The national government has infused new capital to the Development Bank of the Philippines (DBP) to provide additional buffer for the state-lender’s coronavirus response programs.
In a statement, Finance Secretary Carlos G. Dominguez III said the government has recently released P12.5 billion in capital infusion to DBP, the country’s eighth largest bank in terms of assets.
Dominguez said the fresh capital should provide additional funds for DBP’s low-interest, easy-to-pay loans to the transport, healthcare, education sectors along with micro, small and medium enterprises (MSMEs) and other affected industries.
Dominguez also said the additional funds should allow DBP to act as a wholesale bank, which will buy the loans of smaller banks, cooperatives and other institutions that were affected by the coronavirus-induced crisis.
Of the P12.5-billion appropriations approved by President Duterte, he said P5 billion was earmarked for the transportation sector covering 68 transport cooperatives as beneficiaries and P2 billion for healthcare assistance to 20 hospitals.
DBP is also mandated to set-aside P500 million for 17 schools and P5 billion for 230 MSMEs and other businesses, Dominguez said.
“This P12.5-billion fund will help provide liquidity support to COVID-19 hit sectors,” Dominguez said.
“This will have a large multiplier effect in economic activity, given that every peso pumped into GFIs [government financial institution] like the DBP will generate around 10 times its value in credit,” he added.
The President’s approval of the fund release is in accordance with the provisions of Republic Act (RA) No. 11494 or the Bayanihan to Recover As One Act (Bayanihan 2).
RA 11519 was signed by the President on Dec. 29, 2020 to extend the validity of appropriations under the Bayanihan 2 law for release, obligation and disbursement until June 30, 2021.
The Bayanihan 2 law was originally set to lapse last Dec. 19.