[Reuters]

Published date: 3rd Aug 1989

3 August 1988

Reuters News

English

(c) 1988 Reuters Limited

MANILA, Aug 3, Reuter – The Philippines has told its commercial bank creditors they must help bridge a 1.8 billion dollar financing gap in 1989, a senior official close to talks held in New York last month told Reuters.

The official said Philippine officials had told a 12-bank advisory committee the “new money/financing” gap will total about 1.3 billion dollars in 1990.

He said preliminary figures submitted by Manila indicate a gap of over nine billion dollars in the five-year period from 1989 to 1993.

The National Economic and Development Authority has stipulated that GIR must equal at least three months’ imports. June reserves equalled about 1.8 months of imports.

The official said the new reserve estimates took into account projected rises in 1989 imports.

But the financing gap projection rules out any new borrowings from the International Monetary Fund or any incremental inflows from the World Bank in 1989, he added.

Manila’s foreign debt rose to a record 28.65 billion dollars at the end of March, Central Bank figures show.

Central Bank Governor Jose Fernandez said last Friday that the Philippines will hold formal talks with the bank committee in October on a new money package. He declined to give figures for the package.

The official, who spoke on condition he was not identified, said Fernandez and Finance Secretary Vicente Jayme had not specified how much Manila will be asking for in October.

But 1.4 billion dollars of the 1989 shortfall has been projected by Manila as the minimum it needs to boost its gross international reserves (GIR) to three-month import levels, the official said.

“The banks feel Manila does not really need new money at this stage,” the official said.

“They feel the real problem is of management, not of shortfall.” He said continuing bottlenecks in drawdowns of official development assistance commitments from donor countries, mainly Japan, reflected poorly on Manila’s ability to streamline project implementation.

The country’s GIR, stated as the sum of its holdings of foreign exchange, gold, Special Drawing Rights and foreign investments, sank to a 21-month low of 1.73 billion dollars in June. A surge in imports has led to a 441 million dollar trade deficit in the January/May period, up from 414 million a year earlier.

The National Economic and Development Authority has stipulated that GIR must equal at least three months’ imports. June reserves equalled about 1.8 months of imports.

The official said the new reserve estimates took into account projected rises in 1989 imports.

But the financing gap projection rules out any new borrowings from the International Monetary Fund or any incremental inflows from the World Bank In 1989, he added.

Manila’s foreign debt rose to a record 28.65 billion dollars at the end of March, Central Bank figures show.

Fernandez has said Manila also planned to conclude an IMF loan this autumn. An IMF mission is scheduled to Visit Manila on August 22 to discuss borrowing plans.

The official said the Philippines was likely to aim for an 18-month stand-by arrangement. A 198 million Special Drawing Rights standby that took effect In 1986 Is due to expire on August 23. Drawdowns from the current arrangement were delayed because Manila failed to meet IMF-agreed performance targets.

An MF program may be a prerequisite for both the new money package and the rescheduling of about one billion dollars owed to the Paris Club group of 14 creditor governments.