Bank Tries to Absorb Electioneering Cash

Declaring that the nation’s economy is headed for roaring inflation, the Philippines Central Bank on Monday increased the interest rate on treasury bills to 30% from 19% in a drastic effort to soak up billions of pesos spent by the government during President Ferdinand E. Marcos’ recent reelection campaign.

Calling it “strong medicine” for the nation, Jose B. Fernandez, the bank’s governor, said the boost in the interest rate was needed to halt a decline in the value of the nation’s currency and head off a renewed surge of double-digit inflation.

Independent economic analysts have said that both problems are a direct result of large expenditures for bribes paid for votes throughout the nation by Marcos’ ruling party during the campaign for the Feb. 7 presidential election.

Fernandez told reporters that the new measure is likely to discourage badly needed new investment in the country and leave the Philippines with another year of negative growth in 1986. He said it was made necessary chiefly because of an 8.6-billion peso ($430 million) increase in government spending between December and Feb. 10.

Vote-Buying Symposium

Asked whether that flood of new money was spent on Marcos’ campaign or in the form of bribes for votes, Fernandez smiled and said, “I’m saying ‘government expenditures. . . .’ The figures speak for themselves.”

Independent economic analysts at a symposium on vote buying estimated last week that between 5 billion and 10 billion pesos were spread around the country during the presidential campaign, most of it by the ruling party.

The analysts, economic forecasters from the independent Center for Research and Communication, concluded that the level of campaign spending alone has left the nation’s economy in worse shape than it was before the election, which Marcos called to test his mandate from the Filipino people and try to gain enough credibility to solve the country’s deep economic crisis.

Asked if the interest-rate boost, which the Central Bank hopes will entice Filipinos to deposit their cash in banks rather than hoard it for speculation, was a ploy to blunt Sunday’s call by Marcos’ challenger Corazon Aquino for a boycott of seven large banks owned by the president’s friends, Fernandez said the Central Bank’s action was “a coincidence.”

All to Benefit

Fernandez said that all banks should benefit from the interest boost, adding that if citizens wish to heed Aquino’s boycott call, they can deposit their money into any of dozens of banks not included in the boycott and receive the same interest rate.

But the Central Bank governor said he is concerned about a possible bank run resulting from the boycott call. Aquino urged the boycott as part of a program of nationwide civil disobedience against Marcos’ government and the president’s friends to protest an election that she says she would have won if it had not been for fraud, violence, vote-buying and manipulation of the final returns by the ruling party.

“It could happen,” Fernandez said of a possible bank run at any of the seven institutions, adding that his staff is closely monitoring withdrawals at these banks.

“We have a responsibility under the law” to rescue any bank in danger of going under, Fernandez said. “It’s important that the banking system be kept stable. We’ll be watching them.”

Fernandez said at the press conference that he would know within 24 hours whether the boycott was having any affect, but he added, “I don’t think that is something I would want to tell you.”

No Bank Lines

In a random sampling of bank branches around Manila on Monday, there was little evidence of heavy withdrawals at what Aquino has called the “crony banks.” There were no long lines at the teller windows, and, at one, a branch of the United Coconut Planters Bank owned by Marcos’ friend Eduardo Cojuanco, an official who would not give his name said withdrawals were actually lower than on a normal Monday.

Asked how Aquino intends to enforce or monitor her boycott call, Teodoro Locsin, one of her senior advisers, said Monday: “I don’t know. We haven’t really worked it out yet.”

While Aquino herself claimed during a Monday night radio broadcast that she was monitoring the effects of her boycott call, she did not say how.

There also seemed to be little heed Monday of Aquino’s call for Filipinos to boycott the products of the San Miguel Corp., another “crony-owned” corporation, which manufactures two of the most popular products in the Philippines--San Miguel beer and Coca-Cola.

At restaurants, cafes and nightclubs throughout Manila, Filipinos were seen drinking beer and Cokes as usual, and beverage managers reported no change in consumption patterns.

Circulations Steady

Circulation managers at the four daily newspapers that Aquino said should be shunned because they are “blatantly biased crony papers” reported no change in their figures for Monday. One of the papers, the Bulletin Today, even sprinkled three advertisements throughout its pages reading, “Drink San Miguel Beer.”

In her Monday night radio broadcast over Radio Veritas, a Roman Catholic station, Aquino pledged to “apply increasing pressure” on the Marcos regime, and she said she is considering calling for a taxpayers’ boycott and other measures if the protests fail to make Marcos resign.

“Let us give these nonviolent protests of ours time to show their result,” she said, quickly adding, “Never will I allow myself or my name to be used for any demonstration that speaks of violence.”

It remains to be seen, however, how much income Filipinos will have available to spend on boycotted goods and other products this year.

Central Bank governor Fernandez made it clear Monday that 1986 will be, at best, yet another difficult year financially for all citizens, who have lived with growing unemployment and poverty since the economic crisis began after the August, 1983, assassination of Aquino’s husband, Benigno S. Aquino Jr.