BSP is still in IMF facilities

By Lee C. Chipongian

The Philippines through the Bangko Sentral ng Pilipinas (BSP) remains a participant to two International Monetary Fund (IMF) facilities — the Financial Transactions Plan (FTP) and the New Arrangements to Borrow (NAB) — despite shortfalls in the external payments accounts.

Bangko Sentral ng Pilipinas (BSP) deputy Governor Diwa C. Guinigundo Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo

Both FTP and NAB are global financial safety nets that creditor member countries to the IMF are part of. “We are still involved (with the IMF),” said BSP Deputy Governor Diwa C. Guinigundo.

Guinigundo said the BSP is maintaining the same amount of commitment to the IMF. “Our commitment is based on the metrics provided by the IMF.” The BSP still subscribes to the lending facilities despite two straight years of balance of payments deficit. “They continue to consider our external payments position as fundamentally sound,” Guinigundo said.

The BSP’s NAB and FTP are renewed often and on a quarterly basis. The Philippines’ position in the NAB amounts to $460 million and about $415 million in the FTP.

The country also has a $1 billion Note Purchase Agreement (NPA) with the IMF, and with NAB and FTP, has a total $2 billion in the IMF as creditor member.

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 recognised the country's sufficiently strong BOP and reserve position. The commitment and contribution – particularly in the NAB -- has no significant impact on the country’s gross international reserves (GIR).

As of end-February, GIR stood at $82.78 billion. Last year, it fell to $79.19 billion from $81.57 billion.
The country's BOP as of end-February was at a surplus of $3.17 billion, reversing the deficit of same time last year of $961 million.

The Philippines’ $1 billion loan commitment under the NPA to the IMF will expire in December 31 this year.
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 2018 report, the BSP said NPA commitment 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 (IMF) resources to restore global economic and financial stability."