BSP remits P15 billion to national coffers

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has transmitted P15 billion in dividends to the national coffers to boost the government’s war chest against the COVID-19 pandemic.

BSP Governor Benjamin Diokno said the remittance forms part of the central bank’s extraordinary liquidity measures.

The amount was on top of the P20 billion advance dividends transmitted in March last year to augment the funds against the deadly disease.

Under its amended charter, the BSP is no longer mandated to remit its dividends to the central government.

President Duterte signed Republic Act 11211 in February 2019, 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 exempted the central bank from paying taxes on income derived from governmental functions.

However, the BSP decided to defer the application of the dividends to the central bank’s capital in order to use the funds to support the government’s battle against the COVID-19 pandemic.

Diokno said in a speech during the 2021 joint general assembly of the Financial Markets Association, Fund Managers Association of the Philippines, Investment House Association of the Philippines, Money Market Association of the Philippines, National Association of Securities Broker Salesmen Inc., and Trust Officers Association of the Philippines that the BSP continues to keep up with the whole-of-government tempo to address the global health crisis.

The BSP chief said other extraordinary liquidity measures undertaken by the central bank include the P540 billion provisional advances to the national government as well as the purchase of government securities in the secondary market.

To boost market confidence on cost and availability of credit resources, Diokno said the BSP slashed interest rates by 200 basis points last year, bringing the benchmark rate to an all-time low of two percent and lowered the bank reserve requirement ratio.

The regulator, he added, also counted newly granted loans to micro, small and medium enterprises (MSMEs) as well as large corporations severely affected by the pandemic as alternative compliance to the level of deposits banks are required to keep as reserves with the central bank.

Diokno said the central bank has also extended regulatory and operational relief measures to maintain stability of the financial system and ensure public access to financial services were implemented.

The BSP issued time-bound and targeted regulatory and operational relief measures to encourage BSP-supervised financial institutions (BSFIs) to continue their support to the economy, particularly the MSME sector.

“Indeed, we have done much in implementing extraordinary measures. Yet our action will remain anchored to our mandate of promoting price and financial stability, working on appropriate policy responses as necessary,” he said.

Diokno said the country has already made solid economic strides amid the trying times as it exited the pandemic-induced recession with a strong 11.8 percent gross domestic product (GDP) growth in the second quarter of the year, from a 3.9 percent contraction in the first quarter.

“While we move toward a post-COVID-19 economy, we will continue to complement the national government’s broad-based pandemic-relief initiatives, and provide the needed liquidity to support economic activity and maintain the favorable market sentiment,” he said.