Philippines remains net creditor to IMF
Inquirer.net
22 August 2024
The Philippines has maintained its status as net creditor to the International Monetary Fund (IMF), thanks to the country’s “strong external position” that allows it to continue to lend more than it borrows from the multilateral institution, the Bangko Sentral ng Pilipinas (BSP) said.
In a statement on Wednesday, the BSP said the powerful Monetary Board had approved the continued participation of the Philippines in the Financial Transaction Plan (FTP) of the IMF for the period of August 2024 to January 2025.
The FTP is a currency exchange arrangement between the IMF and eligible members to facilitate the Washington-based institution’s lending operations with other member countries. The IMF pays interest to FTP participants like the Philippines.
“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,” the BSP said.
“This puts the Philippines in a favorable position to remain as a Fund 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,” it added.
In selecting member countries for inclusion in the FTP, the IMF considers the strength of balance of payments (BoP) and reserve position, as well as the stability of the exchange and financial markets. The IMF also looks into the adequacy of international reserve assets to ensure that obligations will be fulfilled during the specified FTP period.
Latest central bank data showed that the Philippines has a seven-month BoP surplus of $1.5 billion, approaching the $1.6 billion dollar windfall for the entire 2024.
That, in turn, translated to a gross international reserve (GIR) of $106.7 billion as of July, from $105.2 billion in June.
The BSP’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the IMF and special drawing rights. The GIR serves as the country’s buffer fund during extreme economic conditions when there are no export earnings or foreign loans.
By convention, GIR is viewed to be adequate if it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income. The BSP said the amount of buffer funds as of July could cover 7.9 months’ worth of imports of goods, way above global standards.
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