PH to maintain floor amount as creditor for IMF facilities
The Philippines is maintaining floor amounts in the International Monetary Fund’s (IMF) credit facilities as a net creditor-status member since actual demand from the IMF for funding has decreased.
The Bangko Sentral ng Pilipinas (BSP), which in its own right is an official institution member of the IMF, is a participant to the New Arrangements to Borrow (NAB) facility with an initial contribution of $500 million.
BSP Deputy Governor Diwa C. Guinigundo said demand for IMF credit is lower not just for the NAB but for other arrangements the BSP have with the IMF. The Philippines is also a participant in the Financial Transactions Plan (FTP) and has a standing commitment to allot $1 billion under its Note Purchase Agreement (NPA) in the European panel.
Guinigundo however said that since there is decreased demand for credits, the country’s participation is not necessarily floor ceiling amount at all times. “We review (NAB and FTP) every quarter and we have different levels,” he said.
The BSP deputy chief said there is less “demand from additional financing from the IMF so the requirements for FTP and NAB (is also reduced).” The $1 billion commitment from the Philippines has never even been “called.”
NAB is a credit arrangement between the IMF and a group of members and institutions to provide supplementary resources to the IMF to enhance global financial stability.
The Philippines’ position in the NAB amounts to $460 million and about $415 million in the FTP. In all, including the NPA, the country has credit available of almost $2 billion. “The actual drawings (drawdowns) from these amount is very low,” said Guinigundo.
At the end of 2016, nine countries had drawn from the FTP amounting to $362.47 million. Drawdowns have also been made from the NAB worth $133.16 million for eight countries.
As FTP participant, the IMF has recognized the Philippines' sufficiently strong balance of payments and reserve position. As for the NAB contribution, while it has no significant impact on the country’s reserves, the participation signals the country’s readiness to help prevent global financial crisis.
At the end of 2016, the BSP has asked the new Duterte administration to continue with its $1 billion commitment to the IMF until 2020 as this will support the IMF for its “crisis prevention and resolution” programs.
The BSP first participated in the IMF fund sourcing in 2013. It became a creditor-member in 2010.
According to the central bank, while no drawdown has been made since the agreement was signed on September 13, 2013, it has “helped boost confidence in the adequacy of the IMF’s resources to restore global economic and financial stability.”
“In this context, the BSP requested concurrence from the Office of the President to continue its participation in the IMF’s bilateral borrowing facility until 2020,” said the BSP.
The IMF announced last year that its bilateral borrowed resources amounting to $340 billion have a fresh commitment until 2020 while access to the lending facilities have a new framework.