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'Global Finance' gives Tetangco a 'B' for handling economy
by Jun Vallecera/BMirror/12.02.08

BANGKO Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. did not get an “A” grade this year from the prestigious business magazine Global Finance, a unit of the US business credit information and global rating firm Dun and Bradstreet.

He instead got a “B” rating—a demotion from last year’s top spot—for his handling of the economy beset, like most countries around the world, with rising inflation and slowing growth.

The magazine noted Tetangco and six other members of the policymaking monetary board were on an easing mode in the first half of the year but had to turn around from June onward as headline inflation, pushed higher by rising prices of commodities and food, threatened to upset local output and price stability.

“The bank is hopeful that its rate rises will bring the [inflation] beast back under control by the end of the year but is not so optimistic that it will hit its target of 4 percent,” the magazine reported.

“Tetangco showed he is not afraid of being a little heavy-handed when the situation demands it, with a 50-basis-point rise in July to combat the ‘second round’ effects of rises in oil and commodities prices,” it added.

This pertained to the 0.5-percentage-point rise in the BSP’s policy rates on July 17, intended to tame inflation that in August would climb to a 17-year high of 12.5 percent.

Global Finance said the markets responded positively to the rate hike as the peso—then on a downtrend—gained strength.

“However, with inflation increasing steadily in the seven months prior to June, arguably the BSP could have shown its resolve a little sooner.

“Fortunately for Tetangco, GDP growth is slowing only moderately despite the rate rises and remains above five year-on-year,” the magazine said.

Tetangco’s performance was given the same rating as the central bank governors of Australia, China, Malaysia and South Korea.

They were outperformed by the central banks of Singapore and Taiwan whose heads were each given an “A” rating.

Ben Bernanke of the US Fed, however, was given a “C”, who was seen to have “painted himself into a corner by trying to please Congress and the financial markets instead of getting ahead of the curve and keeping inflation under control.”

“The Federal Reserve has been counting on slower economic growth to bring inflation down as it pumps liquidity into the fragile financial system to avoid a meltdown. The main worry for the US economy, however, is the lack of price stability,” the magazine added.

None from the Americas and from Europe received top grades this year and the central banks of India, Indonesia and Japan were not rated as their central banks reported changeovers.

With Singapore and Taiwan receiving “As”, Asia as a whole performed better than counterparts elsewhere, the magazine said.