The Department of Finance (DOF) said the recent P12.5 billion capital infusion to the Development Bank of the Philippines (DBP) will provide additional funds for the state lending institution's COVID-19 response programs, which include extending low-interest, easy-to-pay loans to the transport, healthcare, education sectors along with micro, small and medium enterprises (MSMEs) and other affected industries.
Finance Secretary Carlos Dominguez III said the DBP will also act as a wholesale bank that will buy the loans of smaller banks, cooperatives and other institutions to free up more credit for the benefit of other industries that need to recover from the pandemic-induced impact on the global economy.
Under the P12.5-billion appropriations approved by President Duterte, the fund will be allocated as follows: (a) P5 billion for the transportation sector with 68 transport cooperatives as beneficiaries; (b) P2 billion for healthcare assistance to 20 hospitals (c) P500 million for 17 schools; and (d) P5 billion for 230 MSMEs and other businesses.
“This P12.5-billion fund will help provide liquidity support to COVID-19 hit sectors. This will have a large multiplier effect in economic activity, given that every peso pumped into GFIs like the DBP will generate around 10 times its value in credit,” Dominguez said.
The President’s approval of the fund release is in accordance with the provisions of Republic Act (RA) No. 11494 or the Bayanihan to Recover As One Act (Bayanihan 2).
RA 11519 was signed by the President on Dec. 29, 2020 to extend the validity of appropriations under the Bayanihan 2 law for release, obligation and disbursement until June 30, 2021. The Bayanihan 2 law was originally set to lapse last Dec. 19.