In trying to save the euro-zone, can’t we also save the Philippine Consulate in Barcelona from closing down?
I am not a numbers person but when those numbers add up to US$1-billion coming from our country’s international reserves, then I have no other recourse but try to at least understand what that is all about.
My interest was piqued because in explaining the US$1-Billion loan to the IMF, Presidential Spokesperson Edwin Lacierda had this to say: “We are not wasting the money. It is a loan and the IMF will pay us back the loan. Non-monetarily, it is going to help us because it is going to help the economies of Europe where we have a substantial number of overseas Filipino workers.”
True, we do have a number of seafarers and land-based workers in Europe. And of course, none of us would like to see the riots in Athens, Greece over harsh austerity measures spill over to our traffic-clogged EDSA. However, I need to point out that while our government thinks of our OFWs in relation to said loan as in need of saving, that same government has decided to close down the Philippine Consulate in Barcelona, Spain where more than 25,000 of them live, as well as several other embassies and consulates elsewhere. We scrimp on a 7-man consulate and offer a $1-B loan to the IMF to bail out millions of strangers? Uhmm, as the song goes, “isn’t that ironic?”
If this is truly for our OFWs, then spare the Consulate in Barcelona where thousands of OFWs are directly at the receiving end of the euro-zone crisis. Otherwise, let’s not go down that road to compassion.
Our national ego is boosted by this loan. But let’s not delude ourselves that our contribution will ease the euro-zone debt crisis. The long, difficult and painful process to recovery is really in the hands of the euro-zone economies. Our policy-makers must resist the temptation to over-inflate the country’s new role as a lender to the IMF or inject romance in a multitude of ways to make the billion-dollar loan a sonata to better times.
Diskarte ito ng BSP. Hindi nila tayo kailangang konsultahin. Hindi naman daw tayo malulugi, at hindi rin mawawala yung pera. Maibabalik ito na may interes pa. At kahit nandiyan yung pera sa atin, hindi naman ito magagamit para magpatayo ng dagdag na klasrum, magpauwi ng mga inaaping kasambahay mula Syria, Jordan, at Saudi Arabia, o para ipaayos ang kalye sa munisipyo. Tama din lang na makiramay tayo sa ibang bansa bilang responsableng kasapi ng international community. Ayos lang ‘yan. Pero sana ipaliwanag ito ng maayos sa sambayanan at huwag isipin na ang bawat tanong na ipinupukol sa gobyerno ay may kakambal na pagtuligsa o pagaalipusta. Hindi naman tayo sanay gumising sa umaga na bilyones na dolyares ang laman ng isip.
I know that the BSP decision is based on sound banking and investment policies, but when partly explained from the context of our modern-day heroes then the door is left open for that context to be carefully scrutinized. In this case, there appears to be a disconnect between the deed and the creed.
Here is a Q & A that I hope could be useful in understanding this historic albeit controversial loan:
What triggered the loan?
The International Monetary Fund had written the Philippine government and other nations as well to seek support for its efforts to raise US$400-Billion to the IMF’s euro-zone emergency fund.
What was the internal process that led to the BSP’s approval of the $1-B loan?
The BSP has its own internal research unit and a department on international relations. Both gave a positive recommendation regarding the IMF’s request for a loan from countries with strong dollar reserves. The Monetary Board reviewed the BSP’s position and decided to endorse this loan proposal to the Office of the President. On June 19, the President approved the BSP decision to lend IMF a billion dollars from the Gross International Reserves.
Who sits in the Monetary Board?
The BSP’s MB is composed of the following:
Chairman: Amando M. Tetangco, Jr. (BSP Chairman)
Cesar V. Purisima (Finance Secretary representing the national government)
Alfredo C. Antonio
Ignacio R. Bunye
Peter B. Favila
Felipe M. Medalla
Armando L. Suratos
Does the MB need to consult other stakeholders before deciding to grant this loan request to the IMF?
Technically, no. Under Section 75 of RA 7653, which is the law that created an autonomous BSP, it has the flexibility and authority to invest the dollar reserves or the GIR in Triple AAA investment grade financial instruments such as foreign banks and international financial institutions including the IMF.
What led the BSP/Monetary Board to decide that the loan is in the best interest of the country?
Here is the BSP’s explanation on its decision:
“The Philippines is supporting the global efforts to stabilize the world economy and maintain it on a growth path. This is the reason why the Philippines is extending a $1 billion loan to the IMF. We are a member of the global community of nations and it is also in our interest to ensure economic and financial stability across the globe. The Philippines is a member of the International Monetary Fund which uses the contributions from its members to provide loans to countries going through financial difficulties to minimize their adverse impact on their people. For about forty years until 2006, the Philippines itself had been a net borrower from the IMF. We finally fully paid our loans to IMF in December 2006 as the implementation of continuing reforms have made our economy stronger. Today, our economic fundamentals are sound, our banks are able to meet domestic credit needs, and we are capable of lending $1 billion from our international reserves to the IMF. This is a loan to the IMF and we will get our money back with interest. In effect, by extending a loan to the IMF that will earn money for the Philippines, we are also able to help other nations saddled with financial problems. Other nations have also committed to help IMF address the current financial crisis.” (underscoring supplied)
Are there other countries that declined IMF’s request?
Yes, one of the countries that declined IMF’s request for contributions is Canada. Canadian Finance Minister Jim Flaherty said that euro-zone countries could do more in terms of additional resources for the bail-out fund. Based on news reports, Minister Flaherty emphasized that Canada has been supporting the IMF but has decided against additional contributions. “Our view is that the IMF has adequate resources now to deal with any imminent situation in Europe.”