National Government to borrow P540 billion for BSP

MANILA, Philippines — The national government is borrowing an additional P540 billion from the Bangko Sentral ng Pilipinas (BSP) to beef up its war chest to fight the COVID-19 pandemic.

BSP Governor Benjamin Diokno told reporters the national government has requested a provisional advance from the central bank.

“The national government has requested for fresh provisional advance of P540 billion to be settled on or before Dec. 29 at zero interest,” Diokno said.

He said the request would be submitted to the Monetary Board for approval soon.

The BSP chief said the fresh borrowings would be used for budgetary support and to plug the widening budget shortfall as a result of the pandemic.

Diokno said terms of the request would be shared once approved by the Monetary Board.

Last March 24, the BSP launched a P300-billion stimulus package to revive the pandemic-stricken economy.

It also entered into a repurchase agreement with the Bureau of the Treasury to lend as much as P300 billion to the national government, at zero interest, with a maximum repayment period of six months.

On top of the repurchase agreement, the BSP has been purchasing government securities in the secondary market.

The recently signed Republic Act 11494 or the Bayanihan to Recover as One (Bayanihan 2) raised the cap on the amount the BSP could advance to the national government to 30 percent of its earnings from the previous 20 percent.

In other words, the BSP could provide as much as P850 billion instead of the previous ceiling of P540 billion.

ING Bank Manila senior economist Nicholas Mapa earlier said the new law signed by President Duterte on Sept. 11 opened the door for more burden-sharing for the central bank.

“The advance was made via a three-month repurchase agreement (extendable to six months) that will expire at the end of this month and with the timely passage of Bayanihan 2, this opens the door for a more hefty burden sharing arrangement between the fiscal and monetary authorities,” Mapa said.

The Duterte administration is expected to leave behind a record P13.7 trillion in debt as it struggles to fight COVID-19 and revive the economy.

Data from the Treasury showed the government borrowed P1.86 trillion from domestic creditors through the sale of Treasury bills, Treasury bonds and Retail Treasury Bonds, as well as P481.2 billion from the offshore debt market from January to July.