Gov't adds P20B to BSP capital

(Updated 8:24 p.m.) The government will sink P20 billion into the authorized capital stock of the Bangko Sentral ng Pilipinas as part of a P32.39-billion burst of spending for priority programs in the last days of 2012 and the early part of 2013. The amount allotted to the BSP is part of the P50 billion that the government needs to provide it as mandated by the New Central Bank Act of 1993. “It is only under the Aquino administration that BSP received bulk of its legally-mandated equity infusion from the national government. With this fresh capital, BSP will be able to recuperate its losses from stabilizing our currency,” said Budget and Management Secretary Florencio Abad. With the new infusion, the government is only P10 billion short of its obligation to the BSP. President Benigno S. Aquino III approved the release of the P32.29 billion, which came from the savings in the 2011 and 2012 budgets as well as P4.4 billion from government corporations' (GOCC) dividends. “With better-than-expected revenue collections this year as well as savings from the discontinuation of slow-moving expenditure items, the government is able to create a fiscal space of P32.29 billion that we can use for urgent expenditures,” said Abad. The funds will be used for infrastructure development, tourism, defense capability upgrades and other programs, he added. “With these new expenditure items as well as the new policies we introduced in the 2013 General Appropriations Act, we are confident that the pace and quality of government disbursements this year will be sustained in 2013,” Abad said. In a briefing on Wednesday, Bangko Sentral Governor Amando Tetangco, Jr. said the extra capital will help the central bank adapt to speculative inflows that buoy the peso’s strength.   “We welcome this development. It should help fortified the BSP as you're aware the current domestic environment has been influenced by continued capital flows,” he said. Tetangco added the capital infusion will help aid in the agency's recuperation from losses. “This has not been trivial. The BSP has incurred revaluation loses due to the peso’s strength,” he said. The BSP has been in the red for almost two years, with its losses totaling P68.36 billion in the third quarter, up 189 percent from P23.62 billion in the same period last year. The economy’s strength amid global uncertainties has resulted in the influx of foreign portfolio investments that caused the peso’s rise of up to over 7 percent year-to-date. This has caused a decrease in value in the Bangko Sentral’s dollar holdings. — Siegfrid O. Alegado/BM, GMA News