MANILA, Philippines - Sen. Franklin Drilon defended the Bangko Sentral ng Pilipinas' (BSP) decision to lend US$1 billion dollars to the International Monetary Fund (IMF) to help ailing economies in Europe, saying it would benefit the Philippines in the long run.
"Consider the fact that the stability of the European economy is to our national interest," he told reporters on Thursday.
Drilon, chair of the Senate committee on finance, explained that the Philippines earns US$6.5 billion every year from exports to Europe.
"If the European economy is unstable and will collapse, you can kiss goodbye to this export market," he said.
He added that overseas Filipino workers in Europe, who remit US$3.5 billion to the country annually, may lose their jobs if European economies continue to plunge into crisis.
Citing section 75 of the new Central Bank Act, Drilon pointed out that the fund to be lent to the IMF will not come from the national budget but from the country's gross international reserves, which the BSP has the duty and authority to invest.
Under the BSP rules, the money may not be lent to the Philippine government, Drilon said. He added, however, that the Philippine government would earn revenues from interests from the loan to the IMF.
"Whatever yield this investment in debt instruments will be made is remitted as a dividend to the national government," Drilon said. "It becomes part of the revenues of the national government, which is used for its operations."