$1B loan to IMF could better serve interests of Filipinos

Sen. Ralph G. Recto yesterday asked to be clarified on the move of the Bangko Sentral ng Pilipinas (BSP) to commit $1 billion of the country's dollar reserves for the economic bailout being packaged by the International Monetary Fund (IMF) for troubled European economies.

Recto said the BSP, as a creation of Congress, could not claim sole proprietary rights over the country's dollar reserves and should seek consensus first or secure appropriation cover from Congress.

"I'm not totally opposing it but how can the government, through the BSP, lend money to IMF without authority from Congress?" the senator asked.

He said BSP's Congress-enacted mandate is glaringly affirmed by the P40-billion infusion approved by Congress for its recapitalization when it repudiated its old self, P20 billion of which had already been appropriated in the past national budgets.

Recto said the people must also be made to understand why the government is lending out to IMF while it continuously borrows from international lending and multilateral institutions for budgetary support and deficit spending.

He stressed the $1-billion loan to IMF could be better used to bankroll projects that have mass impact such as school buildings, hospitals and other key infrastructures.

"The BSP could remit the amount as dividend to the national government and use it for the country's so many needs," Recto said.

"Or the BSP, like a regular bank taking care of business, could loan the amount directly to the national government under the same interest rate that it would get from the IMF," he added.

Recto said if the reason is to stabilize the peso, which has been appreciating lately, boost the export sector and protect the economy from the European contagion, then it should allow the $1 billion to flow into the local economy to spur consumption and growth.

"Spending it to boost consumption is the better way to protect us from contagion," he said.

The senator also said once the economic growth achieves traction, global credit agencies would be happy to give the country a credit upgrade in order for the country to attract more investors.

"At the end of the day, the country would not be judged on how it helped a troubled First World economic bloc, but on how it exercised fiscal maturity to achieve long-term growths and spared itself from befalling the same fate of the European economies," Recto said.

He stressed that he was willing to listen to the "gameplan" of the BSP and why it would risk denying the Filipino people its sovereign claim to $1 billion worth of projects and programs that could "change their lives even for a little bit."

The BSP said last week that the $1-billion loan to the IMF would be used to support global efforts to stabilize the world economy and put it on a growth path.

The BSP said the Philippines, as a member of the global community of nations, has an obligation to ensure economic and financial stability across the globe.