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The Bangko Sentral ng Pilipinas’ (BSP) has so far infused P1.9 trillion in liquidity into the financial system to support the Philippines’ economic recovery amid the coronavirus disease 2019 (Covid-19) pandemic.

“The BSP has injected approximately P1.9 trillion ($39.2 billion) in liquidity into the financial system,” central bank Governor Benjamin Diokno told reporters in a message on Friday, adding the amount was equivalent to 9.6 percent of the country’s gross domestic product (GDP).

Diokno said included in the amount is P540 billion in new provisional advances of the national government from the Bangko Sentral for budget support amid the pandemic. 

Also, P300 billion in government securities were acquired by the BSP from the Bureau of the Treasury through a reprhase agreement in March.

“The BSP is working hand-in-hand with the national government to ensure that the coronavirus pandemic will leave little permanent scar on the Philippine economy and its people,” Diokno added.

He earlier mentioned that the central bank also remitted P20 billion worth of dividends to the government.

The BSP has been very supportive of the government and the banking sector since the Covid-19 pandemic broke out in March this year. It also bought select liquid government securities in the secondary market, temporarily suspended term deposit facility auctions, and reduced the overnight reverse repurchase volume offering as a process to channel funds to loans or government securities.

Furthermore, the central bank chief has made it a policy that loans to micro, small, and medium enterprises (MSMEs) now count as part of banks’ compliance with the BSP’s reserve requirements.

And to encourage lending to MSMEs, a sector hard hit by Covid-19 pandemic, the BSP assigned a credit risk weight of loans granted to MSMEs in status to a lower 50 percent, while MSME loans covered by guarantees from the Philippine Guarantee Corp., Agricultural Guarantee Fund Pool, and the Agricultural Credit Policy Council were assigned a zero-percent risk weight,

Also, the BSP’s Monetary Board increased banks’ limit on real estate loans from 20 to 25 percent of their total loan portfolio, which is expected to release an additional P1.2 trillion to the economy.

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