PH can borrow additional ₱280B cash advance from BSP for COVID-19 response fund

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Metro Manila (CNN Philippines, January 14) — The Philippine government has room to borrow an additional ₱280 billion from the Bangko Sentral ng Pilipinas if it needs to boost the COVID-19 response funds, BSP Governor Benjamin Diokno said.

"Right now, the (Monetary) Board has recently approved last Dec. 28 the ₱540 billion. They have not accessed that yet, I think they will access that anytime soon," Diokno told reporters during his weekly GBED Talks.

"On top of that, they can actually ask for 10% (more)," he added.

The Bangko Sentral has been fulfilling its mandate as lender of last resort by extending interest-free "provisional advances" to the Bureau of the Treasury since the pandemic started. So far, the state has borrowed ₱1.38 trillion to the national government through three credit lines since March 2020.

Diokno said the recently amended BSP Charter allowed the monetary authority to lend up to 20% of the government's average yearly income for the last three years, while the additional 10% allotment came from the Bayanihan to Recover as One Act –– a stimulus package for COVID-19 response. These credit lines are temporary.

Diokno desribed the arrangement as "bridge financing" rather than debt.

"There is a great need for additional expenses like the SAP or the ayuda and of course, we have to invest in health facilities, we have to invest in healthcare," he said. "Naturally, the national government will need a lot of financing."

"That will require the national government to borrow money, then that will increase interest rates too high," Diokno added. "Instead of spending ₱100 billion for servicing of interest rates... that's how significant that bridge financing is."

President Rodrigo Duterte has repeatedly lamented lack of funds for emergency response measures as the global coronavirus crisis drags on. The state is also resorting to foreign loans from the Asian Development Bank, World Bank, and the China-led Asian Infrastructure Investment Bank to fund COVID-19 vaccine purchases.

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Meanwhile, overall public debt has reached ₱10.13 trillion as of November 2020.