The Philippines: New Central Bank Governor To Be Tested Early

Eli Remolona’s appointment has been welcomed by analysts who point to his significant international experience at the Federal Reserve Bank of New York and the Bank for International Settlements.

Eli Remolona, the new central bank governor of the Philippines, will soon be tested.

The new governor of the Central Bank of the Philippines (Bangko Sentral ng Pilipinas, or BSP) is likely to be tested early on, as the Philippine economy faces mounting headwinds. Growth slowed sharply in the first quarter to only 6.4% year-on-year, the slowest rate of growth since the first quarter of 2021, according to a June note from research firm Capital Economics. The International Monetary Fund predicts only 6% growth for all of 2023.

With numbers showing that inflation may have peaked—and expectations that the island nation will be exposed to the El Niño weather system, resulting in a prolonged dry spell—Eli Remolona, who was named to a six-year term as head the BSP starting July 3, may be tempted to cut interest rates. The bank hiked its policy rate by a cumulative 425 basis points to 6.25% in May, more than other emerging market Asian central bank, the International Monetary Fund noted in May. The new governor is scheduled to chair his first policy meeting in mid-August.

Borrowing costs are another increasingly burdensome problem for Philippine President Ferdinand R. Marcos Jr.’s government. Philippine debt has reached record levels of some $270 billion, equivalent to about 61% of GDP; pre-pandemic levels were about 39%, Finance Secretary Benjamin Diokno said in a July press briefing. The Philippines also remains on the Paris-based Financial Action Task Force’s “grey list” for deficiencies in anti-money laundering and counterterrorism financing controls.

Still, Remolona’s appointment has been broadly welcomed by analysts who point to his significant international experience. His career includes 14 years at the Federal Reserve Bank of New York, followed by 19 years at the Basel-based Bank for International Settlements.

Remolona also served as a professor of finance and director of central banking at the Asia School of Business in Kuala Lumpur, in collaboration with the MIT Sloan School of Management, from 2019 to 2022. He was selected as the new head of the BSP following “extensive” consultations by Marcos with the Department of Finance, various government offices, and private banks and financial institutions, according to the official Philippine News Agency. Prior to his appointment as governor, Remolona was a member of the BSP’s Monetary Board, starting in August of last year.