MANILA, Philippines — With the Philippine economy expected to continue to have a large dollar surplus for the foreseeable future, the Bangko Sentral ng Pilipinas (BSP) has decided to make it easier for locals to buy foreign currency, a move that could help curb the peso from rising to unhealthy levels.
In a statement, PASB said its Monetary Policy-Making Council had approved further regulatory changes “to promote greater ease of use of the banking system’s foreign exchange resources and to streamline or further simplify banking system operations. procedures and documentary requirements for foreign exchange transactions “.
“Foreign exchange reforms are also aimed at facilitating digital payments or electronic transactions, supporting national government infrastructure development projects and programs, and helping to further deepen the domestic capital market,” BSP explained.
The main reforms included, among others, the authorization of the sale of currencies by banks without the prior approval of the BSP for transactions involving e-commerce market participants to support digital payments or electronic transactions.
The offsetting of debts with debts between or among residents for various foreign exchange transactions will also be authorized, and residents with non-residents for their current account commercial and non-commercial transactions.
The new rules will also allow the purchase of foreign currency for living allowance or medical expenses for dependents abroad, among other non-commercial current account transactions.
Rules will also be relaxed for dollar purchases for importing goods with services covered by engineering, procurement and construction contracts; and the payment of fees before registration provided that foreign loans are duly declared to the BSP.
The BSP said the relaxed rules will also allow for the conclusion of transactions for foreign exchange derivatives by non-bank government entities without the prior approval of the BSP and the use of peso receipts relating to commercial transactions to fund deposit accounts. in pesos of non-residents, among others. .
“These reforms are part of BSP’s commitment to maintain a foreign exchange regulatory framework that meets the needs of a vibrant and growing Philippine economy,” the regulator said.
“However, BSP expects banks to continue to implement safe and sound practices as part of the continued liberalization of exchange rules,” he added.
The circular applying the relaxed rules will take effect 15 banking days after its publication.
The BSP expects a balance of payments surplus for 2021 of $ 7.1 billion, or 1.8% of gross domestic product (GDP). This figure was revised up in June from the annual projection of $ 6.2 billion established by the Monetary Council last March, but significantly lower than the record surplus of $ 16 billion in the balance of payments. for the whole of last year, when the economic crisis reduced imports and investments.
According to the BSP, the new forecast reflects the upward revision of the current account to a surplus of $ 10 billion in 2021 compared to the previous projection of $ 9.1 billion.
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