April 14th, 2021
I hope now banks will have fewer excuses to lend to small businesses in need. We currently have historic levels of liquidity expansion via monetary policy. Much of our policy interventions were around keeping our banks strong – from granting them the highest levels of capitalization ever in the history of our state banks, to allowing banks to dispose of non-performing assets in tax-advantaged ways through the FIST Act.
While I welcome the upgrade of our outlook, we must not deny that it came at the expense of credit growth, which declined recently for the first time in more than a decade. Banks remained strong because they used the P1.9 trillion in liquidity that the BSP released to trade in the markets, instead of lending to struggling businesses.
Now, more than ever, bank-initiated borrower relief is important. Banks should offer ways to make existing debt payable on gentler terms for small businesses. Options for restructuring should be available to borrowers with existing payables. Flexible arrangements should be available to ensure that current debt load does not become non-performing.
Moving forward, we will continue to act on behalf of small businesses.
CREATE, which is now in effect, should further strengthen the banking sector, appetite for borrowing, and economic recovery in general. Lifeline measures, which I am championing in the House, should help improve the capacity of households and the private sector to carry existing debt. Bayanihan 3 – particularly direct cash transfers via universal basic income – will be a blessing to small businesses, as it will increase demand for their products.
The Senate is now also tackling the GUIDE Act. Both the TWG Chair, Senator Gatchalian, and the Chairperson of the Committee concerned, Senator Poe, are friends. I am in very productive conversations with them on how to make the bill more responsive to the needs of small businesses.