May 8, 2017 11:20 pm JST

Top job at Philippine central bank goes to deputy governor

Duterte picks veteran insider Nestor Espenilla in bid for policy continuity

CLIFF VENZON, Nikkei staff writer

Left to right: Philippine President Rodrigo Duterte chats with incoming central bank Gov. Nestor Espenilla and Finance Secretary Carlos Dominguez (Presidential photo)

MANILA -- In what is likely to be one of his most crucial appointments, Philippine President Rodrigo Duterte has chosen Nestor Espenilla as the next governor of the country's central bank, Finance Secretary Carlos Dominguez said on Monday night.

A spokesman for the presidential office confirmed the appointment.

Espenilla is currently deputy governor for banking supervision and examination at the central bank -- officially the Bangko Sentral ng Pilipinas. He will replace Gov. Amando Tetangco, who will retire in July after serving two six-year terms -- the maximum allowed by law.

"I believe the choice is to achieve continuity of monetary policy and [ensure the] further strengthening of the financial system of the country," Dominguez told the Nikkei Asian Review.

Espenilla joined the BSP back in 1981 after finishing a business economics degree at the University of the Philippines the previous year. He later obtained a master's degree at the Graduate Institute of Policy Science in Tokyo in 1988.He is credited with championing a range of banking reforms, such as the adoption of good corporate governance, financial transparency and open competition -- including the liberalization of foreign bank entries.

Espenilla beat other candidates including BSP colleague Diwa Guinigundo, the deputy governor for monetary stability; former monetary board member and Trade Secretary Peter Favila; and Antonio Moncupa, CEO of mid-size lender East East Banking, who was endorsed by Duterte's PDP-Laban Party.

Tetangco, who wanted to promote someone from within the BSP, said Espenilla is respected in the banking community at home and abroad.

"The choice of an insider in the person of Deputy Gov. Espenilla ensures the continuity of policy and thought process at the BSP," Tetangco said.

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

Luis Limlingan, managing director at local brokerage Regina Capital Development, said Espenilla inherits a central bank with a strong balance sheet and huge but dwindling reserves. "The challenge is to fight inflation, which is finally shooting up, and to make sure we don't fall too far into a [current-account] deficit," he said.

Philippine inflation was recorded at 3.4% in April, unchanged from March, when consumer prices rose at their fastest pace in over two years. The latest figure brought the year-to-date inflation rate to 3.2%, still within the central bank's target range of 3-4% for 2017.

Meanwhile, the Philippines' current-account surplus plunged by 91.7% to $601 million last year, from $7.3 billion in 2015, due to a bigger trade deficit. The current-account balance at the end of 2016 narrowed to 0.2% of gross domestic product, from 2.5% in 2015.

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