The Philippines: Government borrows PHP540bn from BSP; possibility of Bayanihan III

• THE CENTRAL BANK approved another short-term loan worth PHP540bn to the National Government to boost its coffers as the pandemic continues. This is the fourth time the National Government has received support from BSP.
• Under Republic Act 7653 or The New Central Bank Act, the BSP is allowed to lend 20% of its average revenue to the government, which is equivalent to PHP540bn. This was increased to 30% or up to PHP850bn by the Republic Act 11494 or the Bayanihan to Recover as One Act.
• Economic managers have previously ignored calls for another stimulus package, but seem to be reconsidering after Fitch’s downgrade of the nation to a “negative” rating outlook.
• Socioeconomic Planning Secretary Karl Kendrick T. Chua said there are some provisions under Bayanihan III that may be considered if there are extra funds available
• The Development Budget Coordination Committee (DBCC) will be meeting on 19 Jul 21, and an official has said discussions on Bayanihan III could be a part of the DBCC’s agenda. Bayanihan III, worth PHP400bn, has been approved by the House of Representatives, but remains pending at the Senate committee level.
• Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno, however, said he does not believe Bayanihan III can lift the country’s rating outlook.
• “I disagree, however, that legislating Bayanihan III will help us to improve our ratings prospects after Fitch downgraded the country’s outlook to ‘negative’ from ‘stable’,” he said.
• Meanwhile, others have cautioned that having the central bank provide substantial cash support to the National Government may cause risk-off sentiment from investors if they see the move already going beyond what they expected to be a temporary means of support from the BSP.
• Mr. Diokno said the central bank will retain its accommodative policy, and will assess data to avoid a premature withdrawal of support that may hurt recovery.

External Link : https://www.bworldonline.com/natl-government-borrows-another-p540b-from-bsp/

External Link : https://www.bworldonline.com/economic-team-may-rethink-stimulus/