Mary Dayne Tai IV Faith

Class Number 24 July 13, 2012 Closing Government This House Supports the BSPs Loan to the IMF

I.

Argument

By loaning money to the International Monetary Fund (IMF), the Philippines will be able to help boost its own economy by earning money through interest. II. Explanation of Argument

Upon hearing the issue about the Philippines loaning $1B to the IMF, many would argue that the Philippines is a poor country. We need those funds. However, what these people fail to realize is that by assisting international economies, we are also helping boost our own since the country will be able to earn money through interest. The International Monetary Fund is an organization consisting of about 188 countries. It aims to help nations suffering from recessions and financial instabilities. The IMF also promotes international trade, global monetary cooperation, sustainable economic growth, and poverty reduction. By lending $1B to the IMF, the Philippines will be able to not only help the economies of other countries, but also help its own through the earnings that it will get through interest. The $1B to be given to the IMF is a loan, not a gift. This means that after a certain period of time, the country will be able to get back the money, plus interest. There is no need to be worried whether the IMF will be able to pay back the loan since it is rated with a Triple A (AAA) or an excellent credit rating. This would mean that within the history and the numbers of the IMF, it is proven that the organization will be able to pay back the money. Aside from this, the $1B will come from the international reserves of the Philippines. This means that the money cannot pay for government projects nor can it be spent for the alleviation of poverty in the country. In short, the International Reserves cannot be used as an additional sum of money for the National Budget. Therefore, instead of having the money just lying around, without collecting interest, it is better to invest it in a secure organization that can help other economies and can also guarantee the money back. In addition, loaning money to the IMF sends a positive message to potential investors. By showing that the country has money to spare, we are able to prove that the country is financially stable and economically growing. As an investor, you would want security, the knowledge that the money that you will be investing will grow. With this, the country will be able to attract more investors to the country, therefore boosting the Philippine economy.

III.

Example/s of Argument

Earning money through interest from lending is one of the most visible and regular occurrences in the economy today. An example for this is the continuous growth of banks. Hasnt it ever occurred to you how banks actually earn money? Much of the profit

comes from bank transfer fees, mortgage services and through investing depositors money. Aside from this, banks earn money through the interest rates that collect when they give out loans or when people use their credit cards. For example, when a person wants to buy something but does not have enough cash on hand, he will most likely resort to either asking for a loan or using a credit card to pay for it. In a loan, he is given a certain period of time to pay back the money, but after that time, interest builds up. Depending on the interest rate, the banks will be able to earn money. The higher the interest rate, the more profit that the bank will make. The same goes for if the person decides to use a credit card. He will be given a certain period of time to pay for the item purchased, but interest will pile up after that given time. The IMF loan also abides by this system used by banks. If the Philippine loans the IMF $1-B, the country will be able to make money through the interest that will build up after a certain period of time.

IV.

Sources

1. Rouchelle Dinglasan, July 10, 2012, PHLs $1B Loan To IMF Not The First Nor The Biggest, <http://www.gmanetwork.com/news/story/264036/economy/finance/phls-1-bloan-to-imf-not-the-first-nor-the-biggest> July 03, 2012 2. Carl John C. Reyes, July 10, 2012, $1-B BSP loan to IMF legal, is good business and beneficial to Filipinos Drilon <http://www.interaksyon.com/article/35998/1-b-bsp-loanto-imf-legal-is-good-business-and-beneficial-to-filipinos---drilon> June 28, 2012 3. Llanesca T. Panti, July 9, 2012, $1-B Pledge to IMF, Cant be Spent Here, Says Lawmaker, <http://www.manilatimes.net/index.php/news/nation/25697-1-b-pledge-to-imfcant-be-spent-here-says-lawmaker> June 28, 2012 4. Paolo Romero, July 9, 2012, Admin Lawyers Defend $1-Billion Loan to IMF, <http://www.philstar.com/Article.aspx?articleId=820663> June 25, 2012