THE CENTRAL BANK has remitted P20 billion in dividends to the government to support its programs amid the disruptions caused by the coronavirus disease 2019 (COVID-19) outbreak.
In a statement, the Bangko Sentral ng Pilipinas said it remitted on Thursday the P20 billion as advanced dividends to the national government, despite no longer being mandated to do so.
The New Central Bank Act allows the BSP to release all declared dividends for the payment of its increase in capitalization instead of remitting them to the national government.
BSP Governor Benjamin E. Diokno said the central bank will continue to support the government’s efforts to battle the “once-in-a-lifetime pandemic” and to keep the economy afloat.
“The BSP has and is ready to employ the necessary tools in its arsenal to address the impact of COVID-19 while staying true to its mandate,” Mr. Diokno was quoted as saying.
The amount constitutes 87% of the total estimated dividends of the central bank in its unaudited 2020 financial statement.
This was remitted through direct credit to the account of National Treasurer Rosalia V. de Leon which is maintained with the BSP.
On Monday, the BSP also committed to buy $300 billion worth of short-term government securities from the Bureau of the Treasury through a repurchase agreement with a maximum repayment period of six months.
The Monetary Board has also announced a 200 basis point (bp) cut in the reserve requirement ratio (RRR) for big lenders to bring it down to 12% by March 30.
Moreover, they said a reduction in the reserve requirements of other BSP-supervised financial institutions are also being evaluated, with Mr. Diokno authorized to cut RRR up to 400 bps this year.
Last week, the central bank cut policy rates by 50 bps, reducing the overnight reverse repurchase, lending, and deposit rates to 3.25%, 3.75%, and 2.75%, respectively, in a move to boost activity amid an expected economic slowdown.
Sought for comment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the central bnak’s move is a step in the right direction to encourage other government units to do their part in responding to the pandemic.
“BSP’s remittance of P20 billion in advance dividends to the national government sends a positive signal as this is a step in the right direction for all units of government to cooperate and unite, in terms of further increasing the national government’s cash position, which will be used to to better combat COVID-19 and prevent it from spreading…,” he said in an emailed response.
Mr. Ricafort cited other government units that have pledged assistance in the midst of the outbreak, including the Department of Transportation as well as the Philippine Amusement and Gaming Corp.
“This [BSP move] will also help reduce the national government’s borrowing costs with more money remitted from other government units, reducing the government’s borrowing and less crowding out effects in the market,” he added.
For his part, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the central bank chief’s assurance bodes well for the economy and the market.
“Anything positive towards the struggle to make the economy fight will definitely help market sentiment,” Mr. Asuncion said in an emailed response.
In 2019, BSP remitted P4 billion in dividends to the Treasury.
Government-owned and controlled corporations are required by law to remit half of their profits to the Treasury. — Luz Wendy T. Noble