comprising the governor, five full-time members from the private sector, and one from the Cabinet, serve six-year terms, with the possibility of reappointment. BSP's charter mandates that all Monetary Board decisions must garner the concurrence of at least four members, a crucial requirement even in scenarios such as bank closures, where a minimum of four votes is necessary, with emergency loan extensions necessitating five votes.
This unfolding scandal underscores the imperative for transparency, integrity and accountability within the Philippine central bank, pivotal for maintaining public trust and effective policy implementation amidst economic uncertainty.
