MANILA, Philippines — Additional liquidity injected into the financial system from various measures aimed at softening the economic impact of the coronavirus pandemic has reached P1.4 trillion, according to the Bangko Sentral ng Pilipinas.
BSP Governor Benjamin Diokno told participants of a webinar organized by Standard Chartered Bank that the amount released into the financial system through the different measures deployed by the BSP to address the needs of the banking sector and the general public amid the global health crisis is equivalent to 7.3 percent of gross domestic product (GDP).
Diokno said monetary authorities swiftly deployed an initial set of measures, including the P300 billion repurchase agreement with the Bureau of the Treasury, the P20 billion dividends remitted to the national coffers, purchase of government securities in the secondary market to help maintain stability and ample liquidity in the financial system.
He also said the central bank temporarily suspended term deposit facility auctions and reduced the overnight reverse repurchase volume offering to encourage market participants to channel funds to loans or government securities.
To shore up market confidence and cushion the slowdown in economic activity, Diokno said the Monetary Board slashed the benchmark rate by 175 basis points since the start of the year bringing it to an all-time low of 2.25 percent, as well as lowered the reserve requirement ratios by 200 basis points for big banks and 100 basis points for mid-sized, as well as small banks.
Likewise, the BSP chief said the limit on real estate loans of banks was raised to 25 percent of their total loan portfolio from 20 percent, releasing an additional P1.2 trillion to boost economic activity and channel credit to more productive sectors.
Monetary authorities also waived the term spreads on rediscounting loans to provide banks with a more viable option for financing their liquidity needs by refinancing the loans extended to their clients.
“These are just some of the measures deployed by the central bank to address the needs of the banking sector and the general public amid the pandemic,” Diokno said.
Diokno said authorities are laying the groundwork for a post-COVID economy that is well prepared and well equipped to move forward and surpass its past achievement under the ‘’new normal.’’
“But, as we envision the Philippines to be a champion in the post-COVID era, we cannot be fixated with the current crisis. The right attitude is that while the national leaders and health authorities worry about the pandemic, we must look beyond the challenges of the present situation and lay the groundwork for stability and prosperity in the medium and long run,” he said.
Economic managers, through the Development Budget Coordination Committee (DBCC), see the country’s GDP rebounding strongly with a growth of 6.5 to 7.5 percent next year.
“Reinforcing the country’s solid economic fundamentals with finely calibrated reforms is the best way to strengthen the economy’s prospects. Speaking of prospects, we remain optimistic that when the dust has settled, the Philippines’ investment potential will shine through,” Diokno said.
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Article and Photo originally posted by Philippine Star Globallast September 21, 2020 12:00am and written by Lawrence Agcaoili.
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