BSP ready to use full arsenal to cushion economic impact of COVID-19

The Bangko Sentral ng Pilipinas (BSP) is ready to use all the tools necessary to soften the potential economic slowdown brought about by the coronavirus disease 2019 (COVID-19) in the country, even as it said the local economy will be able to withstand negative impacts brought about by the deadly illness.

"As I said before, the Philippines has ample monetary and fiscal space to overcome whatever adverse impact the pandemic has on the Philippine economy. Its economic fundamentals are intact," BSP Governor Benjamin Diokno said in a text message.

"We, the Monetary Board, are willing to use all the tools in our arsenal whenever necessary. We have to trust that the political leadership, based on science, will do the right thing," he elaborated.

Since the Philippines first confirmed a case of COVID-19, the BSP has already slashed policy rates by 50 basis points, providing economic stimulus given the COVID-19 health crisis. It also reduced the reserve requirement for all universal and commercial banks by 200 basis points starting March 30.

Aside from this, the BSP said it will purchase P300-billion worth of government securities to support government programs against the spread of COVID-19.

The BSP also last week said it will provide another P20 billion to the national government in support of efforts against COVID-19.

Earlier on Tuesday, the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF-EID) announced the extension of the enhanced community quarantine (ECQ) placed over Luzon until April 30.

"The decision to extend, modify or end ECQ will be based on science, on study of relevant data, and not on the pandemic's potential impact on the economy.
BSP has already displayed what it can do to soften the potential economic slowdown," said Diokno.

"As a people, we have to do our part -- cooperate, be supportive, and stay at home. The Philippine economy has been a resilient one," he added.

Still, Diokno said the Philippine economic fundamentals are intact and will be able to withstand negative effects of the COVID-19, as the country survived the collapse in 1984 and 1985 when the economy contracted by two consecutive -7% under a high inflation regime.

"Fast forward: the Philippine economy is much stronger and vibrant now than ever before -- stable peso, hefty gross international reserves(GIR), robust and well-capitalized bank industry, manageable debt-to-GDP ratio, well managed fiscal policy with higher allocation for public infrastructure. We're in a much better shape to overcome this pandemic," he explained.

"The BSP is committed to deploy its vast tools in a timely and appropriate manner to boost the Philippine economy and to protect the wellbeing of all Filipinos," added Diokno.—AOL, GMA News