Bangko Sentral offers to sell dollars to gov’tBy Michelle V. Remo
Philippine Daily Inquirer
The Bangko Sentral ng Pilipinas, which is managing the country’s nearly $80 billion in foreign-exchange reserves, is offering to sell dollars to the national government.
According to the BSP, buying dollars from the central bank would be a more prudent move for the government than borrowing dollars from foreign creditors.
The Aquino administration still has to raise $750 million this year to pay maturing obligations and meet its expenditure requirements denominated in dollars.
BSP Deputy Governor Diwa Guinigundo said that instead of borrowing $750 million from foreign creditors, the government could borrow an equivalent peso amount from the local capital market and use the proceeds to buy dollars from the BSP.
Guinigundo said that with the country’s huge foreign-exchange reserves, the government need not rely so much on foreign creditors. He said buying dollars from the BSP would benefit the government, the central bank and the economy.
By buying dollars from the central bank and avoiding borrowing from creditors abroad, Guinigundo explained that the government would free itself from foreign exchange risk such as when the peso depreciates.
The BSP also stands to benefit if the government will buy dollars from the monetary agency because the BSP, which incurred a net loss of about P33 billion last year, would avoid interest payments. If the government borrows from abroad, it is expected to temporarily deposit the funds with the central bank, which, in turn, has to pay interest on the deposits.
Guinigundo said the economy would also benefit should the government decide to buy dollars from the BSP as the economy would avoid additional inflationary pressures that might be created by the inflow of funds from abroad into the domestic economy.
“The BSP, time and again, has indicated its readiness to sell dollars to the national government,” Guinigundo told reporters Friday.
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