On March 17, 2020, in order to slow the spread of COVID-19 in the Philippines, President Rodrigo Duterte ordered the whole island of Luzon, including Metro Manila, to be under Enhanced Community Quarantine (ECQ). However, the toll on the economy and businesses due governmental response measures has been getting heavier by the day. To help keep the economy afloat during the pandemic and its aftermath, the Bangko Sentral has been several key moves. Here are some these, so far:
- Effective April 3, 2020 the Bangko Sentral reduced the reserve requirement (RR) ratio of banks and other covered institutions by 200 basis points. According to BSP, the move is “intended to calm the markets and to encourage banks to continue lending to both retail and corporate sectors. This will ensure sufficient domestic liquidity in support of economic activity amidst this global pandemic due to the Coronavirus Disease (COVID-19).”
- On April 17, 2020 the Bangko Sentral reduced benchmark interest rate by 50 basis points or .5 percent to 2.75 percent. This move will ensure that businesses and industries will have easier and cheaper access to funds during ECQ and especially after it has been lifted or modified. The funds acquired will be a big help in rebuilding the strength of businesses especially the MSMEs who are one of the hardest hit sectors of the lockdown.
- Further, to help the national government acquire enough funds for its COVID-19 response, the Bangko Sentral has entered into an agreement with the Bureau of Treasury for bond repurchase. Under the said agreement, the Bangko Sentral will purchase Php300 billion worth of treasury bills from the National Treasury which will be paid back in six months. The money from the purchase of the T-Bills is currently being used by the government for its response to the COVID-19 Pandemic.
Written by: Atty. Jon Dominic Penaranda