MANILA, Philippines - The Bangko Sentral ng Pilipnas (BSP) has a P448.3 billion backlog in its production of Philippine peso notes and coins in various denominations as of Dec. 31 last year, according to the Commission on Audit.
In a 2013 report released recently, the COA said this means that not enough bills are circulating in the country considering that there is a buffer stock and standby supply requirement for such.
State auditors said the problem started in 2011 when the BSP came out with and circulated its “new generation currency (NGC)” series.
“Review and analysis of the reports on the status of banknote production and deliveries to CIRO (Currency Issue and Retirement Office) and audit of the level of inventory maintained by the Unissued Currency Division (UCD) disclosed that there were undelivered banknote and coin orders for 2011 to 2013 which totaled to P448.32 billion,” the COA report said.
In terms of value, the biggest shortfall is for P1,000 bills amounting to P258.7 billion or 258.7 million pieces followed by P500 bills worth P130.975 billion or 261.95 million pieces.
The COA report said the biggest production backlog covers P20 bills with 501.021 million pieces followed by one P100 notes of 311.891 million pieces.
State auditors noted that the BSP’s Currency Management Sub-Sector Procedures Manual requires a three-month buffer stock of both currency notes and coins of all denominations or 25 percent of the yearly actual average withdrawal for the preceding three years.
The CIRO is also required to maintain “at all times” three months contingency reserves for high-denomination notes, while regional offices are supposed to have a four-month buffer stock with BSP branches having a two-month standby supply.
State auditors said such safeguard mechanisms were not followed as “cash holdings (are now) below the ideal manageable currency level”.
The COA report said the cancellation of the production of 2.15 million pieces of P200 notes in 2011; the replacement of 1.35 million “new design series (NDS)” P200 notes; the shortage of ink for the printing of the 2013 order for 311.869 million pieces of P100 notes; and the delay in ordering 1,335.9 million pieces of imported NGC notes in 2013 attributed to lack of suitable storage space are to blame for the shortfall.
State auditors said at least three BSP branches have resorted to re-circulating currency notes that have previously been considered unfit to shore up buffer stocks.
In response to COA’s findings, the BSP said it is now in “catch up mode” through in-house production and outsourcing of finished banknotes as officials assured that shortfalls in the contingency reserve and buffer stocks will be fully addressed by the end of 2014.