Espenilla reveals bout with cancer, but says it’s work as usual for him

Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. said yesterday it’s work as usual for him after revealing that he had earlier been diagnosed with tongue cancer, but has undergone surgery to contain the ailment.

In a post on his WhatsApp account, Espenilla said that he “got a curve ball in November last year” when he was diagnosed with tongue cancer.

“Fortunately, it was very early stage and quite localized. I underwent surgery soon after to remove the

problem,” he said.

Espenilla also reported that the operation was a success and that his doctors said he was now “cancer-free.”

“So I don’t expect this curve ball to slow me down,” he added.

Just to be sure, Espenilla said his doctors subjected him to radiation therapy, which he has already completed.

“However, radiation therapy had unavoidable effects. Mainly causing speaking difficulties for me due to dry throat and mouth sores,” he noted.

But he also pointed out that the effects “should go away in time, and my doctors expect me to achieve more or less full recovery in a month or so.”

“I have to hang on and be patient,” Espenilla said.

The BSP governor also said that his statement should be able to answer “the questions of those who may be wondering about my health.”

“I am confident that this personal medical issue will not distract from the important work at hand,” Espenilla said.

Warning to speculators Espenilla Jr. on Sunday discouraged speculators from using the reduction of banks’ reserves ratio to play on the exchange rate and to act on worries that the BSP has a “looser” policy stance which could be inflationary at this time.

The peso hovered near the 152:$1 level before the February 15 announcement of the BSP that it will cut reserve requirement ratio (RRR) that banks set aside and deposited to the central bank on March 2. The peso breached P52 on that day and stayed close to this level, even hitting 152.35 last Tuesday.

Espenilla said: “The bottomline (is that) the BSP has many options to maintain firm monetary control. The key reason it is lowering RRR is to promote a more efficient and level financial system that’s less biased against deposit-taking financial institutions which creates market distortions. This is really in a sense part of a grand normalisation process. Alongside capital market reforms and FX (foreign exchange) liberalization.”

Espenilla also allayed concerns that reducing RRR is inflationary. “Analysts’ fears of ensuing looser monetary policy that can fuel more inflation is really unfounded. Moreover, to the extent that speculators use RRR reduction as pretext for peso depreciation, BSP sells FX from its reserves to manage excessive peso volatility. That in itself also has the effect of draining peso liquidity from the system which causes a self-correction.”

The one percentage point cut in RRR, from 20 percent to 19 percent, is expected to release at least 190 billion into the financial system after March 2.

Espenilla, who left the country on February 16, said he has been closely monitoring financial market conditions and activity. While still overseas, he reiterated that the phased reduction in “our ultra-high RRR regime” and “ensuing excess liquidity” will be addressed by its open market operations, namely the weekly term deposit facility (TDF) auction. The TDF is a liquidity mopping tool.

“That’s why we don’t see it as an easing of monetary policy stance. Not at all. What BSP is executing is just an operational adjustment that should have a neutral effect on the monetary policy stance,” he emphasized. “If BSP wants to change the monetary policy stance, BSP will signal that overtly, by changing the policy rate (the overnight RRP rate). But it can also do that more subtly without necessarily changing the RRP rate, by allowing the marketdetermined TDF rates to rise (or fall) by altering auction volumes.”

Espenilla said the adoption of the interest rate corridor in June 2016 has allowed them the “maneuvering room to conduct monetary policy and gradually bring down RRR.” The current reserves ratio of 20 percent is considered one of the highest in the region.

The cut in RRR, at the core of it, should reduce banks’ intermediation costs which will benefit borrowers. But a one percentage point reduction is not enough and the BSP has said it wants it lowered to single-digit over time.