BSP advances P20 billion dividends to boost COVID-19 war chest

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) yesterday transmitted P20 billion to the national coffers to further boost the government’s war chest versus the coronavirus disease 2019 (COVID-19) pandemic.

The central bank made the advance dividend payment through direct credit to the Treasurer of the Philippines-Treasurer Single Account, which is maintained with the central bank, even through its amended charter has exempted it from paying dividends to the national government.

President Duterte signed Republic Act 11211, amending RA 7563 or the New Central Bank Act of 1993. It allowed the BSP to raise its capitalization to P200 billion from P50 billion, to be sourced from dividends declared by the BSP in favor of the national government.

The new charter also exempts the central bank from paying taxes on income derived from governmental functions.

Considering this extraordinary time, BSP Governor Benjamin Diokno said the central bank’s Monetary Board approved to defer the application of the BSP’s dividends for 2019 to its capital and remit P20 billion advance or partial dividends to support the national government’s programs during this enhanced community quarantine due to COVID-19.

“We are one government. We are one Filipino nation. And we, at the BSP, shall support all efforts to fight this once-in-a-lifetime pandemic and keep the economy afloat,” Diokno said.

The advance dividends constitute 87 percent of the estimated total dividends based on the BSP’s unaudited financial statements for the year 2020.

Early this month, the central bank remitted an all-time high P21.48 billion in dividends to the national coffers in support of the government’s social programs and projects.

According to the BSP, it has transmitted more than P26.96 billion in dividends to the national government under the Duterte administration.

The central bank has unleashed a P500-billion stimulus package to help the country survive the negative effects of the COVID-19 pandemic.

“The BSP has and is ready to employ the necessary tools in its arsenal to address the impact of COVID-19 while staying true to its mandate,” Diokno added.

The BSP has arranged for the purchase of government securities from the Bureau of the Treasury (BTr) under a repurchase agreement in the amount of P300 billion.

It has also approved a reduction in the reserve requirement ratios of universal and commercial banks effective March P30 to release about P200 billion in additional liquidity into the system allowing banks to lend more and to boost economic activity.

The BSP’s Monetary Board has so far slashed interest rates by 75 basis points this year including the deep cut of 50 basis points last March 19 to boost market confidence and soften the impact of COVID-19.

In all, the central bank has reduced interest rates by 150 basis points since May last year, almost reversing a tightening cycle that saw rates jump by 175 basis points in 2018 due to inflation breach.

The BSP chief pointed out the regulator also enabled continued access to banking institutions and extended regulatory relief measures to the banking sector to allow stakeholders to extend the greatest possible help to the economy and Filipinos.