MANILA,Philippines — The Philippines extended for another year its $1 billion bilateral borrowing agreement with the International Monetary Fund (IMF), as part of its commitment to help strengthen the global financial safety net.
In a statement, the IMF said the Philippines and 39 other member-countries have agreed to extend until end-2020 the terms of their 2016 borrowing agreements with the IMF, following the approval of the IMF executive board.
“The extension of terms preserves the IMF’s overall lending capacity of about $1 trillion for an additional year and is a prudent step to provide confidence to members and markets that the fund continues to have adequate resources to meet the potential needs of the membership,” the IMF said.
The IMF said this forms part of the fund’s action plan to beef up its resources.
“This step is part of a broader package of actions on IMF resources and governance reform—including support for maintaining the IMF’s current resource envelope and considering a doubling of the New Arrangements to Borrow (NAB) and a further temporary round of bilateral borrowing beyond 2020—endorsed by the IMF membership at the 2019 Annual Meetings,” the IMF said.
The Philippines, through the Bangko Sentral ng Pilipinas (BSP), decided to extend a $1 billion loan facility to the IMF through a bilateral borrowing agreement, which was first signed in 2013 to support countries going through financial difficulties.
The IMF said the agreements with the Philippines and several other countries supplement the fund’s quota and NAB resources to meet the potential financing needs of its members.
In 2016, IMF members committed to retain access to bilateral borrowing as a third line of defense in view of the continued uncertainty in the global economy.
The agreements had an initial term through the end of 2019, extendable for a further year by the executive board and with creditors’ consents.
The IMF said total commitments under the 2016 borrowing framework from 40 members amount to about $433 billion, based on end-September 2019 exchange rates.
As a member of the global community, the BSP shares the responsibility to contribute to the stability of the international monetary system given its sound macroeconomic fundamentals and strong external position.
The Philippines fully paid its loan to the IMF in 2006 and became a net creditor in 2011.