The Philippines through the Bangko Sentral ng Pilipinas (BSP) which is a member of the International Monetary Fund (IMF) in its own right, has renewed an estimated $750 million (special drawing rights or SDR540 million) commitment under the IMF’s Financial Transactions Plan (FTP) from August 2024 until January 2025.

The BSP is a creditor-member of the IMF since 2010 after prepaying its last loans in 2006. It first participated in the FTP in 2010. The Philippines joined the IMF as regular member in 1956.

The BSP in a statement on Wednesday, Aug. 21, did not disclose the amount of the FTP participation, but based on a previous report, the BSP is ready to provide SDR540 million under the FTP. This is the floor participation in the IMF facility. SDR is the IMF’s monetary reserve currency and its unit of account.

The BSP has confirmed that the Monetary Board approved the continued participation of the Philippines via the BSP in the FTP.

“This means that the country has maintained its net creditor position in the IMF which underscores the country’s sound macroeconomic fundamentals. The Philippines’ strong external position supports the country’s development goals which will be beneficial to the Filipino public,” said the BSP.

The FTP is a currency exchange arrangement between the IMF and eligible members to facilitate the IMF’s lending operations with other member countries. The IMF pays interest, called remuneration, to the FTP participants like the Philippines, the BSP explained.

“In selecting members for inclusion in the FTP, the IMF considers the strength of the member’s balance of payments and reserve position, stability of the exchange and financial markets, as well as adequacy of country’s international reserve assets to ensure that the participating country will fulfill its obligations during the specified FTP period,” said the BSP.

It added that “given that the country’s external position remains strong, with ample gross international reserves to withstand external shocks, the country has been assessed to be eligible for continued participation in the FTP.”

“This puts the Philippines in a favorable position to remain as (an IMF) financial partner, which is an indication of the country’s commitment to contribute to the global financial safety nets and support the resolution of possible crises,” the BSP also said.

Last year, the BSP raised its IMF quota by 50 percent to SDR3.1 billion. This is equivalent to $4.2 billion.

Increasing the quota payments is required to enhance lending resources.

In December 2023, BSP Governor Eli M. Remolona Jr. said they have renewed lending facilities in the IMF and will continue to contribute as needed for the various IMF facilities as standby resources. Renewal is typically for one year.

The IMF in November last year announced that its executive board has approved a proposal to increase IMF quotas by 50 percent.

The IMF said that once quotas are increased, borrowed resources such as the Bilateral Borrowing Agreements (BBAs) and New Arrangements to Borrow (NAB) will be reduced “to maintain the Fund’s (IMF) current lending capacity.”

As of end-2022, the BSP as creditor-member of the IMF has a total commitment of $2.26 billion in various IMF facilities as standby resources, up from $1.8 billion in 2021.

This includes a BBA worth $575 million by end-December 2022. The BBA is the central bank’s commitment to provide resources to the IMF to finance arrangements for countries with balance of payments difficulties.

Meanwhile under the FTP, the BSP has a currency exchange arrangement with Portugal, Ireland, Greece, Moldova and Ukraine as of end-2022.

The FTP is a currency exchange arrangement to facilitate lending operations between the IMF and its members. The use of a member’s currency entails a change in the composition of its international reserves, while the overall level of its reserves remains unchanged.