The Bangko Sentral ng Pilipinas (BSP) is ready to lend more money to the government that can be used for its coronavirus pandemic response.
In a virtual briefing on Thursday, BSP Governor Benjamin Diokno announced that the government can borrow as much as P280 billion more from the central bank.
The amount is 10 percent of the Bangko Sentral’s income for the last three years, he said, adding that the loan was allowed under Republic Act 7653, or the “New Central Bank Act.”
“That’s one year, long-term and renewable for another year with the approval of the Monetary Board. But that has to be accessed within the next two years. It’s just really focused on Covid-19 pandemic (response),” the central bank chief said.
Last week, Diokno announced that the BSP had extended a fresh P540-billion zero-interest loan to the government for use as budgetary support.
This loan — approved by the Monetary Board, the regulator’s policymaking body, last
December 28 — would provide the government an immediate cash source to sustain its pandemic response amid lower revenue collections.
Last March, the central bank bought P300 billion worth of government securities to support state programs aimed at countering the health crisis’ impact.
The purchase was allowed under a repurchase agreement signed by the BSP and the Bureau of the Treasury, with a maximum repayment period of six months. The infusion was equivalent to 1.6 percent of the country’s gross domestic product.
Such Bangko Sentral measures to support that government’s financing requirements do not constitute a long-term source of funding for public spending, according to Diokno.
“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.