Central bank approves ₱300-B fund for COVID-19 response via bond deal with Treasury

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The Monetary Board has approved a ₱300-billion bond buying program with the Treasury to boost funds in combatting the novel coronavirus outbreak.

Metro Manila (CNN Philippines, March 23) — The central bank has opened a ₱300-billion bond buying program with the Treasury to boost funds in combatting the novel coronavirus outbreak.

The Monetary Board announced on Monday that it has approved a bond repurchase deal between the Bangko Sentral ng Pilipinas and Bureau of the Treasury. Through the agreement, BSP will buy debt papers from the Treasury, which the latter must repay within six months.

"The fund generated from the said agreement shall be used to support the national government’s programs to counter the impact of COVID-19," the body said in a statement.

With the deal, the BSP is effectively lending cash to the national government, which it can use for immediate purchases and fund releases to soften the impact of the pandemic.

READ: BSP launches 'assertive' rate cut to boost economy amid COVID-19 pandemic

On Sunday, Albay Representative Joey Salceda said Congress will likely give President Rodrigo Duterte the power to realign about ₱275 billion of funds under the 2020 national budget through a bill granting emergency powers, which is being tackled under a special session this week.

"This arrangement is the most cost-effective way for us to provide an extra lifeline to the national government to support the programs to fight this pandemic," National Treasurer Rosalia De Leon said.

BSP Governor Benjamin Diokno said the additional funds will provide support for people most affected by the enhanced community quarantine "for the next 60 to 90 days."

Duterte's economic team has set aside a ₱27.1 billion fund as its initial response to the outbreak, which has so far infected 396 people and killed 33 patients. More than half of this amount was earmarked to help the tourism sector, while about ₱3 billion has been set aside for the purchase of more test kits as well as protective gear for health workers.

The entire Luzon has been placed under a month-long shutdown, as authorities scramble to contain the disease. Other provinces and cities have followed suit as COVID-19 cases continue to climb.