BSP Governor Amando M. Tetangco, Jr. announced today that as part of continuing efforts to have an appropriate regulatory framework for foreign exchange (FX) transactions, the Monetary Board has approved further amendments to the Manual of Regulations on Foreign Exchange Transactions (FX Manual).
The amendments involve the following:
- Allowing the sale of FX (on spot and forward basis) by authorized agent banks (AABs)/AAB-subsidiary/affiliate forex corporations to residents without prior BSP approval to settle net obligations (payables) under intercompany netting arrangements pertaining to trade transactions (import and export) of resident entities with related foreign entities (parent, subsidiary, affiliate) upon presentation of documentary requirements.
The policy is expected to further facilitate legitimate trade transactions and will allow the BSP to better capture data on trade transactions through reporting of gross importations.
- Inclusion, as beneficiary of FX payments/remittances by Philippine residents for settlement of trade and non-trade current account obligations, the payment centers/treasury centers/hubs of a group of companies, subject to presentation to the FX selling institution of supporting documents evidencing the payment arrangement with the centralized settlement unit.
This is intended to hasten settlement of transactions among related entities considering current trends involving the use of a clearing unit for payments/financial transactions such as payment/treasury centers/hubs by members of a group of companies.
- Allowing the sale of FX to residents for settlement of their credit card obligations to resident credit card companies.
This will address cases where obligations of residents to resident credit card companies incurred with non-residents as counterparties are billed and payable in foreign currency.
- Consolidating the guidelines for reporting of importations under Documents Against Acceptance/Open Account (D/A-O/A) arrangements in Appendices 6 and 6.1 to Appendix 6 of the FX Manual.
This aims to simplify guidelines for better understanding and compliance.
- Inclusion in the FX Manual of the general policy requiring a long-term debt-to-equity ratio of 75/25 or better for private sector non-bank borrowers for the entire duration of their foreign/foreign currency loans.
This aims to provide better guidance for prospective private sector non-bank borrowers.
- Expanding the coverage of short-term interbank loans that do not require prior BSP approval.
Short-term interbank loans will now cover short-term interbank loans of financial institutions that are allowed to engage in interbank loans under existing BSP rules.
- Exempting from the PHP10,000 limit on cross border transfer of Philippine peso the amount of peso refund to outbound passengers exempted from the payment of International Passenger Service Charge
This will address the possible breach of the limit arising from the implementation of such refund.
The Governor affirmed that the continuing review of FX regulations is consistent with the BSP’s commitment to maintain a safe and sound financial system, a stable FX market, and appropriate monetary policy supportive of sustained and inclusive economic growth.