The Bangko Sentral ng Pilipinas (BSP) paid $600 million of its short-term loans, mostly from the Bank for International Settlements (BIS) which it borrowed as liquidity buffer last year amid the worst of the global financial crisis.

As of end-October, BSP’s liabilities now amount to only $35.63 million from $653 million in September.
The BIS loan, originally $500 million, was the first short-term loan that the BSP tapped last year. It borrowed an additional $400 million from other sources in August and September 2008. The Switzerland-based BIS is an international organization for monetary and financial cooperation.

The central bank has been paying off its liabilities since January when it had $1.521 billion as loans. This was brought down to $1 billion in February but they took out another $500 million by the end of the first quarter. Since June, the BSP has been paring down its debt by $200 million a month.

The BSP borrowed several loans to prop up its foreign exchange reserves. The National Government and the BSP use gross international reserves to pay off debts.

The GIR includes foreign exchange deposited by the NG and central bank’s net income from its overseas investments. The government accumulates dollars from multilateral and bilateral loans from funding agencies such as the World Bank, Asian Development Bank, among others.