The exit strategy of the Bangko Sentral ng Pilipinas’ (BSP) for pandemic-related measures will depend on the sustainability of domestic economic growth, BSP Governor Benjamin Diokno said.
“It makes sense that we looked at whether the growth is sustainable, whether there is traction,” he said during the question and answer part of the first segment of the virtual “Sulong Pilipinas: pre-SONA of the Economic Development and Infrastructure Cluster” Monday.
Aside from growth targets, Diokno said monetary officials will also look at developments on inflation rate and employment.
The pandemic resulted in the 9.5-percent contraction of the domestic economy, as measured by gross domestic product (GDP), in 2020.
When the pandemic hit the country starting in the first quarter of last year, the BSP immediately cushioned any possible economic impact by reducing the central bank’s key policy rates.
For the whole of 2020, BSP’s key rates were slashed by a total of 200 basis points.
To date, the central bank’s reverse repurchase (RRP) facility rate is at record-low of 2 percent.
Aside from the rate cuts, the BSP also reduced banks’ reserve requirement ratio (RRR) by as much as 200 basis points and allowed for a certain period banks’ lending to micro, small and medium enterprises (MSMEs) as reserve requirement compliance.
To help the national government on funding requirements for coronavirus disease (Covid-19) programs, the BSP also entered into a P300-billion short-term repurchase agreement with the Bureau of the Treasury (BTr), which was redeemed last September.
A P540-billion provisional advance was also extended to the national government and this was settled last December.
Another P540-billion provisional advance was extended to the national government last January.
Diokno earlier said that since the start of the pandemic, the central bank has injected an equivalent of P2 trillion into the domestic economy and they are continuously monitoring developments to determine the ideal time to start withdrawing these measures.