PH may put in $900M in AIIB

If the Philippines pushes through with plans to be part of the China-led Asian Infrastructure Investment Bank (AIIB), the country may have to shell out about $900 million or over P40 billion as contribution to the lender’s capitalization.

A source familiar with the ongoing negotiations on the establishment of the AIIB told reporters on Tuesday that the Philippines’ contribution would represent roughly 1 percent of the $100-billion capitalization requirement for the bank.

This indicative amount was based on the size of the 50:50 or 60:40 ratio of the country’s nominal gross domestic product (GDP) to the GDP at purchasing power parity, as compared to the total size of the economies of the now more than 57 prospective founding members.

“[I]t won’t be very substantial because our economy is not as big as, say, China and India,” the source noted.

The amount of about $900 million would be subscribed capital, of which only 20 percent will be paid up, payable in five years, if ever the prospective founders approve this proposed scheme.

These prospective founding members were given until Dec. 31 to confirm their participation in the AIIB, as China wants to start the bank’s operations in January next year, the source said.

In the case of the Philippines, membership in the AIIB is still subject to the availability of budget for the contribution to the capital, as well as Senate ratification, according to the source.

The country’s international reserves may be tapped for this purpose, the source said.

Prospective AIIB founding members will meet in Singapore later this week to firm up the articles of agreement, after which discussions on the lender’s basic documents and operational procedures will follow.

The Chinese government had said it planned to finalize the AIIB’s articles of agreement by June.