BSP eases forex rules further

The Bangko Sentral ng Pilipinas has further eased foreign exchange rules, specifically on those involving private sector loans that finance projects aimed at boosting the economy.

“The prior BSP approval requirement for purely private sector loans (that is, those without guarantee from/exposure of any public sector entity) was lifted, such that these loans now only need to be registered with the BSP to allow use of banking system resources for loan payments,” BSP Governor Nestor Espenilla Jr. said in a statement Friday.

“Requirements to support applications for registration and purchase of foreign exchange from the banking system were also substantially trimmed down, and the form of documents liberalized, including allowing the use of scanned application to purchase foreign exchange form,” Espenilla added.

According to Espenilla, the revised rules aim to further facilitate financing of critical and urgent projects and activities that can contribute to a more vibrant business climate conducive to growth.

Also, a temporary window was opened for six months during which purely private sector loans/borrowings obtained without the required BSP approval requirement and are recorded in the obligor’s books as of the date of the implementing circular can be applied for registration following the guidelines set for the purpose, Espenilla said.

“The BSP registration of these accounts will qualify the outstanding balances of the obligations to be paid on scheduled due dates using foreign exchange resources of the banking system. Previously, these loans can only be settled with the borrower’s own foreign exchange or with funds sourced outside the banking system,” Espenilla explained.

Espenilla said the revised rule was intended to further widen the coverage of the BSP’s records on the country’s external obligations to support policy review and formulation, analysis and statistical needs.

The circulars implementing these two new rules will be effective on Jan. 15 next year, according to Espenilla.

“Even as the rules are further liberalized, banks are expected to continue to adopt safe and sound practices in their operations. This liberalization move is expected to further strengthen the BSP’s database and its ability to adopt timely and necessary prudential measures to address any perceived emerging concerns,” Espenilla said.

“This latest thrust represents the BSP’s goal to ensure ease of access to foreign exchange resources in order to help support economic activities,” Espenilla said, adding that “this was also done with due recognition of the continuing volatility in the external financial markets.” —BEN O. DE VERA