BSP increases IMF lending to $ 2.4 billion – Manila Bulletin
The Bangko Sentral ng Pilipinas (BSP) increased its contribution to multilateral and bilateral borrowing from the International Monetary Fund (IMF) to $ 2.4 billion after doubling its participation in the New Arrangements to Borrow (NAB), the credit facility of the IMF.
Based on the BSP report, the $ 2.4 billion IMF loan facility includes a $ 1 billion NAB commitment of Special Drawing Rights (SDRs), another $ 1 billion bilateral borrowing arrangement. dollars and a financial transaction plan (FTP) of $ 400 million.
According to the BSP, it doubled its NAB commitment from 340 million SDR or $ 500 million to 680 million SDR or $ 1 billion.
The Philippines, through the BSP which is in itself a creditor member of the IMF, has consistently maintained a minimum participation of SDR 340 million in the NAB since its accession in 2010. However, in January of this year, the IMF has reformed the NAB and increased its size to $ 521 billion.
Besides the NAB, the BSP has a BBA of $ 1 billion with the IMF and participates in the FTP with $ 400 million.
The terms of the NAB and BBA have been extended by the BSP until 2025 for the NAB and the end of December 2021 for the BBA.
The NAB, which is the IMF’s second line of defense after payment of members’ quotas, is an arrangement in which the BSP provides resources to the IMF while the CTF is an exchange rate agreement between the IMF and certain members of the IMF.
The IMF also gets its money from BBAs, its third line of defense. The BSP said the BBA is the central bank’s commitment to provide the IMF with up to $ 1 billion in resources “to finance arrangements for countries with balance of payments difficulties.”
BSP’s subscription to the IMF stands at 2.04 billion SDRs or $ 2.9 billion as of 2016, its latest quota increase, while its SDR holdings stand at 856 million. SDRs or $ 1.22 billion. The SDR is the currency of the IMF and quotas are its main source of funding.
“The Philippines, through the PASB, have facilitated their continued participation in IMF financing facilities to ensure that the (IMF) has sufficient firepower to deal with looming threats to global financial stability,” said the BSP.
PASB also said that “the global and regional financial safety nets in place have provided some support to anchor financial stability as improvements have been made to ensure responsiveness to current member needs (IMF). In the event of a balance of payments issue or liquidity difficulty, members can use these funding arrangements that serve as an additional layer alongside an individual country’s first line of defense – its RIF (Gross International Reserves) – to preserve financial stability.
The BSP receives interest at the rate of the SDR – currently 0.05% – on its participation in the NAB. There are 40 IMF members in the NAB.
“The increased participation in these facilities testifies to the solidity of the country’s external position (sufficient international reserves, solid external debt management framework) despite the pandemic”, declared the PASB.
PASB first participated in the sourcing of IMF funds in 2013. It became a creditor member in 2010 after prepaying its last IMF loans in 2006.
The BSP in the original document detailing the contribution of the NAB said that transfers under the credit arrangement will have no impact on the country’s foreign exchange reserves as it will only result in a change in the allocation of the wallet. “There is no withdrawal for the BSP until the (NAB) is called,” the BSP said.
The BSP has a previous billion dollar note purchase agreement with the IMF, which expired in 2019.
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