The central bank reported that nine countries in Europe had withdrawn $439.50 million from its credit facilities with the International Monetary Fund (IMF).
As a creditor-member nation of the IMF, these drawdowns are part of the Philippines’ assistance to establish global financial stability, said the Bangko Sentral ng Pilipinas (BSP).
“The strong external and reserve position of the BSP enabled the institution to increase its contributions in various fund pooling arrangements to support the stability of the international and regional financial systems,” the BSP said in a March, 2014 report.
One of these global arrangements is the IMF’s Financial Transaction Plan (FTP) of which the BSP has a floor participation amount of $462 million.
As of end-December, 2014, the BSP noted nine countries had drawn from funds exchanged by the BSP through the IMF’s FTP amounting to $355.60 million. Portugal, Ireland, and Greece were the biggest recipients. The BSP said this was to “address the financial crisis impacting the European economic zone.”
The IMF also accessed $83.91 million from the BSP’s credit line under the New Arrangements to Borrow (NAB) to finance the IMF requirements for Greece, Portugal, Tunisia, Cyprus, and Ukraine.
The Philippines’ NAB has slightly higher deposit reserves of $521 million compared to FTP.
The two IMF participation is separate from the country’s $1 billion other commitment to the multilateral group.
“With regard to the BSP’s loan commitment of $1 billion to the IMF in support of efforts to strengthen its capability to secure global economic and financial stability, no drawdown has been made since the agreement on 13 September 2013,” the BSP reported.
BSP Deputy Governor Diwa C. Guinigundo said the country’s IMF commitments are part of the BSP’s investments since they earn interests from these credit lines.
Guinigundo said in a previous interview that despite incurring a balance of payments (BOP) deficit in 2014, the BSP is keeping its IMF commitments both in the FTP and the NAB.
Last year for the first time in eight straight years, the BSP reported a BOP deficit of $2.87 billion due to a weakened external sector. The foreign exchange and foreign assets’ reserves also fell to $79.54 billion from $83.18 billion in 2013.
Cost-wise both the FTP and NAB are not considered government expenses because the commitment is to release reserves only when a credit arrangement is required.