By Luz Wendy T. Noble, Reporter
THE Bangko Sentral ng Pilipinas (BSP) has granted a fresh P540-billion loan to the National Government to boost pandemic relief funds.
“We just approved it last Dec. 28. [It is a] done deal,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said in an online forum on Wednesday.
This is the third time the National Government has received support from the central bank, which has extended advances of P300 billion in March and P540 billion in October.
The National Government had made the request for a new loan from the BSP after it repaid its previous P540-billion loan on Dec. 17.
Mr. Diokno said they allowed another direct advance “because the National Government needs it” at a time when revenues are down while expenditures are on the rise.
“I call it bridge financing. In the meantime that they do not have the taxes and the cash to pay for the COVID-related programs, then we lend them P540 billion,” Mr. Diokno said.
He said the direct advance will be a “non-interest bearing loan” with the same terms as the previous advance — payable within three months and extendable for settlement for another three months.
Under Republic Act No. 11494 or the Bayanihan to Recover as One Act, the central bank is authorized to lend the National Government an equivalent of 30% of its average revenue or P850 billion. The previous cap was set at 20% of its average annual revenue.
The BSP chief said the National Government can make another request for direct advances given it is within the provision of the law.
“They have to pay first, whatever we lent them. And then, we consider another request,” Mr. Diokno said.
The National Government’s gross borrowings in the first 11 months of 2020 reached P3.048 trillion. In November alone, gross borrowings skyrocketed 764% to P124 billion from P14.346 trillion. This year, the government targets to borrow P3 trillion.
The budget deficit swelled to P108.2 billion in November, surging by 148.29% from the P43.6-billion gap a year earlier, as revenues dropped alongside a rise in government expenditures.
Aside from its direct advances to the Bureau of the Treasury, Mr. Diokno has said they have been purchasing government securities in the secondary market.
“This is part of BSP’s immediate monetary policy response to help shore up domestic liquidity, and restore market players’ confidence to continue participating in primary auctions,” Mr. Diokno said.
A World Bank report released on Monday stressed the need to coordinate conventional and unconventional monetary policies.
“Monetary policy alone cannot prevent rising concerns over solvency associated with elevated government borrowing yields,” the report said.
While non-conventional policies were instrumental in restoring market functioning following the instability caused by the COVID-19, World Bank said their medium- and long-term effects in emerging and developing economies have yet to be fully assessed.
“Structural, financial, and fiscal reforms are needed to reduce the risk of debt distress in response to the COVID-19 pandemic over the longer-term,” it added. — with Beatrice M. Laforga