MANILA, Philippines - Senator Miriam Defensor Santiago on Thursday defended the Bangko Sentral ng Pilipinas' (BSP) move to lend US$1 billion to the International Monetary Fund (IMF) to help European countries deep in debt.
In a speech before the members of the Credit Management Association of the Philippines, Santiago said the central bank is mandated to maintain and grow the country’s international reserves.
In fact, she said the BSP is mandated to invest the money “in accordance with the investment guideline that only investment-grade and highly-rated financial instruments of non-residents should qualify."
Santiago said this has no impact whatsoever on the national government’s budget, which is a different matter altogether.
“Why is the BSP lending to the IMF, when over 38% of the Philippine population are living below the poverty line? The answer is that it is the national government and not the BSP which is directly responsible for addressing poverty with resources coming from the budget,” she said.
She said the BSP loan to the IMF is already indirectly helping the poor, in particular, overseas Filipino workers.
So why not just use the money to pay off the country’s own debts?
"Again, the answer is the legal provision that our international reserves follow an investment guideline mandating that only investment-grade and highly-rated financial instruments of non-residents should qualify. Therefore, the BSP cannot lend part of its reserves to the national government to retire Philippine public debt, and the law prohibits the BSP from engaging in development banking or finance," she explained.
Santiago said President Benigno Aquino III need not get Congressional approval for the IMF loan.
“At present, there is no such law that requires the President to consult Congress or the Senate. If the Senate wishes to participate in the foreign loan process, then it should pass a bill to that effect,” she said.
Many leftist groups have criticized the BSP's pledge to the IMF, saying it would be better if the money is used to help poor Filipinos.