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THE
Department of Finance (DOF) has lauded the Bangko
Sentral ng Pilipinas (BSP) for its withdrawal of
short-dated special deposit accounts (SDAs) that made
more difficult the sale of equivalent government IOUs in
recent months.
But
Finance Undersecretary and Treasury chief Roberto Tan
vowed to continue selling Treasury bills on negotiated
basis despite the likelihood that he may be haled before
the Ombudsman for it.
“Who
said this was illegal? We have always resorted in the
past to the negotiated-sale basis whenever the situation
called for it,” Tan said, bewildered that the BSP or
anyone else should cite them for graft charges.
According to Tan, the DOF, particularly the Bureau of
Treasury where he is head in acting capacity, “felt the
bimonthly T-bill auctions have not been operating
normally in recent months.”
The BSP
contended that all government sale activities must be
conducted under an auction process so that transparency
is assured; or risk inviting unsavory market
perceptions.
“The
negotiated sale of government securities will give us
the flexibility we need. It will help us be more
opportunistic. But you must understand, we will conduct
it using market-determined pricing,” Tan said.
That the
market has not been behaving “normally” was evident by
recent attempts to ramp up the cost of raising funds
from T-bills, where even a three-month paper would cost
the Treasury more than 5 percent.
The last
time Tan looked, the 91-day paper should cost the
government no more than 3.673 percent, and all this
because the BSP offered the banks far shorter-dated
papers, with yields approximating those given the
long-dated instruments.
Still,
Tan cited the BSP for removing its one-week, two-week
and one-month SDAs that used to yield up to 5.1875
percent for investment-hungry banks looking out for the
biggest return with the littlest risk.
“We
expect liquidity to return to the T-bills market now
that some of the SDAs have been withdrawn,” Tan said.
BSP
Governor Amando Tetangco Jr. was encouraged in May last
year to expand the eligible SDA participants to now
include the various trust units and even
government-owned or -controlled corporations in a bid to
soak on externally-driven liquidity threatening to upset
their carefully calibrated inflation target.
Tetangco
ruled out government pressure when the seven-man
Monetary Board recently dropped the two-, three- and
six-month SDAs “to encourage the lending of more loan
funds for the banking public.” |
