Connect with us

Hi, what are you looking for?


BSP grants new P540-B loan to gov’t

By Luz Wendy T. Noble, Reporter

THE Bangko Sentral ng Pilipinas (BSP) has granted a fresh P540-billion loan to the National Government to boost pandemic relief funds.

“We just approved it last Dec. 28. [It is a] done deal,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said in an online forum on Wednesday.

This is the third time the National Government has received support from the central bank, which has extended advances of P300 billion in March and P540 billion in October.

The National Government had made the request for a new loan from the BSP after it repaid its previous P540-billion loan on Dec. 17.

Mr. Diokno said they allowed another direct advance “because the National Government needs it” at a time when revenues are down while expenditures are on the rise.

“I call it bridge financing. In the meantime that they do not have the taxes and the cash to pay for the COVID-related programs, then we lend them P540 billion,” Mr. Diokno said.

He said the direct advance will be a “non-interest bearing loan” with the same terms as the previous advance — payable within three months and extendable for settlement for another three months.

Under Republic Act No. 11494 or the Bayanihan to Recover as One Act, the central bank is authorized to lend the National Government an equivalent of 30% of its average revenue or P850 billion. The previous cap was set at 20% of its average annual revenue.

The BSP chief said the National Government can make another request for direct advances given it is within the provision of the law.

“They have to pay first, whatever we lent them. And then, we consider another request,” Mr. Diokno said.

The National Government’s gross borrowings in the first 11 months of 2020 reached P3.048 trillion. In November alone, gross borrowings skyrocketed 764% to P124 billion from P14.346 trillion. This year, the government targets to borrow P3 trillion.

The budget deficit swelled to P108.2 billion in November, surging by 148.29% from the P43.6-billion gap a year earlier, as revenues dropped alongside a rise in government expenditures.

Aside from its direct advances to the Bureau of the Treasury, Mr. Diokno has said they have been purchasing government securities in the secondary market.

“This is part of BSP’s immediate monetary policy response to help shore up domestic liquidity, and restore market players’ confidence to continue participating in primary auctions,” Mr. Diokno said.

A World Bank report released on Monday stressed the need to coordinate conventional and unconventional monetary policies.

“Monetary policy alone cannot prevent rising concerns over solvency associated with elevated government borrowing yields,” the report said.

While non-conventional policies were instrumental in restoring market functioning following the instability caused by the COVID-19, World Bank said their medium- and long-term effects in emerging and developing economies have yet to be fully assessed.

“Structural, financial, and fiscal reforms are needed to reduce the risk of debt distress in response to the COVID-19 pandemic over the longer-term,” it added. — with Beatrice M. Laforga

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



Start-ups backed by venture capital (VC) could be wiped out in droves this year as cash dries up and investors turn off the taps,...


Next has bought the Cath Kidston brand name for £8.5m, after the vintage-inspired British retailer fell into administration for the second time in two...


A London-based corporate intelligence specialist set up by former spies has launched an investment fund to support high-growth companies with the knowledge that it...


Cheap imported products made in polluting factories abroad may face new green import taxes and middle-income families will be given grants to make their...


Start-up organisation Tech Nation said it is in talks to sell its brand to Brent Hoberman’s Founders Forum today as it prepares to wind...


The Philippine Franchise Association (PFA) will be holding a Regional Franchise Show featuring more than 60+ franchise brands in SM Lanang Premier on March...

You May Also Like


Browsing history makes referring to sites and pages you’ve visited in the past seamless. It’ll help you recall what page you checked out on...


The minute that any question pops into your head, you can simply ask Google. No longer do we have to pour over books and...


Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...


Insomnia is the most common sleep disorder in the global population. Therefore, it is a problem that many people suffer or have suffered throughout...

Disclaimer:, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.