THE FINANCIAL Stability Coordination Council (FSCC) is formulating initiatives to respond to systemic risks stemming from borrowers’ inability to pay their debts due to the coronavirus pandemic, Bangko Sentral ng Pilipinas (BSP) Governor and FSCC Chairman Benjamin E. Diokno said.

“We have to deal with the systemic risk itself, meaning the difficulty of borrowers to service the maturing obligations, rather than be limited as to who is the appropriate authority over non-financial corporations. In this regard, we have a number of initiatives at the late stages of development. I hope to announce this soon in line with authority provided to the council by Executive Order (EO) 144,” Mr. Diokno said at an online briefing.

EO 144 signed by President Rodrigo R. Duterte on July 6 institutionalized the FSCC as an interagency body that will focus on assessing systemic risks to financial stability and formulating policies to address these issues. 

Prior to this, the FSCC was a voluntary initiative. It includes officials from the BSP, the Department of Finance, the Securities and Exchange Commission, the Insurance Commission, and the Philippine Deposit Insurance Corp.

Systemic risks refer to disruptions to any part of the financial system that could affect the rest of the economy.

The FSCC earlier cited debt servicing as a risk to financial stability, but said this is expected to be manageable in the near term.

Gross nonperforming loans climbed 83% to P479.481 billion in May from P262 billion a year earlier, BSP data showed. Analysts attributed this to the pandemic’s impact on the economy.

Mr. Diokno said companies facing problems in repaying their debts are not under the watch of financial authorities, so their situations should be reviewed by the FSCC as a whole.

“The problems that these nonfinancial corporations face is a result of the recession induced by COVID-19 (coronavirus disease 2019) and the measures that had been taken to contain the spread of the virus. The problems, therefore, are not from any reckless behavior on the part of the borrowers…,” the BSP chief added.

Mr. Diokno said they are seeing signs of improvement as the economy gradually reopens. However, the FSCC acknowledges that the pandemic has affected lives and livelihood, and risks should continue to be monitored so appropriate responses can be made, he said.

“We note that the scars may linger [from the pandemic], and that there are changes that run deep. This is why we say that the new economy will be fundamentally different from the pre-COVID market arrangements,” he said.

Meanwhile, at the same briefing, Mr. Diokno said EGov Pay, which facilitates online transactions for government agencies, saw increased usage in May due to fees for clearances and tax payments.

Data from the central bank showed EGov Pay transactions surged in terms of both volume (5,000%) and value (2,000%) in May from their year-ago levels.

“Aside from curbing revenue leaks, fostering better audit trail and enhancing transparency, the wider usage of EGov Pay is seen to promote efficiency in the country’s revenue generation efforts under the New Economy,” the BSP chief said.

Mr. Diokno said 387 government billers are already onboard the facility, which represents 90% of the institutions targeted to be included in the facility this year.

EGov Pay was launched in 2019 and is expected to help the BSP reach its target to have 50% of the value and volume of transactions in the country done digitally by 2023. — L.W.T. Noble