Palace OKs P20-B capital infusion into BSP

PRESIDENT Aquino has approved P32.3 billion in additional spending this year, including the infusion of P20 billion in much-delayed equity into the Bangko Sentral ng Pilipinas, Budget Secretary Florencio B. Abad said.

This leaves Malacañang a balance of P10 billion to complete its P50-billion capital infusion into the central bank.

“A stronger and more adequately capitalized BSP is needed to sustain a stable macroeconomic and investment climate, especially as we look forward to having an investment-grade credit rating by next year,” Abad said.

He said the fresh funds would allow the BSP to expand its rediscounting facility and help stimulate economic activity by enhancing the delivery of credit to the private sector, particularly to micro, small and medium-scale enterprises.

The 1993 law that created the BSP to replace the bankrupt Central Bank of the Philippines provided for the infusion by the government of P50 billion in capital into the BSP.   However, only P20 billion had been infused as of 2011.

“It is only under the Aquino administration that the BSP received the bulk of its legally-mandated equity infusion from the government,” Abad said.

“It is high time for the government to acknowledge the much-needed contribution of BSP to macroeconomic stability, particularly its excellent management of the monetary and fiscal environment,” he added.

The budget chief said the fresh capital would enable the BSP to recuperate its losses from stabilizing the peso, which remained on a strong trajectory.

Abad said the additional spending funds came from savings that were realized from the unreleased budget items for 2011 and 2012 and from windfall revenues, in the form of dividends, from state corporations.

He said the rest of the P32 billion would be used for quick-disbursing priority programs and projects that were expected to help bolster domestic economic growth in the remaining days of 2012 and in the first few weeks of 2013.

“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,” Abad said.