Registration of corporate foreign loans set to end on July 15

The Bangko Sentral ng Pilipinas (BSP) is not keen on extending the temporary window that allows private companies to register foreign loans obtained without approval from the central bank as part of the liberalization of the country’s foreign exchange measures.

The regulator said the six-month temporary window for the registration of foreign loans or borrowings obtained without the requisite prior approval from BSP is set to expire on July 15.

As part of the 10th wave of the BSP’s foreign exchange liberalization measures approved last December, the BSP waived the approval requirement for purely private sector loans or those without guarantee from or exposure of any public sector entity.

However, the said loans need to be registered as the central bank opened a temporary window from Jan. 15 to July 15 to allow private sector to register the loans without the required BSP approval.

“Concerned parties are, therefore, urged to file their requests for registration soonest to avoid crowding of applications towards the end of the temporary win- dow,” the BSP said.

It said applications would be processed on a first-come, first-served basis, provided all requirements are complied with.

Unregistered private sector foreign loans or borrowings from the public sector obtained without the requisite prior approval from BSP that are outstanding and booked in the borrower’s record may be applied for registration through the central bank’s International Operations Department.

BSP Governor Nestor Espenilla Jr. had said the ongoing foreign exchange reforms are in line with the BSP’s thrust to further open up the economy through a more liberal policy framework.

“The reforms aim to promote greater ease in the use of the foreign exchange resources of the banking system for legitimate needs by further relaxing foreign exchange rules and further streamlining of procedures and requirements,” Espenilla said.

The BSP chief said the recent wave of reforms was also done with due recognition of the continuing volatility in the external financial markets.

Furthermore, Espenilla said the requirements to sup- port applications for registration and purchase of foreign exchange from the banking system were also substantially trimmed down.

Likewise, the BSP liberalized the use of the form of documents by allowing the use of scanned application to purchase foreign exchange form.

The revised rules, Espenilla said, aim to further facilitate financing of critical and urgent projects and activities that could contribute to a more vibrant business climate conducive to growth.

In the 1990s, the then Central Bank of the Philippines (CBP) started liberalizing its foreign exchange regulations and actively carried out 11 waves of foreign exchange liberalization reforms starting in 2007.

These include reforms pertaining to current and capital account transactions, and prudential regulations in order to promote more disciplined macroeconomic policies, greater financial depth, technological transfer, and institutional development.

The reforms were also employed to make the country more responsive to the needs of increasing integration with global markets.