Legislators have proposed putting in the P40-billion balance in the Bangko Sentral ng Pilipinas (BSP) capitalization in the BSP charter, currently being reviewed for amendments in Congress.

The proposal will make it possible for the National Government to borrow funds that the central bank can sell whenever they want to.

Congressman Luis Villafuerte, during Tuesday’s Committee on Banks and Financial Intermediaries hearing in Batasan, said there is a proposal to include the P40 billion capitalization in the BSP charter.

“(The charter) will have a mode of allowing government to infuse the additional capital (which) should have been given long ago,” Villafuerte said after the hearing. “Its cash flow impact on the NG that will be staggered but its cash flow impact on the BSP will be immediate (and) given the right incentives,
the instrument will be lapped up banks and investors.”

In 1993, when Congress restructured the central bank’s finances with the passage of the New Central Bank Act, which had a provision for a P50-billion capitalization, the government deposited only P10 billion. BSP has been waiting almost 14 years for the balance of P40 billion.

In an interview last week, Budget Secretary Rolando Andaya Jr. said they could provide at least P4 billion a year to the BSP as capitalization but not the entire amount. “At this point, we don’t know how much of a direct infusion we can provide,” he said. It was disclosed earlier that the plan was to allocate P15 billion of the P40 billion capitalization in the 2009 national budget. The BSP’s Monetary Board is lukewarm to proposals from both the DoF and Department of Budget and Management for an alternative structure of raising the amount, other than direct NG infusion. The latest plan is to sell BSP subscription receivables to the NG to raise the funds. (LCC)