• By The Financial District

Bridge Financing No Longer Necessary: BSP

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said Thursday the national government does not need another bridge financing, citing its capacity in handling pandemic-related financing requirements and an untapped provision under Bayanihan 2.

Photo Insert: The BSP does not see any need for additional bridge financing, as per its governor.

In a virtual briefing, Diokno said there is a provision under the Bayanihan to Recover as One Act that authorizes the Department of Finance (DOF) to avail of a bridge financing, according to a PNA report

“But (that) was not availed of by the Department of Finance,” he said.

Diokno said the cash advances the central bank has extended to the national government are in line with the amended BSP Charter.

Under the amended BSP Charter, the central bank can extend provisional advances to the national government based on the average revenues of the latter in the past three years.

All the news: Business man in suit and tie smiling and reading a newspaper near the financial district.

Since the pandemic hit last year, the BSP lent the national government PHP300 billion through a short-term repurchase deal and three PHP540-billion bridge financing.

“And the way I see it, now that we have turned the corner, and I’m positive about this, the number of cases has been cut by half, there is now hope on the economy and maybe there is no more need for the PHP540-billion bridge financing for the Department of Finance. So, I don’t see any need for additional bridge financing other than the PHP540 (billion), which is currently being made available to the Department of Finance,” Diokno said.

Banking & finance: Business man in suit and tie working on his laptop and holding his mobile phone in the office located in the financial district.

Economists said the central bank has the lead in ensuring that the domestic economy remains afloat amid the pandemic given these cash advances and aggressive cuts in the central bank’s key policy rates totaling to 200 basis points, which brought the BSP’s overnight reverse repurchase (RRP) rate to record-low 2 percent.

Diokno, however, said the unprecedented nature of the shock caused by the coronavirus disease 2019 (COVID-19) required a whole-of-government approach to address the crisis.

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