The Bangko Sentral ng Pilipinas (BSP) wants a better handle on capital from abroad flowing into or out of the country to analyze their impact on the domestic economy, the agency said on Monday.
To do this, the monetary authority wants both public and private entities to submit by month’s end their overseas borrowing plans for next year — a potentially market-sensitive information that the BSP vowed to keep secret.
As part of its responsibility to monitor capital flows and their impact on the economy, the BSP conducts an annual survey to get an indication of the magnitude and timing of the country’s financing requirements for the following year, as well as the purpose of such borrowings, among others.
In a statement, the central bank said the order to divulge overseas borrowing plans covers “all resident entities, both public and private, intending to obtain medium- and long-term foreign loans from offshore sources, such as banks, foreign parent companies, affiliates or shareholders, including offshore issuances of debt instruments.
Also encouraged to submit their data to authorities are those public or private entities planning to issue onshore debt instruments that require settlement in foreign currency.
The deadline for submitting the required information to the BSP’s International Operations Department is on Sept. 30, 2018.
“All reported data are covered by strict confidentiality rules and used for the BSP’s internal purposes only,” the central bank said. “The BSP, therefore, enjoins the cooperation of all concerned.”
The submission of data to the central bank is voluntary as regulators have progressively liberalized the country’s foreign exchange market in recent years, especially at the height of capital inflows over the last decade.
At present, corporate borrowers are no longer required to seek the approval of the Monetary Board before taking out a foreign currency loan or issuing a foreign currency-denominated bond. Companies are also free to source their dollar requirements from the formal banking system or outside of it, depending on their needs.
In recent months, however, the large deficits in the Philippines’ balance of payments — the net value of the country’s financial transactions with the rest of the world — have forced regulators to keep a closer eye on dollar flows into and out of the country.
The Philippines has total dollar reserves of $76.9 billion at the end of July, representing 7.4 months worth of imported goods and services for the local economy. /vvp