The amended Chiang Mai Initiative Multilateralisation (CMIM) Agreement, which could be tapped by the Philippines in times of crisis, has come into force at the end of March, according to the Bangko Sentral ng Pilipinas (BSP).
In a statement, the BSP said the amended accord provides the legal basis for the regional financing arrangement among the finance ministers and central bank governors of the Association of Southeast Asian Nations (Asean) member-states, China, Japan and Korea (Asean+3), and the Monetary Authority of Hong Kong, China.
It noted the amendments provide enhancements to the fundamental features of the CMIM, which include the increase in the International Monetary Fund (IMF) De-linked Portion from 30 percent to 40 percent of each member’s maximum arrangement amount; institutionalization of the use of members’ local currencies, in addition to the US dollar, for CMIM financing on a voluntary and demand-driven basis; and addressing other technical issues, including revisions related to the London Inter-bank Offered Rate reform.
The Bangko Sentral added the CMIM offers two facilities for signatories like the Philippines.
First is the CMIM Precautionary Line (CMIM-PL) which, as a crisis prevention facility, may be tapped for potential crisis or liquidity difficulties. Another one is the CMIM Stability Facility (CMIM-SF), which may be availed for crisis resolution.
“Under both facilities, 30 percent of the maximum drawable amount by any member may be quickly disbursed called the IMF de-linked
portion (IDLP). Meanwhile, the so-called IMF linked portion (ILP) refers to the maximum amount that may be drawn in circumstances where an IMF-Supported Program exists or is expected to come into existence in the very near future,” the BSP explained.
It added the maturity period applicable for both the CMIM-PL and CMIM-SF under the IDLP is six months renewable up to three times for a maximum supporting period of two years; while under the ILP, the maturity period is one year renewable up to two times for a maximum supporting period of three years.
“The CMIM continues to stand at the center of the regional financial safety net of the Asean+3, and these amendments are intended to make it more effective and operationally ready for member economies,” the central bank said.