Tolentino cautions BSP over selling of gold reserves amid COVID-19 pandemic

MANILA -- Senator Francis "Tol" Tolentino has cautioned the Bangko Sentral ng Pilipinas (BSP) over its supposed plan to sell a small portion of the country's gold reserves, amid the current health crisis due to the global coronavirus pandemic.

Tolentino made the manifestation during the Senate Committee on Finance's deliberation on the proposed P4.5-trillion National Expenditure Program (NEP) for 2021, over reports that the BSP is considering to sell parts of its gold reserves to reduce its share from the country's gross international reserves (GIR).

Based on BSP's records, the country's international gold reserves have reached a record high $98.6 billion.

Tolentino reminded the BSP, through its representative Deputy Governor Francisco Dakila, that certain provisions of Republic Act No. 7653 or the New Central Bank Act of 1993 may limit the selling of the country's gold reserves during emergency situations.

The Senator mentioned Section 72 of RA 7653 or the Act's provision on "Emergency Restrictions on Exchange Operations", which states that "during an exchange crisis, or in time of national emergency and to give the Monetary Board and the Government time in which to take constructive measures to forestall, combat, or overcome such a crisis or emergency, the Monetary Board, with the concurrence of at least five (5) of its members and with the approval of the President of the Philippines, may temporarily suspend or restrict sales of exchange by the Bangko Sentral, and may subject all transactions in gold and foreign exchange to license by the Bangko Sentral."

"The BSP family should be aware of RA 7653 specifically Section 72 and I quote, emergency restrictions on exchange operations... they may temporarily suspend or restrict the sales of gold," said Tolentino.

In response, Dakila said that "it is not really the majority of the gold portion of the reserves that are going to be sold".

As clarified earlier by BSP Governor Benjamin Diokno, the guidance now is for about 10 percent of the country's GIR to be allocated to gold. The BSP official also noted that changes are based on market conditions.

Dakila also clarified that the planned selling of gold reserves it not only at the discretion of the BSP's treasury department, but it is also guided by the policy of the Monetary Board.

But Tolentino cautioned Mr. Dakila that the BSP and the Monetary Board may be violating the law for its action since country is currently under a "national emergency."

"So any action taken, the discretionary actions taken by the Treasury Department even it is pursuant to a Monetary Board resolution, should take into account the national emergency we are in right now," said Tolentino.

The lawmaker added that the BSP should consider the pertinent provision of RA 7653 in connection with the supposed selling gold reserves, since during times of crisis or national emergencies, similar to this COVID-19 pandemic, "we might need the gold reserves later on."