The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) approved today certain amendments to the Manual of Regulations on Foreign Exchange Transactions. These changes are a result of the continuing efforts by the Bangko Sentral to keep the foreign exchange (FX) regulatory framework responsive to and attuned with current economic conditions, and to align it with the policies of neighboring countries in the region to maintain the competitiveness of the Philippines FX regime.
The policy amendments, which further liberalized rules governing foreign exchange transactions, consist of the following:
- Increase from the present ceiling of US$30,000 to US$60,000, of over-the-counter FX purchases by residents from authorized agent banks (AABs) and AAB foreign exchange corporations (AAB-forex corps) without documentation for non-trade current account purposes. This proposed measure is aimed at further inducing transactions to be coursed through the banking system and away from the unsupervised FX market.
- Increase from the present ceiling of US$200 to US$5,000, of the amount that departing non-resident tourists or balikbayans may reconvert at airports or other ports of exit without need for proof of sale of FX for pesos. This will simplify procedures for transactions of tourists and balikbayans, e.g., higher ceiling so that more FX initially brought in can be reconverted without securing BSP approval, and in the process help align Philippine rules with those of other countries.
- Allow residents to purchase foreign exchange from AABs/AAB-forex corps from the current ceiling of up to US$100,000 to up to US$1 million, to cover advance payment requirements for import transactions without prior BSP approval subject to standard documentary requirements as attached in Annex A. Through this measure, more trade transactions are expected to be facilitated, and turn-around time for imports shortened, which would help further stimulate business activities and encourage higher demand for FX.
- Allow prepayment of BSP-registered foreign/foreign currency loans of the private sector to be funded with FX from AABs/AAB-forex corps without prior BSP approval, subject to presentation of supporting documents and certain conditions as enumerated in Annex B. As a result, residents will have greater flexibility in managing their FX obligations/exposures and finances.
- Allow registering banks to act on requests by foreign investors for conversion to FX and outward remittance of peso funds not to exceed the FX brought in less the amount used for investments actually made in the country, subject to conditions and documentary requirements as shown in Annex C. This amendment will help facilitate payments arising from foreign investments.
- Increase in the present ceiling of US$30 million to US$60 million per investor per year, of the amount that residents may purchase from authorized agent banks for outward investments and/or investments in ROPs and other Philippine debt papers issued offshore, including peso-denominated instruments to be settled in FX, provided the total FX purchases for any or all of these purposes by any investor in one year does not exceed the prescribed limit. This will be complemented by the following additional measures:
One, lift the registration requirement for outward investments in excess of the USD60 million limit and replace this with reporting to BSP. Prior approval for investment in excess of the prescribed limit is, however, retained; and
Two, extend the periods for inward remittance and conversion to pesos/reinvestment of proceeds and related earnings on outward investments of residents from 2 and 7 banking days to 30 banking days from receipt of funds abroad:
These aforementioned measures will provide residents greater flexibility in diversifying and managing their outward investments as well as managing the attendant risks.
These proposed amendments are expected to encourage greater FX outflows at this time that the domestic currency has been appreciating against the US dollar. Based on the BSP’s analysis, while the amendments will help temper the strengthening of the peso, the impact on both domestic liquidity and inflation will be minimal.
The covering BSP Circular in this regard will be issued shortly and posted in the BSP website, to take effect 15 days from publication in the Official Gazette or a newspaper of general circulation.