The Marcoses and the old central bank

There is nobody like Imelda Romualdez Marcos, the extraordinary daughter of the south, she of legendary beauty, of perfect pompador hair, of unparalleled glamor and one with insatiable lust for everything extravagant.

When she walks past you, the smell of her signature Perry Ellis scent will pervade the air long after she is gone.

Her name itself has given birth to the term Imeldific, an adjective to describe one who is “ostentatiously extravagant, sometimes to the point of vulgarity.”

Her wild shopping sprees around the world have made headlines in newspapers across the globe.

Remember that story about how an airplane that departed Rome had to do a mid-air U turn because the former first lady realized she’d forgotten to buy some cheese?

The former First Lady is old now, her eyes rheumy and her beauty has faded. Her husband, the late dictator Ferdinand Marcos, is buried in a sprawling hill in a place for heroes. Eldest daughter Imee is in the Senate, while their only son Bongbong is on YouTube.

But the stories about the Marcoses continue to abound. The stories are endless as they are varied, and depending on who the storyteller is, these tales range from the good, the bad, and the ugly.

Martial law

Every year around this time, Filipinos remember the one thing the Marcos name is most synonymous with — the declaration of martial law in the Philippines on Sept. 21, 1972.

Last week was no exception and Filipinos marked the 47th anniversary of military rule in the country with protests.

Yet, there is one story during the Marcos years that only few people remember. Those who do still can’t help but sigh in frustration 47 years later, calling it a dark chapter in the country’s history.

This is the little known story of the Philippine Central Bank and how it was left in shambles after the Marcoses fled the country in 1986.

Central bank and other institutions

History tells us that by the time the Marcoses left, the old central bank was bankrupt and saddled with debt.

Former Sen. Alberto Romulo, now chairman of state-owned Development Bank of the Philippines, remembers it well.

“Many people don’t remember now what happened during those years,” he told me during a recent chat in his office.

In a Jan. 20, 1992 privilege speech, Romulo, then Senate majority floor leader, called attention to the central bank’s ailing health.

“Since 1981, the Central Bank’s financial position has continued to deteriorate. Indeed, for 1992, Central Bank losses are projected to constitute more than 3/4 of the entire public sector deficit,” the then senator said in his 1992 speech.

“It is no wonder, he said, that in the recent Philippine-International Monetary Fund talks, the financial health of the Central Bank was a key issue, specifically the Central Bank losses in the consolidated public sector deficit.”

What happened?

“According to bank insiders, Imelda Marcos, her kids and kin, charged shopping trips abroad to one of the suspense accounts of the Central Bank — either the Monetary Adjustment Account or the Exchange Stabilization Adjustment Account,” Romulo said in another speech on Feb. 3, 1993.

“How in the world can such a shopping trip be a legitimate charge either to the Monetary Adjustment Account or the Exchange Stabilization Adjustment Account, which under the CB accounting form part of the assets of the Central Bank?” Romulo said.

Quoting reports in the Far Eastern Economic Review at the time, Romulo also said:

“No other national institution appears to have been so debilitated by the Marcos era as the Philippine Central Bank. The bank’s indiscretions during the Marcos era resulted in a P26 billion loss in 1990.

“The major cause of the Central Bank’s losses is the disastrous foreign exchange hedges the bank granted in the 1970s up to 1980 to a privileged group of businesses. Under these arrangements called swap loans and forward covers, the Central Bank agreed to bear costs incurred by the firms due to depreciation in the peso.

In effect, no matter how the problems are approached, the economic mismanagement of the Marcos regime will continue to dog the country for years to come.”

CB-BOL

It is for this reason that then Sen. Romulo pushed for the creation of a new central bank, I learned during our chat. The Central Bank-Board of Liquidators was set up to administer and liquidate the assets and liabilities of the old central bank.

Indeed, many people don’t remember this now, the former legislator lamented.

Yet, it is a story that should never be forgotten, a story that should be told and retold.

For posterity, I write this on the 47th anniversary of martial law in the country so that future generations may know what happened to the Philippine Central Bank once upon a time.

May those who know guard the institution — the country’s sole independent and powerful monetary authority — from similar abuses that may happen under the current administration or in the future.

Allowing history to repeat itself will be a great disservice to this nation and to generations and generations of Filipinos.

Iris Gonzales’ email address is [email protected].

Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com