MANILA, Philippines - The government has approved a P20 billion capital infusion into the Bangko Sentral ng Pilipinas (BSP).
In a statement, Budget Secretary Florencio Abad said the amount is part of the government's legally-mandated equity infusion into the BSP under the New Central Bank Act of 1993.
"It is only under the Aquino administration that BSP received bulk of its legally-mandated equity infusion from the national government. With this fresh capital, BSP will be able to recuperate its losses from stabilizing our currency. Moreover, it is high time for the national government to acknowledge the much-needed contribution of BSP to macroeconomic stability, particularly its excellent management of the monetary and fiscal environment," Abad said.
The BSP, which has been in the red for the past two years, incurred P25.48 billion in losses from January to April. This was attributed to interest payments on deposits and dollar purchases targeted at taming an appreciating peso.
With the latest equity infusion, the Aquino administration has so far infused P30 billion into the BSP, on top of the P10 billion that BSP received way back in 1996. Now, the government only needs to cover the remaining P10 billion of a total P50 billion authorized capital stock for the BSP under the law.
"A stronger and more adequately capitalized BSP is needed in order to sustain the stable macroeconomic and investment climate, especially as we look forward to having an investment-grade credit rating by next year," Abad said.
The Budget chief noted this new capital infusion will allow BSP to expand its rediscounting facility and help stimulate economic activity by enhancing the delivery of credit to the private sector.
The P20 billion equity infusion for the BSP was part of President Aquino's recent approval of P32.29 billion in additional spending for priority programs to spur the economy.
Abad said the amount includes P28.9 billion in savings that were incurred from unreleased 2011 and 2012 appropriation; as well as P4.4 billion in remaining windfall revenues from dividends by government corporations.
"With better-than-expected revenue collections this year as well as savings from the discontinuation of slow-moving expenditure items, the government is able to create a fiscal space of P32.29 billion that we can use for urgent expenditures... This will be used for programs and projects that will sustain macroeconomic stability, accelerate infrastructure development, bolster tourism, support reforms in local governments, and upgrade defense capabilities, among others,” he said.
Aside from the BSP, the Department of Education will get P4.07 billion for the school infrastructure project and the Department of Public Works and Highways will get P2.77 billion for the construction of national roads and bridges. Local government units will get P2.79 billion.