The Philippine Online Chronicles

The Philippines has been a lender to economically troubled Eurozone countries since 2010, thanks to its record foreign exchange reserves, the Bangko Sentral ng Pilipinas said yesterday.

The Philippines has made around USD 250.5 million available to the International Monetary Fund’s Financial Transactions Plan (FTP) for crisis-stricken countries. Around half this amount was used by the IMF to aid countries affected by the European financial crisis, such as Ireland, Portugal, and Greece.

Due to the Philippines’ participation in the FTP, the country has effectively become a net lender reversing the net borrower status it has held for half a century since the IMF’s formation in 1945.

“The Philippines’ long-standing relationship with the IMF has evolved from being a prolonged user of the IMF’s resources to a stronger partnership marked by the country’s contribution to collective efforts in preserving the stability of the international monetary system,” BSP Governor Amando Tetangco Jr. said in a statement.

Tetangco added that the FTP funds the IMF’s loans and repayment programs through the strong foreign exchange resources of member nations to address the needs of financially weaker countries.

Creditor members use their currency to financially assist borrower members, gaining interest for the funds’ use. Creditor members do not relinquish control over the resources, as the interest earned, along with the original amount, will be reflected in the country’s Gross International Reserves (GIR).

The country’s GIR is expected to reach USD 79 billion by the end of the year, an all-time high. Last December, it was at USD 75 billion.

In 2006, the Bangko Sentral paid its IMF commitments ahead of schedule, and paved the way for the Philippines’ exit from the Fund’s Post-Program Monitoring arrangement.

The Philippines also contributed USD 4.55 billion to the USD 120 billion Chiang Mai Initiative Multilateralization fund, a reserve to support difficulties in balance repayments among the member nations of ASEAN, China, Japan, South Korea, and Hong Kong.