More BSP help to gov’t Covid-19 response

April 08, 2020
Bangko Sentral ng Pilipinas

The Bangko Sentral has indicated its readiness to implement additional measures that would support the government’s program to address the impact of the coronavirus disease 2019.

In a statement, the BSP said inflation is seen to remain benign because of disruptions in industries and private spending as a result of the various levels of quarantine imposed across the country.

For one, the enhanced community quarantine for mainland Luzon, which took effect last March 16, was extended to April 30 from the initial deadline of April 12 to reduce the movement of people and potential virus transmission.

As of 4 p.m. on Monday, the total number of Covid-19 cases in the country rose to 3,660, with 73 patients who have recovered while 163 have died.

The quarantine is expected to further dampen economic activities and decelerate the rate of price increases from the 2.5 percent print last March, which is slower than the 2.6 percent in the previous month.

Last March’s inflation rate is within the BSP’s two-percent to 2.8-percent projection and is lower than the previous year’s 3.3 percent.

To date, the average inflation rate is at 2.7 percent, which is at the lower half of the government’s two-percent to four -percent target band.

The BSP’s policy-making Monetary Board has forecast risks to inflation to be on the downside for this year and next year, given the effect of the global pandemic, which has also affected the tourism sector, the growth of overseas Filipino workers’  remittances, and foreign investments.

The BSP said while the ECQ would have economc repercussions, “the BSP recognizes that the health and safety of the Filipino people remain the government’s foremost priority”.

It thus echoed its “support for urgent and carefully coordinated measures with other government agencies to alleviate the spillover effects of the pandemic on people and firms, with a view toward preventing any long-lasting economic and social damage”.

“In addition to the monetary policy actions that have been announced, the BSP stands ready to deploy all available measures in its toolkit as we continue to assess the impact of the global pandemic on the domestic economy,” it added.

To date, the BSP has reduced key policy rates by 75 basis points and universal and commercial banks’ reserve requirement ratio by 200 basis points, with the latter seen to ensure adequate liquidity in the domestic economy.

The BSP has also eased the know-your-customer rules to help people easily open bank accounts or similar accounts from other financial institutions vis-à-vis the government’s financial aid program for poor households affected by the pandemic and has issued operational relief measures for foreign exchange transactions.

The MB has authorized the BSP to buy P300 billion worth of government securities with a maximum redemption period of six months to boost the funds for the Covid-19 response.