RP’s outstanding debt to IMF reaches $432.6M

The Philippines’ outstanding debt to the International Monetary Fund (IMF) reached SDR (special drawing rights) 322 million ($432.6 million) or 36.6 percent of the country’s quota as of end-July 2005.

The latest SDR was lower than the SDR 364.65 million registered as of end-May this year.

A member quota is broadly determined by its economic position relative to other members. Various economic factors are considered in determining changes in quotas, including gross domestic product (GDP), current account transactions, and official reserves.

When a country joins the IMF, it is assigned an initial quota in the same range as the quotas of existing members considered by the IMF to be broadly comparable in economic size and characteristics.

Quotas are denominated in SDRs, the IMF’s units of account. The largest member of the IMF is the United States, with a quota of SDR 37.1 billion (about $56.9 billion), and the smallest member is Palau with a quota of SDR 3.1 million ($4.7 million).

The IMF’s board of governors conducts general quota reviews at regular intervals (usually every five years).

The current SDR level could be part of the report that would be submitted by the Philippine economic team to the visiting IMF mission that arrived yesterday.

It was reported that the country may soon exit the post-program monitoring (PPM) program of the IMF because of the continued lowering of the quota. An IMF mission visits the country twice a year. The first visit was done last June this year.

The quota determines a country’s maximum financial commitment to the IMF and its voting power. It also has a bearing on access to IMF financing.

For the past years, the Philippines’ outstanding debt to the IMF has been falling below the country’s quota, or contribution as a shareholder in the past few years. But it has chosen to remain under the PPM.

Countries whose borrowings exceed the quota with the IMF are obliged to stay under the PPM program.

In 1998, the IMF approved a two-year stand-by credit for the Philippines equivalent to SDR 1.021 billion (about US$1.371 billion) to support the government‚s economic program for 1998-99. The authorities have expressed their intention to treat the arrangement as precautionary and will draw on the credit only if necessary. The final review under the Extended Fund Facility, approved on June 24, 1994, was also completed.

The Philippines joined the IMF on December 27, 1945. Its quota is SDR 633.4 million ($851 million).