Rediscount loans down 19.6%

MANILA, Philippines - Total rediscounting loan availments by banking institutions fell by 19.6 percent in the first five months after monetary authorities raised the rate on a short-term lending facility to four percent from 3.5 percent last January.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday that total availments under the BSP’s peso resdiscount facility reached P41.84 billion from January to May this year or P10.22 billion lower than the P52.06 billion availed in the same period last year.

About 55 percent of the total rediscounting loans availed by commercial, thrift, and rural banks went to commercial credits while 28 percent went to other services, nine percent to capital expenditures, 2.7 percent to permanent working capital, and 1.5 percent to housing.

Meanwhile, about 3.8 percent of the total availments under the peso rediscount facility went to agricultural and industrial credits.

Aggregate availments under the Export US dollar facility amounted to $45.4 million from January to May that benefitted 23 exporters. There was no availment under the Export Yen Facility during the period.

The BSP added that the availments under the peso rediscount facility excluded the P9 million rediscounting loans granted to micro, small and medium enterprises (MSMEs) affected by tropical storm Ondoy and typhoon Pepeng last year. 

It would be recalled that the BSP approved the established additional P5 billion budget for rediscounting to cover for typhoon-affected MSMEs. The amount was on top of the rediscounting budget of P60 billion.

However, the P5 billion budget previously earmarked to assist bank customers adversely affected by tropical storm Ondoy and typhoon Pepeng last year has been rechanelled to help clients affected by the El Nino weather conditions.

Damages brought about by the El Niño phenomenon would reach P20 billion based on estimates by the Department of Agriculture. 

The BSP has pegged its peso rediscount rate at four percent per annum under its peso rediscount facility for all maturities effective Feb. 1. It has also pegged the rate for loans under the Exporters’ Dollar and Yen Rediscount Facility (EDYRF) at 0.35125 percent per annum for its US dollar facility and 0.16188 percent per annum for its Yen facility.

The central bank has slashed key policy rates by 200 basis points from December 2008 to July last year as part of easing measures to boost the country’s slackening domestic economy. This brought the overnight borrowing rate to a record low of 4.0 percent from 6.0 percent and the overnight lending rate to 6.0 percent from 8.0 percent.

The BSP decided to keep its key policy rates unchanged for eight consecutive policy-setting meetings but paused the implementation of an exit strategy in light of the debt crisis in Europe, the growing concerns between North and South Korea as well as the stronger-than-expected gross domestic product (GDP) growth of 7.3 percent in the first quarter of the year.

The BSP lifted several liquidity-enhancing measures introduced starting November of 2008 to cushion the impact of the global financial meltdown.

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