Rediscount availments up in Jan-Nov

AVAILMENTS of the central bank’s peso rediscount facility rose by more than two times in the first 11 months of the year.

Bangko Sentral ng Pilipinas (BSP) data on Tuesday showed thaat availments reached P122.16 billion in January to November 2019, 115.01-percent higher than the P56.81 billion borrowed in the same period a year ago.

The bulk of it — 65.13 percent

— were classified as other credits by the central bank. The loans were used for capital asset expenditures (38.75 percent), loans to other services (19.62 percent), permanent working capital (6.72 percent), and housing loans (0.04 percent).

The rest — 34.86 percent — were classified as commercial credits, with loans for importation taking up 24.93 percent, trading of goods accounting for 9.92 percent, and exports of goods or products with 0.01 percent.

“Meanwhile, production credits at 0.01 percent of total rediscounting loans pertain to bank loans for agricultural production,” the central bank said.

Rediscounting is a privilege given by the BSP to lenders qualified to obtain loans or advances using eligible borrowers’ papers

as collateral.

Under the rediscount window, a bank wanting to liquidate outstanding client loans can run to the BSP to swap these for cash at a discount.

Through the rediscounting facility, the central bank said it also made possible

the timely delivery of credit to all productive sectors of the economy. Rediscounting is one of monetary tools it uses to regulate the level of liquidity in the financial system.

In a comment, Union Bank of the Philippines chief economist Ruben Carlo Asuncion told TheManila Times the more than double increase in availments of the BSP’s peso rediscount facility “obviously lends credence to the fact that liquidity in the financial market has been really low.”

Since 2018, liquidity has steadily declined from a high of as much as 15 percent to just merely less than half of the said high last year, Asuncion noted.

“This low financial market liquidity can be readily attributed to the steep increase of monetary policy rates in 2018 meant to address runaway inflation,” he said.