Dominguez: DOF to borrow less from BSP next year

Department of Finance (DOF) Secretary Carlos Dominguez said the national government will borrow lesser amounts from the Bangko Sentral ng Pilipinas (BSP) in 2022.

In a statement, Dominguez said the DOF said they have  informed the Monetary Board of a liquidity support request of P300 billion next year, which is lower than the current borrowing amounting to P540 billion.

“(W)e are on track with the unwinding of liquidity support on firmer evidence of return to economic strength,” he assured, adding that the P300-billion provisional advances will ensure sufficient resources for the national government to back the country’s “promising but still fragile recovery.”

“We have seen economic recovery already begin to take root as more businesses embark on a safe reopening with the successful rollout of the government’s mass vaccination program,” Dominguez said in his letter to BSP Governor Benjamin Diokno.

The P300-billion debt to be requested in January 2022 will be interest-free and has three-month maturity with another three-month extension.

“Funds granted under this short-term lending arrangement are not used for direct financing of government operations but serve as a liquidity gap measure that will ensure the government will be able to undertake large spending in advance of anticipated revenue collections or regular borrowing proceeds,” the DOF said.

Dominguez said that as the national government plans to borrow early next year, the DOF will repay in advance its P540-billion debt to the central bank.

DOF tapped the P540-billion provisional advances in July 2021, with maturity in October 2021 and extended to January 2022.

DOF, however, will pay the debt ahead on December10, “on the basis of favorable cash position brought about by promising revenue collections and overwhelming support in the recent Retail Treasury Bond (RTB) offering.”

The World Bank earlier recommended to the government to safeguard its fiscal policies to support the country’s economic recovery amid the threats of the emergence of new Covid-19 variants.

The World Bank has advised the government to strive and ensure a long term fiscal sustainability to support growth.