Bangko Sentral ng Pilipinas Governor Benjamin Diokno (File photo)
MANILA – Liquidity infusion by the Bangko Sentral ng Pilipinas (BSP) to the domestic financial system has reached about PHP1.9 trillion to date and this amount is aimed at helping ensure robust economic activities.
In a message to journalists Friday, BSP Governor Benjamin Diokno said the amount that the central bank has injected so far accounts for about 9.6 percent of the economy’s annual output.
“The BSP is working hand-in-hand with the national government to ensure that the coronavirus pandemic will leave little permanent scar on the Philippine economy and its people,” he added.
These liquidity infusions come in the form of cuts in the BSP’s key policy rates and banks’ reserve requirement ratio (RRR) as well as cash advances.
To date, the central bank’s key policy-making Monetary Board (MB) has reduced the BSP’s key rates by a total of 175 basis points.
Also, universal and commercial banks’ (U/KBs) reserve requirement ratio (RRR) have been reduced by 200 basis points, which released about PHP200 billion into the system.
Similarly, the BSP has slashed thrift banks (TBs) and rural and cooperative banks’ (RCBs) RRR by 100 basis points.
BSP has also allowed, for a limited time, RCBs’ lending to micro, small, and medium enterprises (MSMEs) as RRR compliance to allow these banks to have additional available liquidity that they can extend as loans to the MSME sector.
Aside from these, the central bank earlier extended PHP300 billion cash to the national government through a repurchase deal.
Under the deal, BSP will purchase government securities from the Bureau of the Treasury (BTr) and the latter can pay it off within three months, with an option to extend the repayment period for another three months.
Diokno said the national government has fully settled this amount last September 29.
The MB has also approved the national government’s request for a PHP540-billion provisional advance from the BSP and Diokno said this amount “is targeted to be released first week of October 2020.”
BSP’s Charter authorizes the central bank to extend financial support to the national government with an amount that is equivalent to 20 percent of the latter’s average revenues in the past three years, which to date is about PHP540 billion. (PNA)