Finance Secretary Benjamin Diokno on Thursday rejected a lawmaker’s suggestion that the national government borrow anew from the Bangko Sentral ng Pilipinas to fund the budget deficit.
At the height of the COVID-19 pandemic, the BSP provided the government with a P540 billion interest-free loan and another P300 billion short-term loan.
Minority Congressman Edsel Lagman told the hearing of the House of Representatives’ Committee on Appropriations on the proposed 2024 budget of P5.768 trillion again to avail of the BSP facility and reduce the interest expense of the government and narrow the budget deficit.
The proposed budget for 2024 assumes a deficit of P1.357 trillion, or 5.1 percent of gross domestic product, narrower than the projected P1.499 trillion, or 6.1 percent of GDP, deficit in 2023.
Diokno, who was still BSP governor when the central bank granted the loan, said such lending to the government can only be done in “emergency situations” like the pandemic. He said allowing these kinds of loans could undermine the independence of the BSP.
