The Philippines: Gov’t mulls fresh BSP bond purchases for COVID-19 fight

  • The Duterte administration is “studying” a new round of bond purchases from the central bank when existing securities mature in Oct 20, National Treasurer Rosalia de Leon said on 14 Sep 20.
  • The amount involved is yet to be determined, but De Leon said the government “has limits” on Treasury papers that can be sold to the Bangko Sentral ng Pilipinas (BSP). Under existing repurchase contracts entered on Mar 20, BSP purchased PHP300bn in 3-month securities, renewed in Jun 20 and will mature in Sep 20.
  • In a separate Viber message, BSP Governor Benjamin Diokno also expressed openness to lend further to the government. “NG (National Government) will settle the PHP300bn it got from the repo arrangement before it can enter into another such arrangement,” he said.
  • The likelihood of BSP funneling money to the government anew adds to the central bank’s growing role in what appears to be a long and winding pandemic recovery. But is also raises risks of damage to the central bank’s inflation-fighting credibility, according to S&P Global Ratings, a debt watcher.

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