The Bangko Sentral ng Pilipinas (BSP) has availed of $734 million worth of short-term loans in October as part of international reserve management.
As of end-October, the country’s gross international reserves (GIR) totaled $101.035 billion, up by $2.919 billion from end-September’s $98.116 billion.
Based on available data, the BSP has not increased its GIR-related liabilities in the last 10 years since the data only goes back to 2013.
Incidentally, the BSP first participated in the International Monetary Fund (IMF) financing or fund sourcing in 2013 as a creditor-member. The BSP in its own right is a member of the IMF.
Meanwhile as of end-October this year, the country’s net international reserves (NIR) which refers to the difference between the BSP’s reserve assets or the GIR and reserve liabilities, increased by $2.223 billion to $100.301 billion.
Reserve liabilities are short-term foreign debt and credit and loans from the IMF.
As described by the BSP, NIR includes gold monetization and revaluation of reserve assets and reserve-related liabilities that are not part of the country’s balance of payments (BOP). It is also the difference between the GIR and short-term liabilities and the Use of Fund Credits which are “the sum of outstanding drawings from the IMF under various policies and facilities, other than drawings under the reserve tranche.”
The BSP as creditor-member of the IMF has a total commitment of $2.26 billion as of end-2022 in various IMF facilities as standby resources, up from $1.8 billion in 2021.
This includes a bilateral borrowing agreement (BBA) worth $575 million which the BSP said will likely be renewed by the end of 2023. The BBA is the central bank’s commitment to provide resources to the IMF to finance arrangements for countries with BOP difficulties.
Besides the BBA, the BSP has maintained other arrangements with the IMF including the $784.9 million Financial Transactions Plan (FTP) and the New Arrangements to Borrow (NAB) amounting to $907 million.
The BSP became a creditor-member in 2010 after pre-paying its last IMF loans in 2006.
In 2011, the BSP has also fully paid its $500 million loan taken out in 2005 by the full redemption of the remaining gold-backed $200 million.
The BSP settled the last principal payments for the full redemption of the loan, as $120 million and $80 million Floating Rate Notes which originally formed part of the $500 million term loan facility.
The total principal payments of the public sector which includes the BSP, amounted to $6.6 billion in 2010 or 70 percent of all principal amortizations during the year, of which $4.6 billion or 69.7 percent were bond redemptions.
The central bank borrowed a total of $2.2 billion for liquidity purposes, mainly to stock up on the country’s international reserves.
The BSP has repaid part of the loans in 2009, consisting of $1.2 billion securities-backed loans from the Bank for International Settlements (BIS) and another $1 billion gold-backed loans or repurchase deposit from JP Morgan Chase. The loans were short-term borrowings for reserve management.
It was in 2008, in the middle of a global financial crisis, that BSP as a government independent institution borrowed almost $1.5 billion short-term loans and deposits, partly as buffer funds for BOP position. It was also in 2008 when the BSP borrowed $500 million short-term loans from the BIS.
In 2000, BSP had a loan burden of almost $5 billion which was further increased to almost $6 billion in 2001. By 2004, its outstanding foreign debt decreased to $2.721 billion and to $1.866 billion in 2005. By 2006, the BSP recovered $1.43 billion of its foreign loans and brought the total outstanding loans down to just $440 million.