It has been suggested that the National Government issue zero-coupon bonds or a "no interest" debt security to pay the central bank the P13 billion it owes for shouldering membership dues with the International Monetary Fund.
The Bangko Sentral ng Pilipinas has been advancing NG payment to the IMF so the notes will be issued to pay the central bank.
At the moment the BSP is negotiating with the Department of Finance on the type of instruments it will issue as promissory notes.
The BSP earlier suggested a more diversified bond float after it rejected the government’s proposal for the BSP to shoulder the country’s membership obligations. But the DoF preferred to issue notes.
The finance department wants the BSP to assume the dues because of the government’s budget deficit woes but the central bank thumbed down the proposal.
According to a senior BSP official, "there is no question that it is the NG who should pay (the IMF). The issue will probably be in zero-coupon or no-interest bonds."
The government has been posting monthly fiscal surpluses last year, in fact, ahead of its budget deficit target for 2005 by an estimated P30 billion. "With the positive fiscal turnout, we hope to collect on the dues, finally," the source said.
This year the DoF is targetting a budget deficit of P125 billion or 2.5 percent of gross domestic product.
In February 2005, the NG said it would issue promissory notes worth P20 billion to the BSP to pay for dues or subscription quota to the IMF. The Philippines has been under the tutelage of the IMF since it first took out loans to augment the country’s dollar stock in 1976.
Monetary authorities maintain that the government should assume payment of the quota subscription since the IMF is an association of governments and not of central banks.
But then the NG insists that the BSP bankroll the country’s membership to the IMF since it is the central bank that benefits most from the international lender’s standby facility, which is an emergency loan that the IMF extends a member country as back up for foreign exchange deficiencies.
The IMF is an organization of 184 countries.
Former Finance Secretary Juanita D. Amatong, now a Monetary Board member, when she was DoF chief said that the DoF and the BSP has agreed that the NG will again issue promissory notes in lieu of the cash payments.
Amatong said the Department of Justice has ruled that the IMF subscription quota is an account payable by the NG. In the meantime that the government is cash-sore the BSP has agreed to advance payments to the IMF.
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