Philippines contributes to Asian monetary fund

MANILA, Philippines – The Philippines has allotted a portion of its foreign exchange reserves to a special regional fund, allowing it to withdraw two and a half times its contribution should the need arise in the future.

Estimated at $3.68 billion or about a tenth of the country’s dollar reserves, the country’s contribution represents its participation in the $120 billion Asian Monetary Fund (AMF), the Bangko Sentral ng Pilipinas (BSP) said.

The said fund features a “quick-disbursing, self-help" mechanism, allowing its members to access liquidity, especially in times of crisis, BSP deputy governor Diwa C. Guinigundo said on Friday.

Manila will give an additional $1 billion more to the AMF to reach its $4.77 billion quota as soon as its foreign exchange reserves rise over the near term.

Besides designed to “complement" the Washington-based International Monetary Fund (IMF), the special Asian fund will assist its member-nations nip their liquidity problems in the bud.

The special fund represents the hard and bitter lessons learned by countries such as Indonesia, Thailand, and South Korea which collectively drew more than $100 billion worth of IMF loans during the height of the 1997 Asian financial crisis.

Although Manila at that time already had a stand-by program with the IMF worth $1 billion, it only withdrew less than its allotment.

“Now is the best time to put up a program like this so that when peace time transforms to wartime then we have something to draw from," Guinigundo said on Friday.

Guinigundo and BSP Governor Amando M. Tetangco Jr. recently came from a meeting in Indonesia which was attended by central bank officials from all members of the 10-nation Association of Southeast Asian Nations (Asean).

Also participated in by representatives from China, Japan, and South Korea, the Asean+3 meeting established the AMF after three years of dialogues.

During the meeting, China and Japan agreed to contribute 64 percent of the AMF, totaling $76.8 billion in which each country will give one-half of the amount or $38.4 billion each.

South Korea contributed $19.2 billion to the fund.

Under the agreement, China and Japan were allowed to access up to one-half of their allotments while Korea may borrow up to 100 percent of its contributions.

Like the Philippines, Indonesia, Thailand, Malaysia, and Singapore each gave $4.77 billion, allowing them to borrow two and a half times its contributions.

An estimated $1 billion was given by Vietnam, $120 million from Cambodia, $60 million from Myanmar, while Lao People’s Democratic Republic and oil-rich Brunei were allotted $30 million each.

The so-called CMLB nations (Cambodia, Myanmar, Laos, and Brunei) which gave up five percent of their reserves for the AMF may access five times their individual contributions.

Moreover, any one country may only be allowed to borrow 20 percent of its loan entitlement from the special fund if it does not have a program with the IMF.

This means that countries intending to access 100 percent of their maximum allowable amount are required to have fiscal and monetary programs in place with the IMF to ensure loan repayment.

After all, the fund “is supposed to be for balance of payments assistance which is not supposed to be permanent," Guinigundo said. “The loan is supposed to be transitory or a liquidity problem rather than a solvency issue."

GMANews.TV

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