The Philippines: BSP ready to lend additional PHP280bn to national government

  • The government can still borrow an additional PHP280bn from monetary authorities to augment its war chest against the pandemic, the Bangko Sentral ng Pilipinas (BSP) said on 14 Jan 21.
  • In a virtual press briefing, BSP Governor Benjamin Diokno said Republic Act 11494 or the Bayanihan to Recover as One Act (Bayanihan 2) has given the central bank the authority to provide additional direct provisional advances to the national government.
  • This would allow the BSP to extend more COVID-19 funding that is equivalent to not more than 10% of its average income from 2017 to 2019.
  • According to the BSP chief, the additional allowance is on top of the amount that can be lent by the central bank as provided in its charter, which is equivalent to 20% of its average income in preceding fiscal years or about PHP540bn.
  • This would bring the total amount of financing the government can access from the central bank to PHP820bn until the period indicated in the Bayanihan 2 Law.
  • However, he said the national government has not yet sought out the additional PHP280bn in funding.
  • “We also reiterate that the BSP’s measures to support the national government’s financing requirements do not constitute a long-term source of funding for government spending. These measures are not expected to result in a permanent increase in the monetary base or in significant inflationary pressures and as such, are not expected to affect the conduct of monetary policy,” he said.
  • Diokno said the BSP would continue to monitor developments and respond to the needs of the economy to limit any scarring arising from the health crisis.

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