The Bangko Sentral ng Pilipinas (BSP), which has already released hundreds of billions of pesos with the clever use of appropriate monetary levers, add P20 billion more to the financial system in the form of dividend earnings remitted to the Bureau of the Treasury (BTr).
BSP Governor Benjamin Diokno said the remittance adds to capacity of the national government to deal with the pandemic known as COVID-19.
These were also funds meant to bolster the central bank’s capital structure but rechanneled to help the national government deal with the fast-evolving viral threat.
“We are one government. We are one Filipino nation. And we, at the BSP, shall support all efforts to fight this once-in-a-lifetime pandemic and keep the economy afloat,” Diokno said.
“The BSP has and is ready to employ the necessary tools in its arsenal to address the impact of COVID-19 while staying true to its mandate,” he added.
According to the central bank, dividends constitute 87 percent of estimated total dividend based on unaudited BSP financial statements for 2020.
Under its newly amended charter, the BSP is no longer mandated to remit dividends to the NG. Section 2 of Republic Act 7653, as amended by RA 11211, provides that any and all declared dividends of the BSP in favor of the NG shall be released and disbursed immediately for the payment of the BSP’s increase in capitalization.
Nevertheless, considering this extraordinary time, the Monetary Board agreed to defer the application of the dividends for 2019 to the BSP’s capital and remit P20 billion advance/partial dividends to support NG programs during this enhanced community quarantine due to COVID-19, it said in a statement.
The BSP earlier arranged a repurchase agreement of P300 billion with the Bureau of Treasury, payable in six months to further support government efforts to contain the virus.
Previous to that, the central bank scaled back its key policy rates by another 50 basis points followed by a 200 basis point reduction in the banks’ deposit reserves that effectively flooded the financial system with P400 billion worth of liquidity.