THE PHILIPPINES has renewed a $1-billion loan pledge to the International Monetary Fund (IMF), the Bangko Sentral ng Pilipinas (BSP) said in a statement yesterday.
The country’s commitment to the multilateral lender was renewed earlier this month by Governor Nestor A. Espenilla, Jr., who signed a note purchase agreement with the IMF in Washington D.C. that extended the life of the $1-billion loan facility that was approved back in 2013. The commitment allows the IMF to tap the amount pledged by the Philippines “to support countries going through financial difficulties” in order to minimize potentially adverse spillovers to the global economy.
The Philippines itself had relied on the IMF’s funding aid for 45 years, with the amount fully settled ahead of schedule in December 2006.
The country has been a net creditor to the global monetary authority since 2011, meaning the economy is now sound enough to even extend loans to the IMF.
These funds are then used to provide financial assistance to other member-states in trouble, with the money pledged earning interest once used. The amount is considered part of the country’s reserves placed with the IMF.
“As a member of the global community, the BSP shares the responsibility to contribute to the stability of the international monetary system given its sound macroeconomic fundamentals and strong external position,” the central bank said in a statement.
The loan facility extended by the BSP has been left untouched since September 2013, so the central bank pledged the same amount this time.
The country can tap as much as $1.201 billion in special drawing rights from the IMF, computed from the lender’s reserve currency basket as of end-September. On top of this amount, reserves parked with the IMF stood at $448.1 million, according to latest available central bank data.
These funds form part of the country’s gross international reserves, providing a buffer against external financial shocks. International debt watchers have cited the Philippines’ ample reserves as a credit strength, with the current 8.5-month import cover well above the international standard of three months. — Melissa Luz T. Lopez