BSP Governor Benjamin Diokno (File photo)
MANILA – The Bangko Sentral ng Pilipinas (BSP) extended another PHP540-billion cash advance to the national government last December to help boost its cash flows.
In an online briefing Wednesday, BSP Governor Benjamin Diokno said the central bank’s policy-making Monetary Board (MB) approved December 28 the fresh cash boost, which he termed as bridge financing, to help fund the government’s pandemic-related expenses.
“The national government needs it,” he said, citing its requirement to provide subsidies to affected individuals and sectors, ensure medical facilities are put in place, and there is funding to procure coronavirus disease 2019 (Covid-19) vaccines.
Diokno said there is also a need to boost the government’s fiscal health since revenues are also affected by the pandemic.
“In the meantime that they do not have the access and the cash to pay for Covid-related programs, then we lent them PHP540 billion. That is allowed under the law,” he said, citing the fund boost is non-interest bearing.
This is the second time the central bank extended a PHP540-billion provisional advance to the national government.
The first one was approved by the MB in October last year.
Under the BSP’s Charter, the central bank is authorized to extend cash advances to the national government but this should be equivalent to the latter’s average revenues in the last three years, which currently amounts to PHP540 billion.
In terms of liquidity boost, the latest cash advance is the third for 2020 after the PHP300-billion repurchase deal between the BSP and the national government last March.
Under the deal, the BSP will purchase PHP300 billion worth of government securities, which the Bureau of the Treasury (BTr) can redeem within three months.
The repayment period was allowed for extension for another three months. The BTr fully redeemed the debt paper last September. (PNA)
