Bangko Sentral ng Pilipinas Governor Amando Tetangco said the Philippines may provide the equivalent of as much as $500 million to the International Monetary Fund’s New Arrangements to Borrow facility, or NAB. This will be on top of the country’s contributions to the IMF’s Financial Transactions Plan, Tetangco said in an e-mail today.
From a borrower, the Philippines is now a creditor to the fund, the central bank said last week. As of December 2011, the nation had made available to the IMF about $251.5 million, of which more than half was disbursed to European countries such as Ireland, Portugal and Greece.
“The participation in the NAB would be a significant step in strengthening international cooperation and would demonstrate the BSP’s strong commitment to help address threats to the international monetary system. Among the ASEAN countries, the NAB participants include Malaysia, Thailand and Singapore.”
On lending to IMF as means to diversify reserves:
“Participation in the FTP and the NAB earns interest, called remuneration, at the SDR interest rate, which is currently 0.15 percent. The SDR interest rate is computed weekly, based on the weighted average of interest rates of financial instruments in the SDR basket, which is comprised of the U.S. dollar, the euro, Japanese yen and pound sterling.”
“In this respect, therefore, this participation in the IMF’s lending facilities is a form of diversification of the reserves.”
“But more than this, while it may provide an alternative investment instrument, lending to the IMF is recognition of the strength of our macroeconomic fundamentals (particularly our strong external liquidity position) and contributes to international cooperation efforts to help address threats to the stability of the international monetary system.”
On the Chiang Mai Initiative:
“The Philippines welcomes any opportunity to increase its contribution commitment to the Chiang Mai Initiative consistent with its continued support to the initiatives of the ASEAN plus 3 countries to further strengthen regional financial cooperation.”
“There are, in fact, ongoing discussions to enhance the effectiveness of the Chiang Mai Initiative in order to further boost the capacity of the region to safeguard against downside risks and challenges in the global economy. These initiatives may include, among others, the increase in the size of the Chiang Mai Initiative facility which would also involve the increase in members’ contributions including that of the Philippines.”