By Myris Lee
Within the final stretch of the Duterte administration, President Rodrigo Duterte has ordered non-bank government entities to formulate investment governance frameworks for foreign exchange (FX) derivatives transactions.
This, through the recent signing of Administrative Order (AO) No. 48, in bid “to institute sufficient monitoring safeguards and risk management mechanisms” in FX derivatives transactions to protect the government’s fiscal and economic interests in such entities.
“[The] regulation of FX derivatives transactions of non-bank government entities supports the objective to configure the country’s public sector debt profile, such that government debt involves extended maturities, and ensures an optimum mix of currencies, to minimize the impacts of drastic currency movements,” the AO noted.
The Department of Finance is directed to monitor all FX transactions of all non-bank government entities such as the Government Service Insurance System, Social Security System, Home Development Mutual Fund, and PhilHealth.
Covered entities investment governance frameworks, to be submitted to the DOF, must be approved by board of directors or trustees, or the head of agency, covering risk management, treasury professionals qualifications, operations, controls, and accounting and reporting procedures.
Meanwhile, the entities are also directed to submit quarterly reports. – ag
