The national government has repaid its 300 billion peso loan with the Bangko Sentral ng Pilipinas (BSP) in full, well ahead of the due date next month, the Ministry of Finance (DOF) said.
In a statement on Friday, May 20, Finance Secretary Carlos G. Dominguez III said the repayment of the 300 billion peso unpaid provisional advances with the central bank had achieved the goal of unwinding liquidity support related to the BSP pandemic before the start of the next administration, Dominguez said. The actual repayment was also well ahead of the June 11, 2022 due date.
Interim advances are a temporary measure under Section 89 of Republic Act (RA) No. 7653 or the new Central Bank Act that allows BSP to provide short-term financing to NG up to 20% of the latter’s average. annual income for the last three years.
Provision of interim advances allowed the government to access cash on a regular basis for the uninterrupted implementation of important fiscal response and stimulus measures during the pandemic despite declining revenues and financial market disruptions experienced during the pandemic. over the past two years.
With the sustained economic recovery and the consequent strengthening of revenue collections last year, the volume of provisional advances was reduced from 540 billion pesos in 2021 to 300 billion pesos in January this year, which represents only the half of the maximum amount available of 600 billion pesos.
The prepayment was made possible by the economy’s faster-than-expected return to pre-pandemic strength, the DOF said.
Real gross domestic product (GDP) grew faster than expected in the first quarter of the year at 8.3%, helping the government achieve revenue growth of 12.6% over the same period.
With the strong revenue performance, the budget deficit only reached 317 billion pesos, leaving the government in a strong cash position.
“The advance payment of provincial advances of 300 billion pesos from the BSP national government underscores the Duterte administration’s still strong fiscal position despite the financial challenges of the pandemic and, later, the Russian-Ukrainian conflict,” Dominguez said. .
“Its strong macroeconomic fundamentals – made even stronger by the groundbreaking reforms carried out by President Duterte during the COVID-19 crisis to further liberalize the economy and attract investors – will put the Philippines back soon enough on its pre-pandemic path of rapid and inclusive growth,” he added.
Moreover, the government was already able to raise 35% of its full-year financing requirement of 2.212 billion pesos at the end of March.
The government was able to raise 233 billion pesos through loans and bonds on the external market and 549 billion pesos through the issuance of government securities on the domestic market, despite the difficult financing conditions linked to the normalization of rates of global interest.
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