MANILA, Philippines - From being a user of the resources of the International Monetary Fund for decades, the Philippines has attained creditor status, with half of its $251.5-million contribution to the IMF as of December tapped to help European countries such as Ireland, Portugal and Greece ease the impact of the financial crisis in the euro zone, the Bangko Sentral ng Pilipinas (BSP) said yesterday.
The BSP said the country’s improved status has become evident with its being a participant in the Financial Transactions Plan (FTP) of the IMF since 2010.
The FTP is the mechanism by which the IMF finances its lending and repayment operations through transfer of foreign exchange from members with strong external position to borrowing members.
“A member is said to have a creditor position in the Fund when the latter has used the holdings of the member’s currency to provide financial assistance to other members,” the BSP clarified.
The member gets interest earnings in return which reflect in its gross international reserves (GIR). The country’s GIR is expected to hit a record level of $79 billion this year from about $75 billion last year.
By virtue of their participation in the FTP, emerging market economies like the Philippines have joined international cooperation efforts to mitigate the spillover effects of Europe’s sovereign debt crisis.
The BSP said the country’s participation in the FTP would pave the way for the central bank’s admission to the New Arrangements to Borrow (NAB) facility of the IMF.
The NAB facility is a credit arrangement between the IMF and member countries or institutions aimed at forestalling situations that could impair the international monetary system.
“The participation in the NAB would be a significant step in strengthening international cooperation. This would also demonstrate the BSP’s strong commitment to global efforts to help address threats to the international monetary system,” it said.
The Philippines’ participation in the FTP marks a transition in the country’s relationship with the IMF.
In 2006, the BSP pre-paid all outstanding debts with the IMF, allowing the country an early exit from the fund’s Post-Program Monitoring Arrangement.
With its stronger external payments position, the country has achieved balance of payments surplus in the last seven years. In the region, the Philippines is also a contributor to the $120-billion Chiang Mai Initiative Multilateralization (CMIM) facility among member states of the Association of Southeast Asian Nations, China, Japan, South Korea, and Hong Kong.
The Philippines, through the BSP, has a contribution commitment of $4.552 billion to the CMIM.