Central bank OKs another ₱540B loan to PH gov't to boost available funds

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Metro Manila (CNN Philippines, January 6) — The Bangko Sentral ng Pilipinas has granted a third zero-interest loan to the national government worth ₱540 billion to boost available funds for COVID-19 response.

BSP Governor Benjamin Diokno said Wednesday that the central bank's Monetary Board approved last December 28 the grant of another credit line to the Bureau of the Treasury. It is effectively a renewal of sorts, as the state earlier borrowed a similar amount in September which fell due last month.

"The national government needs it. As a result of COVID, revenues went down because the economy is weak... At the same time, there are huge expenditure demands on the part of the national government," Diokno said during the Kapihan sa Manila Bay forum.

The BSP chief and former Budget secretary said the funding boost will replace money spent on cash aid, upgrade and maintenance of health facilities, and additional testing, to name a few.

"That costs a lot of money. As a result, they need immediate cash so that is the purpose of that bridge financing," Diokno added.

Data from the Budget Department show that the Duterte government has spent ₱500.7 billion on various COVID-19 response efforts as of December 19. The amounts were drawn from existing and realigned items under the 2019 and 2020 national budget laws.

READ: Duterte extends validity of 2020 budget, Bayanihan 2

The central bank has effectively lent ₱1.38 trillion to the national government since March, as it serves its mandate as lender of last resort.

President Rodrigo Duterte has repeatedly lamented lack of funds for emergency response measures as the global coronavirus crisis drags on.

The loans are on top of the ₱40.5 billion cash dividend remitted by the BSP for 2020, and an estimated ₱2-trillion liquidity boost provided through various policy relaxations and lower interest rates introduced in the past year.

State revenues are down by a tenth from a year ago, with collections settling at ₱2.62 trillion against ₱3.69 trillion expenditures as of November 2020. This left a ₱1.07-trillion funding gap, according to Treasury data. 

Meanwhile, total debts have reached ₱10.13 trillion as of November 2020, the Treasury added.

More loans are planned for 2021 from local and foreign investors as well as international lenders like the World Bank and Asian Development Bank. The big-ticket loans will fund priority infrastructure projects and the purchase of coronavirus vaccines.

READ: Gov't secures $12.7B for COVID-19 response from foreign sources as of mid-December