Editorial - Penalizing the BSP

The peso’s continuing slide in recent days has been unusually steep, the secretary of finance observed yesterday. Perhaps he should submit more detailed observations regarding the peso’s latest fall to Malacañang and the judiciary. The currency, already shaken by the Oakwood mutiny last month, started plunging and hit a 31-month low after one particular piece of news came out. No, it was not about another coup attempt, but the Court of Appeals’ order suspending for one year Bangko Sentral ng Pilipinas Governor Rafael Buenaventura and four other BSP officials.

The court order, which overturned a ruling by the Office of the Ombudsman, sought to penalize Buenaventura, his deputy and three other BSP executives for the closure of Urban Bank of the Philippines in April 2000. The BSP is appealing the case, but that has not stopped the court order from rattling the currency and stock market. Yesterday the peso fell to a new low of 55.28 to the dollar before recovering slightly, closing at 55.26. Business groups also continued to express their concern over the repercussions of the court decision.

No one is above the law, not even Buenaventura who has a fixed tenure as central bank governor that will end in 2005. The nation still awaits a final ruling on the BSP’s moves in connection with Urban Bank, whose chairman emeritus happens to be former President Fidel Ramos, a political ally of President Arroyo.

Malacañang will say that it has nothing to do with the judiciary. The Court of Appeals will say that it was just doing its job – the same defense invoked by Buenaventura and the other BSP officials. The court order, however, comes on the heels of concerns long expressed by several investors’ groups about the power of Philippine courts to interfere in business deals and economic matters. The order also comes amid persistent rumors that Malacañang wants to replace Buena-ventura, an appointee of deposed President Joseph Estrada, and to install a BSP chief who is friendlier to the administration.

Buenaventura is one of the few Philippine officials admired by the international community for his contributions to improving the country’s economy. What does the international community think about a country where the central bank governor and his top officials are suspended for a year? We have one answer in the slide of the peso.