MANILA, PHILIPPINES — Less than 2 months before the Duterte administration steps down, the national government has paid in full its P300-billion loan with the Bangko Sentral ng Pilipinas (BSP) ahead of its actual maturity date of June 11, 2022.
The repayment satisfies Finance Secretary Carlos Dominguez III’s goal of unwinding “the pandemic-related liquidity support from the BSP before the start of the next administration,” according to the Department of Finance (DOF).
In the last three years, the DOF has granted the national government provisional advances totaling up to 20% of the state’s average annual income. Provisional advances are a temporary measure authorized by Section 89 of Republic Act (RA) No. 7653, also known as the New Central Bank Act, that allows the BSP to provide short-term financing to the national government.
The provisional advances provided the government with consistent access to cash, allowing it to continue delivering large fiscal response and recovery measures, according to the Finance Department. It stated that the volume of provisional advances was reduced from P540 billion in 2021 to P300 billion in January of this year.
The finance department attributed the early repayment to “the sooner than expected return of the economy to pre-pandemic strength”. The country’s gross domestic product (GDP) grew faster than expected in the first quarter of the year at 8.3%, helping the national government achieve revenue collections growth of 12.6% over the same period.
The repayment of the BSP’s outstanding provisional advances of P300 billion is part of a larger exit strategy from the accommodative policies that once kept the economy afloat. Despite difficult financing conditions, the government was able to raise P233 billion through loans and bonds in the external market and P549 billion through the issuance of government securities in the domestic market, according to the DOF.
Source: GMA News