PHNO-HL; PH NOW AN IMF CREDITOR / IMF LOAN TO HELP STABILIZE WORLD ECONOMY

PH NOW AN IMF CREDITOR / IMF LOAN
TO HELP STABILIZE WORLD ECONOMY

MANILA, JUNE 29,
2012 (ABS-CBN) Gone are the days when the Philippines could only
borrow from the International Monetary Fund (IMF).
With record foreign exchange reserves, the country became a creditor in the
IMF system in 2010, lending to troubled nations in Europe, the Bangko Sentral ng
Pilipinas (BSP) reported Tuesday.
As of end-2011, the country infused $251.1 million in the IMF's Financial
Transactions Plan (FTP), a mechanism by which foreign exchange from members with
strong external position are lent to borrowing members.
More than half of the amount made available by the Philippines went to
European countries such as Ireland, Portugal and Greece, in an effort to address
the financial crisis impacting the euro zone, the BSP said.
"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 by enhancing global
financial safety nets," the central bank noted.
The Philippines' gross international reserves reached $63.4 billion in 2010,
helping reverse its IMF membership status from borrower to creditor-country.
This came four years after the country prepaid all its outstanding debt to the
IMF, ending nearly 45 years of its use of the multilateral lender's resources.

As of January this year, the Philippines' reserves hit a historic high of
$77.36 billion.
In the region, the BSP said the Philippines is also a contributor to the
Chiang Mai Initiative Multilateralization (CMIM) facility, a $120 billion
pooling arrangement among ASEAN countries that aims to provide quick liquidity
access in case of balance of payments difficulties.
The Philippines has committed to contribute $4.552 billion to the CMIM.
FROM PHILSTAR
$1 B loan to IMF to help stabilize world economy: gov't
(philstar.com) Updated June 26, 2012 11:15 PMComments (3)


[PHOTO -POVERTY IN THE
PHILIPPINES]
MANILA, Philippines (Xinhua) - The government said that the loan of $1
billion it extended to the International Monetary Fund (IMF) will be beneficial
to overseas Filipino workers (OFWs) and even local exporters.
"We are not wasting money. It's a loan. The IMF would pay us back. Extending
the loan will also help us because it's going to help the economies of Europe
where we have a substantial number of OFWs," said presidential spokesperson
Edwin Lacierda in a news briefing.
Europe is also a major destination for a number of Philippine products such
as electronics and tuna.
"We are a member of the global community of nations and it is in our interest
to ensure economic and financial stability across the globe," said Philippine
Central Bank Governor Amando M. Tetangco, Jr.
The Philippines had been a net borrower from the IMF until December 2006,
when it was able to pay all its loans in full.
FROM BULATLAT.COM

Aquino's billion-dollar 'loan' to IMF, an insensitive PR
stunt Published on June 27, 2012
The Philippines is still a debtor nation, and as Ibon Foundation said,
this 'lending' to the IMF used to be a sensibly un-hyped part of "management of
any country's international reserves."
By MARYA SALAMAT Bulatlat.com
MANILA –Various groups came close to questioning the sanity of the
Aquino government when it boasted recently that the Philippines is now a
"creditor nation," after it pledged one billion US dollars to the International
Monetary Fund's bailout kitty.
While some Filipinos commented in social networking sites that they fancy and
they feel proud of the seeming turn-around —the Philippines had often been
called a basket case or laggard compared to its neighbors—the billion dollar
pledge still did not change the economic standing of the Philippines. Or even
put it on the road to desired change. According to independent think-tank Ibon
Foundation, the Philippines remains a debtor nation to the tune of US$62.9
billion as of March 2012, or US$79.1 billion if other debts monitored by the
Bangko Sentral ng Pilipinas (BSP) but relegated to a footnote are included.
Members of KMU and Piston hold picket in front of BSP Jun 25 to protest
Aquino's "pledge" to IMF and austerity measures.(Photo by Marya Salamat /
bulatlat.com)
Although the Philippines stopped being a net borrower from the IMF in 2006,
it still has US$11.7 billion in multilateral debt including US$3.3 billion to
the World Bank (WB) and US$6.0 billion to the Asian Development Bank (ADB), Ibon
said.
Statements of various progressive groups also condemned the Aquino
government's latest act for the IMF as proof that this government will not only
injure but also insult Filipinos. Showing the latest strain of what the youth
has scorned early this year as "Noynoying" (pretending to be busy while really
doing nothing), Aquino is perceived today as already into a public relations
campaign in the build-up to the next State of the Nation Address (SONA) at the
end of July, with his campaign resting on just giving impressions and signals of
something good happening or being done, such as in the economy.
Fantasy factory
The Aquino government may have wanted to give the impression that the
Philippines is now able to lend the IMF US$1 billion because of its sound
management of government finances and of the economy, Ibon said in a statement.
But the international reserves are not really funds that the government has
earned and can lend or spend in the same way as, for example, its projected
Php1.6 trillion (US$37.5b) in revenues for 2012, Ibon explained. The
international reserves, it reminded Aquino, are foreign exchange assets
accumulated by the economy from various foreign exchange inflows, but which are
not like money held by the treasury.
Data gathered by Ibon showed that the Philippines has actually been lending
to the IMF for decades now with an interest-earning reserve position that, for
example, rose from US$113.4 million in 2000 to US$516.83 in May 2012. There has
likewise been billions of dollars in other lending to foreign entities. The BSP
has long had interest-earning deposits in foreign banks and held
interest-earning foreign securities including from the United States (US). This
lending rose from US$12.4 billion in 2000 to US$64.1 billion in May 2012.
Playacting: Aquino's make-believe, protesters' lampoon (Photo by Marya
Salamat / bulatlat.com)
"These have sensibly not been played up in the past because such 'lending' of
foreign exchange is normal occurrences in the management of any country's
international reserves and are not equivalent to lending of surplus government
cash," said Sonny Africa, executive director of Ibon Foundation.
The group believes the recent hype about "creditor nation" status is just
"part of a public relations campaign of a supposedly improving economy in the
build-up to the next SONA.
Affront
"The loan is very insulting to workers who have endlessly asked for a P125
wage increase that Aquino has repeatedly rejected. It is an affront to the poor
who can barely make both ends meet. It is the height of insensitivity when, in
the face of majority of poor Filipinos who are in dire need of affordable and
even free basic social services, the Aquino administration continues to renege
on its constitutionally-mandated responsibility to deliver quality social
services," said Gabriela Women Partylist (GWP) Rep. Emmi De Jesus.
The one-billion dollar Aquino hyped pledge underscored his penchant for
chest-thumping positive signals that fail to hide ugly truths. According to the
Gabriela solon, the Aquino government should "stop sending signals that our
economy is robust when in reality, our poor do not have livable wages and
adequate housing, and they could barely feed their family, send their children
to school, and prevent the untimely death from preventable diseases of
increasing number of mothers and infants."
To Filipinos suffering from "decaying public health and education services as
a result of the Aquino regime's budget cuts on social spending," Aquino's
one-billion dollar pledge to the IMF is "a slap on the Filipino people's face,"
the Communist Party of the Philippines said in a statement.
The revolutionary group reminded Aquino that "Debt servicing continues to eat
up the largest portion of the Philippines' financial resources." Last year, the
Philippine government used up as much as PhP357.1 billion ($83.8b) on debt
service or nearly 30% of the PhP1.2 trillion ($28.2b) 2011 budget. In
comparison, the Aquino regime only allocated a little more than P170 billion
($3.99m) for education and around P40 billion (US$938m) for health.
According to Ibon, more than Php5.1 trillion (US$119.7b) national government
debt (of which almost half are foreign debt) explains why debt service is
chronically the single largest expense of the government, for instance reaching
Php738.6 billion (US$ 17.33b) in interest and principal payments just in 2012.

Not for people's benefit
The IMF has continuously given assistance to financially distressed countries
amid a protracted global depression. In exchange, it has required the
implementation of different austerity measures. "This has consequently led
people of different nations to suffer from austerity programs resulting to
unemployment, meager wages, and higher costs of living," said Fortunato
Magtanggol, spokesman of Revolutionary Council of Trade Unions-Southern Tagalog.

It is also for this reason that critics of Aquino's IMF pledge have lashed
out even more at Aquino's announcement.
"The Aquino government is making a pro-imperialist lie in saying that the IMF
is helping countries cope with the crisis," said Leandro "Doods" Gerodias,
deputy secretary general of Kilusang Mayo Uno (KMU) in a picket in front of the
Bangko Sentral ng Pilipinas (BSP) office early this week. The labor leader said
"the workers and peoples of Europe and the world are in fact up in arms against
the IMF and its austerity measures."
Members of KMU protested before the BSP because they said they cannot sit
back and relax as the Aquino government is following the IMF dictates and using
the foreign exchange sent in by Overseas Filipino Workers (OFWs) against fellow
workers and poor people in other countries.
KMU told Aquino his government should find other ways of using the country's
foreign reserves "in ways that actually benefit OFWs and Filipino workers.
Lending it to the IMF will harm rather than help the overseas and domestic
Filipino workers."


Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
All
rights reserved




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