GIR steady at $86 billion

By Lee C. Chipongian

The country’s gross international reserves (GIR) has almost stabilized at the $85-$86 billion level in the last six months as the Bangko Sentral ng Pilipinas (BSP) reviews and implements its reserves management program under BSP Governor Benjamin E. Diokno’s term.

MB file photo. MB file photo.

As of end-October, the BSP reported a GIR of $85.702 billion from $85.581 billion in the previous month. Compared to October 2018, the GIR was higher by $10.992 billion as the BSP started accumulating foreign exchange (FX) around this time up to December, lifting the GIR by $4.483 billion to close the year at $79.193 billion.

In a statement, the BSP said the slight $120 million month-on-month increase in the GIR is because of the National Government’s (NG) foreign currency deposits and BSP's income from its investments abroad. “However, the increase in reserves was tempered by payments made by the NG for servicing its foreign exchange obligations,” it said.

At its current level, the country’s US dollar stock is “ample external liquidity buffer” and is equivalent to 7.5 months' worth of imports of goods and services and payment of primary income. It is also 5.5 times the country's short-term external debt based on original maturity and 4.1 times based on residual maturity.

As of end-October, the GIR’s gold stock is unchanged at $8.015 billion, it has been at this level since July. The BSP’s foreign investments amounted to $73.586 billion while its FX holdings total $2.372 billion.

Diokno said last month that they are reviewing GIR diversification as part of its reserves management program. They are also carefully assessing the metrics of pinpointing the optimal level for the GIR.

Diokno said the BSP is currently reviewing the International Monetary Fund’s recommended optimal GIR limit of $65 billion. The review includes the metrics of maintaining a GIR of this amount, among other yardsticks recommended both by the IMF and the World Bank.

Recently, the BSP has started the “greening” of the GIR by investing an initial $150 million in the Bank for International Settlements-managed Green Bonds.

Diokno said earlier that Green Bonds is just one of financial instruments they could invest in using a portion of the GIR.