The Bangko Sentral will raise its rediscount budget for a second time in four months to spur lending and support economic growth.

Bangko Sentral will increase its rediscount budget to P60 billion starting March 2 from the current P40 billion, it said in a statement yesterday. The central bank last raised its lending budget in November when it also reduced the amount of money it requires banks to put aside as reserves.

?The easing inflation outlook provides greater room for monetary policy to support the liquidity and credit requirements of the economy,? Bangko Sentral Gov. Amando Tetangco said in the statement.

Policy makers across Asia are boosting cash in financial markets and lowering borrowing costs to shield their economies from the global slump. The Philippines has also pledged to increase public spending to bolster an economy that the government says may grow as little as 3.7 percent this year, the slowest expansion in eight years.

The central bank also approved an increase in the loan value of a bank?s collateral, allowed banks to incur a higher bad-debt-to-total loans ratio and removed a requirement for a surety agreement. Bangko Sentral will also start charging banks 0.5 percentage point less than its overnight borrowing rate for funds, replacing a previous rate based on Treasury bills.

?These changes would provide more liquidity and credit in the banking system to ensure the orderly functioning of financial markets should global financial conditions worsen,? Tetangco said. The changes would allow banks to ?have access to additional funds they can relend.?

The central bank increased the ceiling for the bad loans ratio to 10 percentage points above the industry average from the current 2 percentage points.

?This will increase money supply and encourage lending? at a lower rate, said Ricky Cebrero, treasurer at East West Banking Corp. in Manila.

Bangko Sentral Deputy Gov. Diwa Guinigundo said the measures were aimed at avoiding a ?tightness in liquidity.?

The central bank said the bad loans ratio ceiling was still more stringent than the requirement imposed by government banks, such as the Development Bank of the Philippines and the Land Bank of the Philippines. Eileen A. Mencias