The latest set of foreign exchange market reforms will further promote an environment conducive to businesses and investments and is expected to help contribute to the country’s economic growth, according to the central bank.
In an online press briefing, Bangko Sentral ng Pilipinas (BSP)Governor Benjamin Diokno said the regulator wanted to promote greater ease in the use of foreign exchange in the banking system and further streamline and simplify procedures and documentary requirements for foreign currency transactions by allowing, among others, electronic submission of documents and use of electronic or digital signatures.
“The reforms are in line with the BSP’s commitment to maintain a foreign exchange regulatory framework that is responsive to the needs of a dynamic and expanding Philippine economy,” he said.
These reforms also intend to facilitate electronic transactions and digital payments by allowing foreign exchange purchasers to provide alternative documents for trade and nontrade current account transactions.They also aim to support the infrastructure development program of the national government by lifting the prior approval requirement for engineering, procurement and construction contracts.
Access to forex resources
“While the rules are already liberalized, the BSP is continuously reviewing the foreign exchange regulatory framework of the country to ensure that these are aligned with prevailing market conditions and that the general public will have continued access to foreign exchange resources of the banking system for legitimate foreign exchange transactions,” he added.
The recent reforms are also seen to promote capital market development by allowing funding of peso deposit accounts of nonresidents with peso receipts related to loans and investments, among others; and lifting the prior approval requirement for derivatives transactions of nonbank government entities.
The relaxed regulatory environment will also help address the current dollar imbalance, with the Philippine economy expected to continue having a large dollar flow surplus for the foreseeable future—a situation where a strengthening peso will make it more expensive for foreign buyers to pay for products from the local export sector.
The central bank expects a balance of payments surplus for 2021 of $7.1 billion or 1.8 percent of gross domestic product. This was revised higher in June from the full-year projection of $6.2 billion set by the Monetary Board last March, but substantially lower than the record high $16-billion surplus for the whole of last year, when the economic slump crimped imports and investments.
According to the central bank, the new forecast is reflective of the upward revision in the current account to a surplus of $10 billion in 2021 from the previous projection of $9.1 billion.