The national government paid in full its outstanding P300-billion provisional advances to the Bangko Sentral ng Pilipinas on Friday, ahead of the June 11, 2022 maturity date, the Department of Finance said Friday.
It said in a statement the repayment fulfilled the goal of Finance Secretary Carlos Dominguez III to unwind the pandemic-related liquidity support from the BSP before the start of the next administration.
The provisional advances is a temporary measure under Section 89 of Republic Act 7653, or The New Central Bank Act, that allows the BSP to extend short-term financing to the national government in the amount of up to 20 percent of the latter’s average annual income in the past three years.
The grant of provisional advances enabled the government steady access to cash for the uninterrupted delivery of large fiscal response and recovery measures despite the lower revenue collections and disruptions to financial markets experienced throughout the last two years.
“With the sustained economic recovery and consequent strengthening of revenue collections last year, the volume of the provisional advances was downsized from P540 billion in 2021 to P300 billion in January this year, which is only half of the maximum available amount of P600 billion,” the DOF said.
It said the early repayment was made possible by the sooner-than-expected return of the economy to its pre-pandemic strength.
The economy grew by 8.3 percent in the first quarter, a reversal of the 3.8-percent contraction a year ago, helping the government attain revenue collections growth of 12.6 percent over the same period.
The DOF said with the strong revenue performance, the deficit only reached P317 billion, leaving the government with a strong cash position.
“The advance payment of the national government’s P300-billion provincial advances from the BSP underscores the continued strong fiscal position of the Duterte administration despite the financial challenges from the pandemic and, later, the Russia-Ukraine conflict. Its solid macroeconomic fundamentals—made even stronger by the game-changing reforms carried out by President Duterte during the COVID-19 crisis to further liberalize the economy and attract investors—will return the Philippines soon enough to its pre-pandemic path of rapid and inclusive growth,” Dominguez said.
