MANILA, Philippines - The Bangko Sentral ng Pilipinas' capital has doubled to P20 billion ($460 million) after the government injected funds it said would help the central bank carry out price-stability functions and expand its rediscounting facility for priority projects.
The BSP has an authorized capitalization of P50 billion, but had previously only received P10 billion from the government through an initial infusion in 1996 following its separation as an independent body in 1993.
The P10 billion payment announced on Thursday was part of the government's P72 billion spending package unveiled last month to support growth and keep the economy afloat amid the worsening global economic outlook.
"We have to support BSP in strengthening its capacity to pursue swiftly and decisively the necessary policy actions without being limited by concerns over balance sheet weaknesses," Budget Secretary Florencio Abad said in a statement.
Abad did not say when the outstanding P30 billion capital requirement of the central bank would be covered.
The infusion comes as deposits in the central bank's short-term Special Deposit Account (SDA) window have surged this year, reaching a record P1.7 trillion in the week ending Oct. 21, latest data showed.
The BSP uses SDAs to manage liquidity in the economy, and the vehicle is favoured by banks partly due to slow loan demand and the lack of alternative investments.
The central bank pays interest of 4.6875% for the longest SDA tenor of 32 days, higher than the central bank's key overnight borrowing rate of 4.5%.
The 91-day T-bill rate was 0.919% at the last auction on Nov. 2 and was quoted at 0.87% in the secondary market on Thursday.
In 2007, the central bank posted its first net loss since its formation due to its heavy intervention in the currency market to slow the peso's rise and the high cost of the SDA facility as it tried to dampen domestic liquidity.
It posted net profits in 2008 and 2009, and net loss in 2010.
In the first four months of 2011, the central bank recorded a net loss of P29.16 billion, 24% higher than in the same period last year, based on available data on its website.