Monetary Board approves P540 billion advance to NG

THE central bank on Thursday approved a P540-billion cash advance to the National Government (NG) to boost its war chest against the pandemic.

“The Monetary Board (MB) approved today the National Government’s request for a new tranche of provisional advances in the amount of P540 billion (approximately $11.1 billion), pursuant to Section 89 of Republic Act (RA) No. 7653, as amended,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno told reporters via Viber.

He was referring to the Bayanihan to Recover as One Act, which authorized the increase of BSP’s lending limit to the government to 30% of its average revenue from the previous 20%.

This is the second loan to be granted by the BSP to the National Government this year, bringing the direct provisional advances so far to P840 billion, or P10 billion less of the P850-billion limit.

The Bureau of the Treasury on Tuesday repaid the P300 billion it borrowed from the BSP through a repurchase agreement of government securities.

“The second tranche of cash advances will have marginal impact on inflation and the currency but successive rounds of such agreements may eventually call into question central bank independence,” ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa said in a note on Thursday.

The government’s budget deficit ballooned to P740.7 billion in the eight months to August, up 515% from P120.4 billion a year ago, on the back of increased spending for its pandemic response and reduced tax collections.

The government has so far raised P2.47 trillion from local and foreign sources. It plans to borrow P3 trillion this year to plug funding shortfall seen to reach 9.6% of the nominal gross domestic product. — Beatrice M. Laforga