Phl commits $1B to beef up IMF coffers

MANILA, Philippines - The Philippines has contributed $1 billion to the latest lending facility of multilateral lender International Monetary Fund (IMF) that has already reached $456 billion to address financial crises including the sovereign debt debacle in Europe.

The commitment was made by the Philippines during the G-20 Leaders’ Summit in Los Cabos, Mexico wherein 12 member-countries including the Philippines committed additional funds to beef up the facility.

“Countries large and small have rallied to our call for action, and more may join. I salute them and their commitment to multilateralism. As a result, total pledges have risen to $456 billion, almost doubling our lending capacity,” IMF managing director Christine Legarde said in a statement.

During the summit, countries that pledged additional amounts include China with $43 billion, Brazil with $10 billion, India with $10 billion, Russia with $10 billion, Mexico with $10 billion, Turkey with $5 billion, South Korea with $2 billion, Columbia with $1.5 billion, Malaysia with $1 billion, New Zealand with $1 billion, Thailand with $1 billion, and the Philippines $1 billion.

“With today’s announcements by an additional 12 countries, a total of 37 IMF member countries, representing about three-fifths of total quota in the organization, have joined this collective effort, demonstrating the broad commitment of the membership to ensure the IMF has access to adequate resources to carry out its mandate in the interests of global financial stability,” Lagarde said.

She pointed out that the resources would be made available for crisis prevention and resolution and to meet the potential financing needs of all IMF members.

“They will be drawn only if they are needed as a second line of defense after resources already available from quota and the existing New Arrangements to Borrow are substantially used. If drawn, they will be repaid with interest,” she explained.

According to her, the IMF is committed to assuring members’ interests and resources are safeguarded.

The IMF has been advocating the need to build a stronger global firewall of additional resources to contain any further financial crises as the global economy has entered a “timid” recovery and still faces high risks.

Since the start of the global economic crisis in 2007, the IMF has committed more than $300 billion in loans to its member countries. Since then, the fund has reached $456 billion.

The G-20 commitment shows the resolve of the international community to have available tools to defend against crisis.

The Philippines used to be a net borrower as far as its membership with the IMF was concerned. But in 2006, the country prepaid all its outstanding debts with the IMF given its much-improved external liquidity position.

In 2010, the Philippines became a lending IMF member by participating in the Financial Transaction Plan (FTP) as a creditor country.

It contributed more than $125 million as of end-2011 to the pool of money disbursed by the IMF to help address the financial crisis confronting economies in Europe. In all, the Philippines has made available about $251.5 million to the IMF to finance the assistance program.

Of the amount, more than half was actually disbursed by the IMF to European countries battling the financial crisis, including Ireland, Portugal and Greece.