BSP renews P540-B loan to NG


The Bangko Sentral ng Pilipinas (BSP) has renewed a P540-billion provisional advances to the National Government for its fight against the COVID-19 pandemic, the fourth time that the Monetary Board extended the crisis response.

BSP Governor Benjamin E. Diokno announced Thursday (July 15) that the Monetary Board has approved the fresh loan as part of its unconventional measures.

BSP Governor Benjamin E. Diokno

“We recently extended our arrangement with them (it’s) P540 billion. We just renewed the assistance to the government (after) they prepaid it and they asked for a renewal,” said Diokno. The Monetary Board approved the new loan last week.

The last time the BSP extended the same amount of provisional advances was December 28, 2020 to boost the government’s resources for COVID-19 response.

The BSP Charter, specifically Section 89 of Republic Act No. 7653 (the “New Central Bank” Act) as amended, allows the BSP to grant a “lifeline support to the government in times of crisis, with proper safeguards,” said Diokno last week.

“This facility, which allows short-term financing, does not serve as a long-term source of funds for the government because they are temporary, time-bound, and capped,” he added.

The first provisional loan was P300 billion last March 2020, which was undertaken as a repurchase agreement with the Bureau of the Treasury (BTr). The BTr fully settled the loan by end-September 2020 as this was payable after three months but can be renewed for another term of three months.

The BSP can advance to the government a max of 20 percent of the National Government average income for the last three years, or 2017 to 2019. This amounts to about P564 billion.

The second “Bayanihan To Recover As One” Act enabled the National Government to take out additional cash advances from the BSP which will be 10 percent of the average income of the government for the last three years. This is about P282 billion and has a longer term of one year.

Both the BSP law and the second Bayanihan Act combined, has made it possible for the National Government to avail of provisional advances in the amount of P846 billion, of which P540 billion has been approved.