By Lee C. Chipongian
The Philippines’ $1-billion loan commitment to the International Monetary Fund (IMF) will expire on December 31, 2019 while other arrangements are reviewed quarterly.
The Bangko Sentral ng Pilipinas (BSP) said it has renewed the Note Purchase Agreement (NPA) to the IMF “to supplement the global financial safety net.” The extension was already announced in October last year, except for the actual date of expiry.
The previous NPA agreement expired last September 13, 2017 and re-established on November 2 following President Duterte’s consent for the BSP to renew the commitment.
In a report, the BSP said it “is a testament to the country’s sound macroeconomic fundamentals and strong external position.” It added that “the agreement … will contribute towards boosting confidence in the adequacy of the Fund’s (IMF) resources to restore global economic and financial stability.”
The Philippines through the BSP is also a participant to two other IMF facility, the Financial Transactions Plan (FTP) and the New Arrangements to Borrow (NAB) – both are also global financial safety nets.
“The IMF had drawn from funds exchanged by the BSP to finance arrangements for countries with balance of payments difficulties. Similarly, the Fund (IMF) has made drawdowns from the BSP’s NAB commitment to finance extended arrangements for Greece, Portugal, Tunisia, Cyprus, Ukraine, Jamaica, Jordan, and Pakistan,” the BSP reported.
The BSP first participated in the NPA in 2013 since becoming a net creditor-member of the IMF in 2011.
In December 2006, the BSP prepaid its last IMF loans of $220 million. The loans were originally scheduled to mature in April 2007 but because of a large enough gross international reserves (GIR) at the time of $22 billion, the BSP decided to pre-terminate its last IMF obligations.
The BSP’s NAB and FTP, in the meantime, are renewed mostly on a quarterly basis.
The Philippines’ position in the NAB amounts to $460 million and about $415 million in the FTP. In all, including the NPA, the country has credit available of almost $2 billion in the IMF.
The actual drawdowns from the NAB and FTP facilities are very low and none from NPA since it was entered into in 2013.
As an NPA, FTP and NAB participant, the IMF has recognized the country’s sufficiently strong balance of payments (BOP) and reserve position. The commitment and contribution – particularly in the NAB — has no significant impact on the country’s GIR. As of February this year, the GIR level was at $80.43 billion which was 1.2 percent down year-on-year.