MANILA, Philippines - The Philippines is not expected to tap any regional financial arrangements anytime soon despite the bouts of volatility being experienced by local markets.
“I don’t think we (the Philippines) need it at this point,†Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo told reporters.
Guinigundo explained that the Philippines has more than enough international reserves that it can use in case it is faced with short-term liquidity problems.
“We have $83 billion in reserves... Then we have foreign currency deposits of residents between $20 billion and 25 billion,†Guinigundo said.
“In other words, we have comfortable level of dollar liquidity,†he stressed.
A number of countries in the region are seeing a widening current accounts deficit coupled with a weakening currency and a rising inflation rate.
A current accounts deficit means a country has become a net debtor to the rest of the world with its total imports of goods and services surpassing its exports. This situation may cause a liquidity problem as the country may not have enough foreign currency to cover its imports.
But the international reserves, as Guinigundo noted, help create a buffer for the country.
In the case of the Philippines, its $82.9-billion gross international reserves as of end-July would be enough to cover a year’s worth of imports of goods and services and equivalent to 8.5 times the country’s short-term debt based on original maturities.
At the same time, the Association of Southeast Asian Nations (ASEAN) has put in place facilities meant to assist its members facing liquidity difficulties.
“In case one of its members needs assistance and a regional response is required, ASEAN has its existing financial facilities such as the $2-billion ASEAN Swap Arrangments and the Chiang Mai Initiative Multilateralization consisting of a $20 billion multilateral currency swap facility,†Guinigundo said.
He also noted the 10-member bloc has established the ASEAN Intergration Monitoring Office which in part monitors regional economic integration and the ASEAN+3 Macroeconomic and Research Office which is the surveillance unit of the CMIM.
Even with some economic problems currently faced by some countries in the ASEAN, Guinigundo said he also doesn’t think any member state would be tapping a regional facility just yet.
“I don’t foresee any ASEAN country at this point tapping the facilities... because if you look at the macroeconomy, the ASEAN remains strong,†Guinigundo said.
“After all, I think in general, the ASEAN community remains to be a resilient economic region,†he continued.