The Development Bank of the Philippines (DBP) recently got an additional capital infusion of P12.5 billion from the Department of Finance, which will allow the lending institution to improve its coronavirus disease 2019 (Covid-19) response programs, which include extending low-interest, easy-to-pay loans to the transport, healthcare, education sectors along with micro, small and medium enterprises (MSMEs) and other affected industries.
Finance Secretary Carlos Dominguez 3rd said the DBP will also act as a wholesale bank that will buy the loans of smaller banks, cooperatives and other institutions to free up more credit for the benefit of other industries that need to recover from the pandemic-induced impact on the global economy.
Under the P12.5-billion appropriation to DBP approved by President Rodrigo Duterte, the fund will be allocated as follows: P5 billion for the transportation sector with 68 transport cooperatives as beneficiaries; P2 billion for healthcare assistance to 20 hospitals; P500 million for 17 schools; and P5 billion for 230 MSMEs and other businesses.
“This P12.5-billion fund will help provide liquidity support to Covid-19 hit sectors. This will have a large multiplier effect in economic activity, given that every peso pumped into GFIs (government financial institutions) like the DBP will generate around 10 times its value in credit,” Dominguez said.
The President’s approval of the fund release is in accordance with the provisions of Republic Act (RA) No. 11494 or the Bayanihan to Recover As One Act (Bayanihan 2).
RA 11519 was signed by the President on Dec. 29, 2020 to extend the validity of appropriations under the Bayanihan 2 law for release, obligation and disbursement until June 30, 2021. The Bayanihan 2 law was set to lapse last December 19.