The Philippines just got lots of IMF money, $1.1 billion worth

It’s not even a conditional loan.  The IMF has created a new round of SDRs, and the Philippine share is SDR 721.4 million (about US $1.1 billion).

Prior to the new SDR allocations, the Philippines had a cumulative allocation of SDR 116.6 million, but it had used up practically all these “old” SDRs, holding only SDR 6.7 million at end-July 2009.  As of the same date, the Philippines had no outstanding debt with the IMF.

The Philippines’ accounts with the IMF and its SDR holdings are here.

Questions for BSP officials:  Will they trade these new SDRs?  Why or why not?


3 thoughts on “The Philippines just got lots of IMF money, $1.1 billion worth

  1. Wait, isn’t the IMF an institution where Imperialists force heavy loans which are later repaid in concessions of land and resources?


    1. Not really. The IMF likes to bill itself as an ambulance driver with money to lend. While he drives the patient to the hospital, he tells the patient to behave so that he can give him triage. The psychologists call it Tough Love. That kind of money, called conditional credits, has to be repaid on a certain schedule.

      SDRs are a different type of credit. It is money created out of thin air, but backed by the credit of the financially capable member countries. SDR creation is also known in IMF-ese as “unconditional” liquidity – unconditional because a country with SDRs doesn’t have to promise to behave in a certain way in order to be able to use its SDR holdings.

      SDRs can be used, and its usage need not be “repaid.” However, while a country’s “holdings” of SDRs are less than its “allocations,” it pays interest to the IMF. In effect SDRs are a type of credit line that can “revolve” indefinitely.

      The SDR interest rate is very low, and much lower than that which a country like the Philippines would have to pay on its debt to commercial banks or sovereign bond holders. For a very long time, the bigger or more financially capable member countries in the IMF opposed SDR creation because they thought it was a “subsidy” to the financially weaker countries. That opposition gave way to cooperation because of the 2008 crisis.


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