The Bangko Sentral ng Pilipinas (BSP) can now lend more to the national government to boost its COVID-19 response under the newly signed Bayanihan 2 law.
Section of the Bayanihan 2 (Republic Act No. 11494), BSP can give additional direct provisional advances to the government “to finance expenditures authorized by law that will address and respond to the COVID-19 situation.” The loan, however, should not exceed 10% of the government’s average income for fiscal years 2017 to 2019.
The provision increases the cap of BSP to directly lend to the government 30% (from 20%) of its average revenue under the New Central Bank Act, Bloomberg reported.
The Bayanihan 2 authorized the BSP to lend up to P850 billion from its previous limit of P540 billion.
“We proposed the higher cap to enable the National Government to avail of the BSP facility to fund requirements against COVID-19 and pursue quick recovery. Bayanihan II is adequately covered by debt service savings and additional income,” National Treasurer Rosalia V. de Leon said in a Viber message to reporters.
These additional direct provisional advances are effective within two years from the Bayanihan 2 was signed into law. President Rodrigo R. Duterte signed the Bayanihan II into law on September 11, 2020.
The advances, meanwhile, should be paid within a year. The Monetary Board could extend the maturity for another year.
Also read: Palace details Bayanihan 2 fund allocations
BSP can lend more to gov’t under Bayanihan 2
In August, the Asian Development Bank (ADB) approved the Philippines’ $125-million loan to aid the government in boosting the country’s COVID-19 testing capacity and control the spread of the pandemic.
According to ADB, the HEAL COVID-19 project would fund the following:
- Purchase of medical equipment, including electrocardiography machines and defibrillators, to 17 major hospitals across the country and upgrade their laboratories and isolation facilities;
- Purchase of ventilators to 70 DOH hospitals and 20 island local government hospitals;
- Installation of computed tomography (CT) scan machines in 33 hospitals nationwide to improve clinical management of COVID-19 cases;
- Test kits, chemicals, and reagents to at least ten government molecular laboratories to increase their COVID-19 testing capacity; and
- Personal protective equipment to frontline health workers and laboratory technicians.
As of June 2020, the outstanding debt of the national government now swelled at P9.054 trillion.