Manila c.bank sets up fund for typhoon-hit borrowers

MANILA, Oct 8 (Reuters) - The Philippine central bank said on Thursday it had created a 5-billion-peso ($108 million) special rediscounting window for banks with small business clients who had suffered damage from recent typhoons.

The lending window, under which banks can obtain fresh cash from the central bank using promissory notes or other eligible debt, was part of liquidity-enhancing measures ordered by President Gloria Macapagal Arroyo following massive typhoon devastation in and around the capital.

The central bank said in a statement it had widened the debt papers eligible as collateral for the rediscounting facility to include extended or restructured loans.

'This will enable the banks to liquefy their existing loans which could in turn be re-lent to borrowers affected by the typhoons,' it said in the statement.

The central bank said a special facility had to be set up with nearly 98 percent of its current 60 billion peso rediscounting window already utilised.

In February, the central bank raised its budget for the rediscounting window from 40 billion pesos as part of moves aimed at creating more liquidity in the market amid the global downturn.

Arroyo also ordered on Saturday a one-year deferment in repayment of salary and housing loans given by state pension funds, a move that could free up to 32 billion pesos in liquidity.

($1 = 46.46 pesos)

(Reporting by Rosemarie Francisco) (([e-mail]; [phone]; Reuters Messaging: [e-mail])) Keywords: PHILIPPINES ECONOMY/C.BANK (If you have a query or comment on this story, send an email to [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.