I keep hearing this noises from our fellow Filipinos about PNoy giving away 1billion to IMF to help European economy.... Is this really the deal? or are we just missing a very important detail about this certain 1billion pledge from PNoy.. when we hear giving away a huge amount of money to a country who our suppose to be richer than us, who wouldn't get mad?..
But guys let me try to explain to you what I think is the reason behind all this... After doing certain amount of researching this is what I came up with.
Philippines paid its debt to the IMF in 2006.
Philippines has now loaned (not given) 1b to the IMF as part of an emergency fund to support the European Union economy. The money is a loan, not a gift, and comes from the 76b foreign exchange reserve that the BSP (Banko Sentral ng Pilipinas) government bank in Philippines has access too. Philippines will earn interest on the loan until it is paid back by the European countries
So, 2 benefits
1) it makes money for Philippines through the interest that we get from the loan, instead of losing money due to inflation
2) it protects the value of the USD and the Euro, which keeps inflation in philippines lower (so lower prices - eg, fuel!) and also keeps the value of our foreign reserves high (Eg, 76b which we have invested in foreign countries - if the USD value collapased, then those foreign reserves would be worth less)
Simple explanation: if these first world countries fall down we are all gonna suffer from it as well,
It's like a domino effect, Europe and America buys billions of dollars of goods which are manufactured in Philippines, Imagine if they're all broke, who would buy those goods?
If nobody is buying the goods, whose gonna pay the wages of our workers?. Businesses will close and people will lose their jobs.. and by the way our OFWs will be sent home as well because there would be no job for them..
So there, that's what I've learned from researching about what's the real deal regarding this issue.
Moral Lesson... Don't believe the first thing you read, there's two sides to every story. =)