BSP sees no need for IMF funding

THERE is no immediate need for the Philippines to borrow from the International Monetary Fund ( IMF) as the country’s external position remains strong, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said on Tuesday.

“BSP sees no apparent and immediate need to avail of [the] IMF’s Short-term Liquidity Line (SLL),” he told reporters in a message via Viber.

According to Diokno, SLL is a new borrowing facility offered by the IMF to aid its members as part of its response to the coronavirus disease 2019 (Covid-19) pandemic.

It was designed to be a liquidity backstop for members with very strong policy frameworks and fundamentals, who face potential, moderate and short-term liquidity needs because of external shocks that generate balance of payments (BoP) difficulties, he added.

“As I said before, structural reforms and sound economic management have helped the Philippines enter the Covid-19 crisis from a position of strength,” the central bank chief noted.

Diokno stressed that the country’s payments balance remains positive in 2019 with $7.84 billion — the highest in the last seven years.

Latest data, however, showed that the payments balance position reverted to a $516-million shortfall in the first two months of 2020, an about-face from the $3.17-billion surplus posted in the same period last year.

The BSP head also emphasized the Philippine peso’s stability, saying the local currency “has outperformed most of its peers in the region which is least depreciated and second to the TWD (New Taiwan dollar), which is the only currency that appreciated versus the US dollar” as of May 15 this year.

Diokno also highlighted the country’s hefty gross international reserves, which hit a record-high $88.99 billion in March, equivalent to 5.3 times the short-term debt based on original maturity and 3.8 times based on residual maturity.

“It is adequate to cover 7.9 months of imports of goods and services and payments of primary income,” he added.

Diokno said the Bangko Sentral projects the GIR to be in the neighborhood of $93 billion by the end of 2020.

Lastly, he underscored the Philippines’ manageable debt-to-gross domestic product (GDP) ratio.

“As a percentage of GDP, debt was estimated at below 40 percent as of end-2019,” Diokno said.