BSP backs reopening of mining firms

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) supports the reopening of mining companies shut down by the late environment secretary Gina Lopez as the government continues to beef up its foreign exchange buffers to protect the economy from external shocks.

In a forum, BSP Governor Benjamin Diokno said the price of gold in the world market continued to rise and “ it is about time” to reopen the shuttered mining companies.

Gold prices closed at a record high of $1,900 per troy ounce as other safe assets such as benchmark government bonds have become less attractive as the pandemic deepens.

The BSP chief said gold accounts for about 10 percent of the country’s gross international reserves (GIR). Aside from helping beef up the foreign exchange buffer, Diokno said the resumption of mining operations could help augment the government coffers.

Diokno sees an increase in the central bank’s gold purchases this year as sales by small-scale miners are now exempted from paying excise and income taxes.

He also said there has been a pickup in gold purchases from small-scale miners after President Duterte signed Republic Act 11256 or an Act to strengthen the country’s Gross International Reserves last year.

The GIR is the sum of all foreign exchange flowing into the country and serves as buffer to ensure that it will not run out of foreign exchange that it could use in case of external shocks.

Diokno said the country’s GIR may reach an all-time high of $ $97 billion this year after reaching a record $93.32 billion as of end-June.

The end-June figure is equivalent to 8.4 months’ worth of imports of goods and enough to cover 7.3 times the country’s short-term external debt based on original status.

The Department of Environment and Natural Resources (DENR) plans to reopen some of the mining companies to contribute to the struggling economy battered by the ongoing pandemic.

Environment Secretary Roy Cimatu said operations of some of the mining companies would be allowed to resume after a complete review and audit.

“An audit was conducted by technical experts.There were recommendations made for the companies. They complied and applied corrective measures,” Cimatu said during a virtual press conference after the pre-State of the Nation Address forum earlier.

Lopez ordered the closure and suspension of 26 mining companies for alleged violation of environmental standards, including the Philippine Mining Act.

The inter-agency Mining Industry Coordinating Council chaired by Cimatu ordered the review of the closure and suspension orders of the mining firms in 2018.