MANILA, Philippines - The Aquino administration plans to infuse P10 billion every year to the Bangko Sentral ng Pilipinas (BSP) until it has fully paid the government’s unpaid equity to the central bank.
Budget Secretary Florencio Abad said that the government still needs to infuse P30 billion to the BSP to complete its equity requirement.
The infusion is part of the government’s move to boost spending. Below-than-programmed state spending has been heavily blamed for lackluster economic growth.
The Department of Finance (DOF) is set to announce this week the government’s fiscal performance for the month of October.
Last week, the Department of Budget and Management (DBM) announced that it had already paid out P10 billion to the BSP to boost its price stability functions and expand its rediscounting facility for priority projects that would stimulate economic activity.
The P10 billion only partially covers the government’s P40-billion unpaid equity infusion to the central bank.
According to the DBM BSP has a total authorized capitalization of P50 billion but it has been almost 15 years since the government infused an initial P10 billion in equity in 1996.
The P10 billion is part of an P11.5-billion package which the government is infusing to the BSP, the Trade and Investment Development Corp. (TIDCORP), Home Guaranty Corp (HGC) and the Credit Information Corp. (CIC) to strengthen their capability to perform their roles in the financial market.
Of the amount, the government is allotting P570 million for TIDCORP as unpaid capitalization by the National Government.
TIDCORP, formerly known as the Philippine Export-Import Credit Agency, needs to strengthen its capital base to be able to perform its mandate of providing financial assistance to enterprises engaged in international trade.
The government also alloted P400 million for the Home Guaranty Corp. (HGC) for its credit insurance and mortgage guarantee operations.
The amount will improve HGC’s capital base to rebuild its credibility as a guarantee institution in the housing sector.
For the CIC, the government is providing P75 million. The newly established CIC will get P53.94 million as equity, while the balance of P21.06 million will cover the operational requirements and capital expenditures.
CIC will establish a comprehensive and centralized credit information system, including the establishment of a data center which could significantly improve bank lending in the Philippines.