PH may borrow additional 280 billion yen cash advance from BSP for COVID-19 response fund
Metro Manila (CNN Philippines, January 14) – The Philippine government has the option of borrowing an additional 280 billion yen from Bangko Sentral ng Pilipinas if needed. increase COVID-19 response funds, said BSP governor Benjamin Diokno.
“Right now, the (Monetary) Council recently approved the 540 billion yen on December 28 last. They haven’t accessed it yet, I think they will access it soon,” Diokno told reporters at the time. of its weekly GBED interviews.
“On top of that, they can actually ask for 10% (more),” he added.
Bangko Sentral has fulfilled its mandate as lender of last resort by granting interest-free “interim advances” to the Treasury Office since the start of the pandemic. So far, the state has borrowed 1.38 trillion yen from the national government through three lines of credit since March 2020.
Diokno said the recently amended BSP charter allowed the monetary authority to lend up to 20% of the government’s average annual income over the past three years, while the additional 10% allowance came from the Bayanihan to recover in one act – a stimulus package for COVID-19 response. These lines of credit are temporary.
Diokno called the arrangement “bridge financing” rather than debt.
“There is a great need for additional spending like SAP or ayuda and of course we have to invest in health facilities, we have to invest in health care,” he said. “Of course, the national government will need a lot of funding.”
“This will force the national government to borrow money, and then it will raise interest rates too high,” Diokno added. “Instead of spending 100 billion yen on the interest rate service … that’s the importance of this bridging financing.”
President Rodrigo Duterte has repeatedly lamented the lack of funds for emergency response measures as the global coronavirus crisis continues. The state is also using foreign loans from the Asian Development Bank, the World Bank and the Chinese-led Asian Infrastructure Investment Bank to finance purchases of COVID-19 vaccines.
During this time, the aggregate public debt has reached 10.13 trillion yen in November 2020.