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DOF to borrow less from BSP next year

By Kris Crismundo

December 9, 2021, 4:20 pm

<p>Finance Secretary Carlos Dominguez III <em>(File photo)</em></p>

Finance Secretary Carlos Dominguez III (File photo)

MANILA – The Department of Finance (DOF) on Wednesday said the national government (NG) will borrow lesser amount from the Bangko Sentral ng Pilipinas (BSP) in 2022.

In a statement, DOF said the NG has informed the Monetary Board of a liquidity support request of PHP300 billion next year, which is lower than the current borrowing amounting to PHP540 billion.

“(W)e are on track with the unwinding of liquidity support on firmer evidence of return to economic strength,” DOF Secretary Carlos Dominguez III said.

He added that the PHP300-billion provisional advances will ensure sufficient resources for the NG to back the country’s “promising but still fragile recovery”.

“We have seen economic recovery already begin to take root as more businesses embark on a safe reopening with the successful rollout of the government’s mass vaccination program,” the DOF chief said in his letter to BSP Governor Benjamin Diokno.

The PHP300-billion debt to be requested in January 2022 will be interest-free and has three-month maturity with another three-month extension.

“Funds granted under this short-term lending arrangement are not used for direct financing of government operations but serve as a liquidity gap measure that ensures the government will be able to undertake large spending in advance of anticipated revenue collections or regular borrowing proceeds,” DOF said.

As the national government plans to borrow early next year, the DOF will repay in advance its PHP540-billion debt to the central bank.

DOF tapped the PHP540-billion provisional advances in July 2021, with maturity in October 2021 and extended to January 2022.

But the finance department will pay the debt ahead on Dec.10, “on the basis of favorable cash position brought about by promising revenue collections and overwhelming support in the recent Retail Treasury Bond (RTB) offering”.

The World Bank earlier has recommended to the government to safeguard its fiscal policies to support the country’s economic recovery amid the threats of the emergence of new variants of the coronavirus disease 2019 (Covid-19).

It added that the government should ensure long term fiscal sustainability to support growth. (PNA)

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