THE Bangko Sentral ng Pilipinas (BSP) yesterday said it “sees no apparent and immediate need” to avail of the Short-term Liquidity Line (SLL) provided by the International Monetary Fund (IMF).
Benjamin Diokno, BSP governor, said the country has sound economy and doesn’t have short-term liquidity needs.
“As I said before, structural reforms and sound economic management have helped the Philippines enter the COVID-19 crisis from a position of strength,” Diokno said.
The SLL is a new borrowing facility offered by the IMF to aid its members as part of its response to the coronavirus pandemic.
It is designed to be a liquidity backstop for members with very strong policy frameworks and fundamentals, who face potential, moderate, short-term liquidity needs because of external shocks that generate BOP difficulties.
Diokno said the country has an overall BOP surplus amounting to $7.84 billion as of end-December 2019, the highest in the last seven years.
“This is two times higher than the $3.7 billion surplus projected for this year,” Diokno stressed.
He also pointed out the local currency, the peso, is stable.
“Year-to-date (15 May 2020) the peso has outperformed most of its peers in the region which is least depreciated and second to the Taiwan dollar, which is the only currency that appreciated versus the US dollar,” Diokno said.
Diokno also stressed that the country has a hefty gross international reserves (GIR) at $89 billion as of end-March 2020.
“(This is) equivalent to 5.3 times the short-term debt based on original maturity and 3.8 times based on residual maturity. It is adequate to cover 7.9 months of imports of goods and services and payments of primary income,” Diokno said.
BSP projects that the GIR would be in the neighbourhood of $93 billion by the end of 2020.
The country’s debt-to-gross domestic product (GDP) ratio is also “manageable.”
Diokno said as a percentage of GDP, debt was estimated at below 40 percent as of end-2019.
Diokno stressed that structural reforms and sound economic management over the years have provided the BSP with monetary and fiscal space to safeguard lives and support livelihoods at this critical time.
Since the start of the enhanced community quarantine, BSP has released a “long list of prompt and decisive policy support measures” including the cumulative 125 basis points cut in the policy rate and the 200 basis points reduction in the reserve requirement ratio.
