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Government must pay BSP funding rise in advance: Diokno

MANILA – The government will pay the Bangko Sentral ng Pilipinas (BSP) in advance for the PHP300 billion bridge loan it received in January 2022.

In a video conference on Thursday, BSP Governor Benjamin Diokno said, “The National Government will fully refund these debts tomorrow, 20 May 2022, ahead of the maturity timetable of 11 June 2022.”

The BSP’s provisional advance to the national government in January was less than the PHP540 billion it had lent to the latter multiple times in 2020 and 2021 as part of its pandemic-related actions.

The BSP is required by its charter, Republic Act 7653 or the New Central Bank Act, to provide the national government with a liquidity boost equal to 20% of the latter’s average income in previous years.

The first was a PHP300 billion reverse repurchase arrangement in March 2020, which was made during the outbreak. The BSP would purchase PHP300 billion in government securities under the agreement, which is redeemable for three months but can be extended for up to six months.

Following that, three PHP540 billion interim improvements were made till 2021.

The cash reserves were set aside to cover the government’s pandemic-related costs.

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