BSP says PH firms rebounding from pandemic in 2021-22

MANILA, Philippines — The Philippine corporate sector is expected to bounce back this year and next as restrictions to business operations are gradually eased which, in turn, will help the local economy recover, the central bank said on Thursday.

In an online press briefing, Bangko Sentral ng Pilipinas Governor Benjamin Diokno acknowledged that the pandemic has taken its toll on companies, with many of them reporting losses or declines in income in 2020, reflecting the impact of the crisis on the corporate sector’s financial conditions.

“The BSP is closely monitoring the impact of the COVID-19 pandemic on the corporate sector as its financial conditions have significant implications to the formulation of sound and well-informed monetary, financial and economic policies,” he said.

He noted that the easing of quarantine restrictions in the second half of 2020 has helped reinvigorate economic activities but the pandemic has left adverse effects on the general operations and capacity of businesses.

At the same time, however, downside risks linger due to uncertainties about the risk of extended wave of infections, possibly due to new strains of COVID-19, as well as the fragile recovery of the global economy.

“The BSP supports the economy, including the corporate sector, by providing an environment wherein there is ample liquidity available for lending, and banks can intermediate funds effectively and efficiently,” he said, adding that the central bank’s role has been to ensure proper functioning of credit and financial market and to support domestic demand, which could cushion the impact of the crisis.

To date, the BSP has deployed a wide range of monetary instruments and extraordinary liquidity-enhancing measures to support the economy.

As the crisis hit last year, the central bank used its monetary elbow room to reduce the policy rate by a cumulative 200 basis points beginning February 2020 and to lower the reserve requirement ratios by 200 bps effective in April 2020.

The BSP likewise allowed lending to micro, small and medium enterprises and large enterprises as alternative compliance for reserve requirements.

Diokno said these measures reaffirm the regulator’s “commitment and readiness” to complement the national government’s initiatives to mitigate the impact of the pandemic on Filipino households and businesses.

At the same time, Diokno said the recovery of the Philippine economy could be facilitated by continued structural reforms including the Corporate Recovery and Tax Incentives for Enterprises bill and the Financial Institutions Strategic Transfer Act.

/MUF