The Bangko Sentral ng Pilipinas (BSP) is not inclined to increase the amount it lends to the national government on the back of the improving coronavirus situation in the country.
BSP Governor Benjamin E. Diokno said Thursday, Oct. 14, that he does not see a need to raise the direct cash advance limit for the Department of Finance (DOF).
Diokno explained that in terms of COVID-19 situation, the country has already “turned the corner,” noting that daily infections have been cut by half while the economy is set to further reopen.
“I'm positive about this,” Diokno said at a virtual briefing. “I don't see any need for additional bridge financing, other than the P514 billion which is currently made available to the Department of Finance.”
In July, the DOF sought P540 billion in short-term loan from the BSP to boost the government’s war chest to fight the prolonged pandemic.
Since the onset of the COVID-19 crisis, the BSP has already extended P1.92 trillion to the national government.
The central bank first granted a credit line to the DOF through the Bureau of the Treasury in March initially amounting to P300 billion, and was fully settled by the end of September last year.
The second provisional advance of P540 billion was extended in October 2020 and was fully settled, but also renewed in December last year.
In June, the government paid the P540 billion loan secured in December, but was again renewed the following month.
Diokno said the provisional advance is in line with whole-of-government efforts to recovery from the pandemic-induced recession.
“The bridge financing that is currently being used is based on the amended Central Bank act. Now under the Bayanihan 2, there is an additional provision for bridge financing authorized by Congress, that was not availed of by the Department of Finance,” Diokno said.
Under the Central Bank act, or Republic Act 7653, the BSP is allowed to lend 20 percent, or P540 billion, of its average revenue to the government.
However, the 20 percent provision under the Central Bank Act was raised to 30 percent, or up to P850 billion, by the Republic Act 11494 or the Bayanihan to Recover as One Act, also known as the Bayanihan 2.