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Bangko Sentral ng Pilipinas (BSP) injection of liquidity into the financial system to support the country’s economic recovery amid the 2019 coronavirus disease (Covid-19) pandemic has risen to P1.4 trillion.
In Standard Chartered Bank’s Asean webinar series, central bank governor Benjamin Diokno mentioned that the amount was equivalent to 7.3 percent of the country’s gross domestic product. Asean is the Association of Southeast Asian Nations.
“As you know, the coronavirus pandemic required an aggressive and unprecedented response from governments around the world,” he said during the webinar on Friday last week.
Diokno noted that the BSP had implemented collective measures designed to help maintain stability and ample liquidity in the financial system.
He did not provide a breakdown of the liquidity infusion, but highlighted the BSP’s P300 billion buyback agreement with the national government and the advance remittance of P20 billion worth of dividends to increase government funding for the pandemic response. Covid-19.
Bangko Sentral also purchased select series of liquid and highly traded government securities on the secondary market, temporarily suspended auctions for term deposit services, and reduced the reverse repurchase volume offering to overnight to encourage market participants to channel funds. toward government loans or securities.
“To help stimulate the economy, the BSP Monetary Board lowered the overnight reverse repurchase rate by a total of 175 basis points so far this year, bringing the key policy rate to 2.25 percent. ”He added.
Supervisory regulations were also temporarily modified, added the central bank chief. For example, loans to micro, small and medium enterprises (MSMEs) now count as part of banks’ compliance with the reserve requirements of the BSP.
Likewise, the credit risk weighting of loans granted to current MSMEs was reduced to 50 percent, while loans were allocated to MSMEs that are covered by guarantees from the Philippine Guarantee Corporation, the Agricultural Guarantee Fund and the Agricultural Credit Policy Council. a risk weight of 0 percent, he added.
“These measures are intended to promote credit to MSMEs, which represented 99.5 percent of all commercial companies operating in the country, 63.2 percent of total employment in the country and 35.7 percent of the total added value according to the 2018 statistics, ”said Diokno. .
In a more recent move to boost economic activity and channel credit to more productive sectors, he highlighted the decision of the Monetary Board to increase the banks’ limit on real estate loans from 20 to 25 percent of their total loan portfolio.
The measure is estimated to release an additional P1.2 trillion into the economy.
The term margins on the rediscount loans were also temporarily waived to give banks a more viable option to finance their liquidity needs by refinancing the loans they make to their clients, Diokno added.
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