Gov’t expects higher P5.28-B budget gap

MANILA, Philippines - The government expects to incur a higher budget gap of P5.28 billion this year with the restructuring of the accounts and liabilities of the old Central Bank.

Data from the Bureau of Treasury showed that the expected budget gap is 55.29 percent more than the projected P3.4 billion in 2012.

The Central Bank - Board of Liquidators’ debt to the government reached P416.56 billion at the end of 2012. Of this amount, advances made by the national government in servicing the matured retained foreign obligations of CB-BOL accounted for P252.82 billion.

CB-BOL is the administrator and liquidator of the assets and liabilities of the old central bank, now called Bangko Sentral ng Pilipinas (BSP). Under the new Central Bank Act, the CB-BOL has 25 years or until 2018 to dispose of and liquidate all assets of the old central bank.

Upon disposition of said assets, the CB-BOL shall be deemed abolished.

Based on its latest financial statements, CB-BOL had assets of P1.59 billion as of end-December 2012, down eight percent from the previous year’s P1.73 billion.

As an institution under liquidation, CB-BOL continued to incur deficit with accumulated losses reaching a record of P414.98 billion, up P145.5 million from last year’s figure.

The government expects to complete the capitalization Bangko Sentral ng Pilipinas with the infusion of the remaining P10 billion needed to raise its capitalization level to P50 billion.

The additional capital, slated for release in December this year, forms part of the government’s legally-mandated equity infusion into the Central Bank under the New Central Bank Act of 1993.

The 1993 law that created the BSP to replace the bankrupt Central Bank of the Philippines provided for the infusion by the government of P50 billion in capital into the BSP.   The first P10 billion was infused in 1997, the secondP10 billion in 2011 and another P20 billion in December last year.

Fresh funds would allow the Central Bank to further boost  economic activity by enhancing the delivery of credit to the private sector, accelerate infrastructure development, and promote tourism.