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The Bangko Sentral ng Pilipinas (BSP) is not inclined to increase the amount it lends to the national government due to the improving coronavirus situation in the country.
BSP Governor Benjamin E. Diokno said Thursday, October 14, that he saw no need to increase the limit on direct cash advances for the Department of Finance (DOF).
Diokno explained that in terms of the COVID-19 situation, the country has already “passed the milestone”, noting that daily infections have been cut in half as the economy is set to reopen further.
“I’m positive about it,” Diokno said in a virtual briefing. “I see no need for additional bridging funding, other than the 514 billion pesos currently made available to the Ministry of Finance.”
In July, the DOF requested a short-term loan of 540 billion pesos from the BSP to bolster the government’s war fund to fight the protracted pandemic.
Since the start of the COVID-19 crisis, the BSP has already granted 1.9 trillion pesos to the national government.
The central bank first granted a line of credit to the DOF through the Treasury Office in March with an initial amount of 300 billion pesos, and was fully settled at the end of September last year. .
The second interim advance of 540 billion pesos was extended in October 2020 and was fully settled, but also renewed in December of last year.
In June, the government paid off the 540 billion peso loan guaranteed in December, but was renewed again the following month.
Diokno said the interim advance is in line with government-wide efforts to recover from the pandemic-induced recession.
“The bridge financing currently in use is based on the amended Central Bank law. Now, under Bayanihan 2, there is an additional provision for bridge financing authorized by Congress, which has not been used by the Ministry of Finance, ”Diokno said.
Under the Central Bank Law, or Republic Law 7653, the BSP is allowed to lend 20%, or 540 billion pesos, of its average income to the government.
However, the 20 percent provision under the Central Bank Act was increased to 30 percent, or up to 850 billion pesos, by Republic Act 11494 or the Bayanihan to Recover as One Act, also known as Bayanihan 2.
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