He has protected the value of Filipino money from fluctuation amid political upheavals and external challenges over the past 12 years.
Amando Tetangco Jr., the Bangko Sentral ng Pilipinas governor who made three presidents look good because of the thriving economy, is retiring on July 3 after accomplishing his mission—price stability that supports economic growth.
Under Tetangco’s watch, Bangko Sentral helped the country achieve a period of rapid economic growth that nearly trebled the gross domestic product, pushed up gross international reserves above foreign debt, expanded the Filipino middle class with car and home buying capacity, enlarged the assets of banks to trillions and saw the rise of shopping districts and modern cities such as Fort Bonifacio.
The stability in the value of the peso in terms of foreign exchange and purchasing power encouraged companies to invest, helping the economy grow and create more jobs. The record low interest rates, initiated by Bangko Sentral through its policy rates, also boosted consumer spending that supported the growth of automotive and real estate markets.
As Bangko Sentral governor, Tetangco led the Monetary Board in exercising its vast powers such as setting the right bank interest rates, controlling the amount of money that circulates in the market, hoarding foreign exchange reserves and defending the peso against foreign exchange fluctuations. In taking these decisions, the Monetary Board finds the delicate balance between taming prices and supporting economic growth. Tetangco achieved both, when he discovered the formula that is right for the Philippines.
Tetangco, who started his career in central banking in 1974, rose from the ranks until being appointed governor in 2005. He was reappointed for another six-year term in 2011, becoming the first Bangko Sentral governor to serve for two terms.
To help the Philippine economy sustain its growth, while taming consumer prices, Bangko Sentral set an inflation target of 3 percent to 5 percent, apparently the ideal formula for an emerging economy. This target range was later reduced to 2 percent to 4 percent, as the economy attained a greater level of stability.
Beyond taking those decisions, Tetangco made another milestone in central banking—predictability of policy. His words are carefully selected to convey BSP’s monetary stance and offer hints of future actions.
“Communication is now a major instrument or tool in modern central banking,” Tetangco told a group of business editors from different publications.
“The policies have got to be communicated properly to the public real time. This is important because you also have a new channel of transmission of policy and that is expectations,” he said.
Expectations or outlook on the economy help companies plan on their next steps, such as raising more funds to support expansion.
“Before, you had interest rate channels or credit channels, now you have expectation channels. In order to manage expectations, you need to have the right communication, real time and accurate,” Tetangco said, while acknowledging the role of journalists in communicating the policies of Bangko Sentral over the last 12 years.
“That has helped us. The progress that we have achieved is due in part to the accurate and timely dissemination of information, communication of the policy of the BSP,” he said.
Tetangco has been recognized by New York-based Global Finance magazine as one of the best central bankers in the world, giving him a grade of “A” for eight years.
He also received the ‘Lifetime Leadership Achievement Award’ from The Asian Banker on July 2. The Singapore-based financial publication cited the remarkable contributions of Bangko Sentral to the country’s financial services industry and the economy under Tetangco’s leadership.
The Asian Banker recognized Bangko Sentral as a pillar of strength for the Philippine economy and the ‘Best Macroeconomic Regulator in Asia-Pacific.’
The Asian Banker said Tetangco was instrumental in helping the Philippines transform from a speculative- to an investment-grade economy.
“[He] made a huge difference… lifting his country to becoming investment grade and stepping high and tall in the league of nations,” The Asian Banker chairman Emmanuel Daniel said.
Tetangco, 64, will be replaced by Nestor Espenilla Jr., who is currently deputy governor in charge of bank examination and supervision.