BSP eases rule on dollar outflows

By PHILEXPORT News and Features (The Philippine Star) Updated January 16, 2012 12:00 AM

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has finally reversed its long-standing tight control of dollar outflows when the country suffered from chronic balance of payment deficits and overseas Filipino remittances were still not an economic force.

The new policy (BSP Circular 742) was issued in late November and took effect before the end of 2011. It has set free seven major dollar transactions that used to be tightly regulated. BSP reasoned that the new forex policy is meant to encourage peso-dollar transactions in the formal market, improve data capture of these deals, and ease foreign exchange deals in the banking system.

Learn what's new in CEBU now, click here

The decision came on the heels of BSP announcements it had piled up the biggest dollar reserve in its history amounting to over $75 billion, equivalent to the dollar the country needs to cover more than a year of imports.

On top of the list are non-trade current account transactions that include the lease of foreign own equipment like oil drilling facilities, refund of foreign grants and loans as well as dollar commissions on stock market deals and settlement of FCDU deposits of closed banks.

The BSP has likewise allowed authorized agent banks (AABs) to sell dollars as advanced payment of imports regardless of amount and without the need for BSP prior approval. Only the standard documentation is needed.

The central bank likewise lifted the mandatory inward remittance of dollar earnings of Filipinos with foreign investments as well as the required conversion to pesos of dollar foreign direct investments to qualify for BSP registration.

And in support of the flagship program of the present administration, the Public-Private Partnership program in building big-ticket public works projects, the BSP announced it has exempted those projects from securing prior BSP approval to apply for foreign loans.

Also lifted was the BSP rule that commanded importers who bought dollars to pay their inward shipments to remit the dollars to the company from whom they bought their supplies in only three days.

And for the benefit of exporters, the BSP has approved the extension beyond one year the validity of letters of credit.

These new set of foreign exchange policies was seen as the concrete application of the promise made by BSP Deputy Governor Diwa Gunigundo during the December National Exporters’ Summit that the BSP will henceforth forge monetary policies in support of Philippine exports.