The Monetary Board approved the continued participation of the Philippines, through the Bangko Sentral ng Pilipinas (BSP), in the Financial Transactions Plan (FTP) of the International Monetary Fund (IMF) for the period August 2024 to January 2025.
“This means that the country has maintained its net creditor position in the IMF which underscores the country’s sound macroeconomic fundamentals. The Philippines’ strong external position supports the country’s development goals which will be beneficial to the Filipino public,” the Monetary Board said.
The FTP is a currency exchange arrangement between the IMF and eligible members to facilitate the IMF’s lending operations with other member countries. The IMF pays interest, called remuneration, to the FTP participants like the Philippines.
In selecting members for inclusion in the FTP, the IMF considers the strength of the member’s balance of payments and reserve position, stability of the exchange and financial markets, as well as adequacy of country’s international reserve assets to ensure that the participating country will fulfill its obligations during the specified FTP period.
The Philippines first participated in the FTP in August 2010 in line with the Special Authority granted by the President of the Republic of the Philippines to the BSP.
“Given that the country’s external position remains strong, with ample gross international reserves to withstand external shocks, the country has been assessed to be eligible for continued participation in the FTP. This puts the Philippines in a favorable position to remain as a Fund financial partner, which is an indication of the country’s commitment to contribute to the global financial safety nets and support the resolution of possible crises,” the Monetary Board added.
The country’s balance of payments (BOP) position registered a surplus of $238 million in Q1 2024, lower than the $3.5 billion surplus recorded in Q1 2023.
The BOP surplus declined in Q1 2024 due to lower net inflows in the financial account, notwithstanding the contraction in the current account deficit.
The current account deficit in Q1 2024 reached $1.7 billion, lower by 60.6 percent than the $4.4 billion deficit posted in Q1 2023.
This development reflected the narrowing trade in goods deficit and the expansion of net receipts in the primary and secondary income accounts. This was partly muted by the contraction of net receipts from trade in services.
The trade in goods deficit narrowed as exports rose and imports fell. An estimated 98.4 percent of the increase in the exports value was due to volume changes, while 99.1 percent of the decrease in the imports value was driven by price changes.
The capital account recorded net receipts of $16 million in Q1 2024, up by 11.5 percent from the $15 million net receipts recorded in Q1 2023. This developed on account of the increase in net receipts from other capital transfers.
The financial account registered net inflows of $4.9 billion in Q1 2024, lower by 17.1 percent compared with the $5.9 billion net inflows posted in Q1 2023. This was attributable mainly to the decrease in net inflows in the other investment account. The decline, however, was tempered by the increase in the net inflows in the direct investment account, and the reversal of the portfolio investment account and financial derivatives account to net inflows (from net outflows).
The country’s gross international reserves (GIR) level, meanwhile, based on preliminary data, rose to $105.65 billion as of end-July 2024 from the end-June 2024 level of $105.19 billion.
The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income.
Moreover, it is also about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
The month-on-month increase in the GIR level reflected mainly the upward valuation adjustments in the Bangko Sentral ng Pilipinas’ (BSP) gold holdings due to the increase in the price of gold in the international market, net income from the BSP’s investments abroad, and the National Government’s (NG) net foreign currency deposits with the BSP.
Similarly, the net international reserves, which refers to the difference between the BSP’s reserve assets (GIR) and reserve liabilities (short-term foreign debt and credit and loans from the IMF) increased by $0.46 billion to $105.62 billion as of end-July 2024 from the end-June 2024 level of $105.16 billion.
