Philippines - New Billion Dollar Creditor Helping IMF – Europe Crisis

Economy: Philippines - From being a user of the resources of the International Monetary Fund for decades, the Philippines has attained creditor status, with half of its $251.5-million contribution to the IMF as of December tapped to help European countries such as Ireland, Portugal and Greece ease the impact of the financial crisis in the euro zone, the Bangko Sentral ng Pilipinas (BSP) said.

The BSP said the country's improved status has become evident with its being a participant in the Financial Transactions Plan (FTP) of the IMF since 2010.

The FTP is the mechanism by which the IMF finances its lending and repayment operations through transfer of foreign exchange from members with strong external position to borrowing members.

"A member is said to have a creditor position in the Fund when the latter has used the holdings of the member's currency to provide financial assistance to other members," the BSP clarified.

The member gets interest earnings in return which reflect in its gross international reserves (GIR). The country's GIR is expected to hit a record level of $79 billion this year from about $75 billion last year.

By virtue of their participation in the FTP, emerging market economies like the Philippines have joined international cooperation efforts to mitigate the spillover effects of Europe's sovereign debt crisis.

The BSP said the country's participation in the FTP would pave the way for the central bank's admission to the New Arrangements to Borrow (NAB) facility of the IMF.

The NAB facility is a credit arrangement between the IMF and member countries or institutions aimed at forestalling situations that could impair the international monetary system.

"The participation in the NAB would be a significant step in strengthening international cooperation. This would also demonstrate the BSP's strong commitment to global efforts to help address threats to the international monetary system," it said.

The Philippines' participation in the FTP marks a transition in the country's relationship with the IMF.

In 2006, the BSP pre-paid all outstanding debts with the IMF, allowing the country an early exit from the fund's Post-Program Monitoring Arrangement.

With its stronger external payments position, the country has achieved balance of payments surplus in the last seven years. In the region, the Philippines is also a contributor to the $120-billion Chiang Mai Initiative Multilateralization (CMIM) facility among member states of the Association of Southeast Asian Nations, China, Japan, South Korea, and Hong Kong.

The Philippines, through the BSP, has a contribution commitment of $4.552 billion to the CMIM.

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USA formally offers 2nd warship to AFP of the Philippines

Philippines top military official exposed Saturday (18^th February 2012) that the United States has formally offered to the Philippines a second warship that is expected to boost the country's territorial defense capability.

Navy chief Vice Admiral Alexander Pama said the US sent last week a letter notifying them about the availability of another US Coast Guard cutter, Dallas.

"They (US) sent a letter offering us formally (the ship). They are telling us this is available and their government has approved (the giving of the ship to the Philippines). They are asking us if we are interested," Pama said.

He said the Armed Forces of the Philippines (AFP) is expected to reply to the letter next week.

"We will respond to the letter and tell them that we are interested. Once they receive that, the formal, detailed discussion would start," Pama said.

The Navy chief said the transfer of the warship might be held in May if discussions run smoothly.

"If the talks are continuous and smooth flowing, we are looking at a formal transfer to be held in May," Pama said.

The transfer cost would be funded by proceeds from the Malampaya natural gas project off Palawan that the Department of Energy will provide.

Officials have said the transfer cost for the cutter Dallas would be close to the P450 million spent for the first Coast Guard cutter that the Philippine Navy acquired last year.

The first Coast Guard cutter that was converted into the BRP Gregorio del Pilar was acquired from the US Coast Guard last year to improve the Philippines' territorial defense capability.

The Gregorio del Pilar is the Navy's first Hamilton-class vessel and was acquired under the US Foreign Military Sales program.

The ship is 380 feet long and is now the Navy's largest ship. The ship is currently deployed in Palawan since Dec. 23 to secure the country's natural resources.

The Philippines deployed the ship amid a territorial row over the Spratly Islands, an area in the West Philippine Sea that is rich in mineral and marine resources.

The Philippines, China, Brunei, Malaysia, Vietnam and Taiwan claim either part or the entire Spratly Islands, which has been the subject of a territorial dispute in the region.

Last November, US Secretary of State Hillary Clinton said her government is ready to provide a second war ship to the Philippines.

Clinton, who visited Manila to celebrate the 60th anniversary of the Mutual Defense Treaty, said the US would remain "in the corner" of the Philippines, its "trusted ally."

Early this month, US Rep. Ed Royce said the ship "should soon be on its way to Manila" and that the review process for its transfer would be completed soon.

Dallas is a weather high-endurance cutter and has features similar to that of Gregorio del Pilar.

The US Coast Guard had used the ship for drug and migrant interdiction, law enforcement, search and rescue, living marine resources protection, and defense readiness.

The ship can accommodate up to 180 officers and sailors.

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