GIR level tops $100-billion mark for first time

Published October 15, 2020, 3:37 PM

by Lee C. Chipongian

The Philippines’ stock of foreign assets and US dollar reserves have passed the $100 billion mark at $100.49 billion as of end-September, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said Thursday.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno

Based on preliminary data, the gross international reserves (GIR) level was up by $1.54 billion from end-August of $98.95 billion, and up by $14.91 billion from same period in 2019 of $85.58 billion.

A statement from the BSP said the month-on-month increase in the GIR level “reflected inflows mainly from the BSP’s foreign exchange operations and National Government’s (NG) foreign currency deposits with the BSP” and that “these inflows were partly offset, however, by the revaluation losses from the BSP’s gold holdings resulting from the decrease in the price of gold in the international market and foreign currency withdrawals made by the NG to pay its foreign currency debt obligations.”

The GIR is adequate reserves for 10 months of imports of goods and payment of services, and primary income. The footnote here is that “by convention, GIR is viewed to be adequate if it can finance at least three-months’ worth of the country’s imports of goods and payments of services and primary income,” said the BSP.

The current GIR is 9.2 times the country’s short-term external debt based on obligations with original maturity of one year or less, plus principal payments that are due within the next 12 months. It is also 5.4 times based on residual maturity.

As defined by the central bank, the GIR are foreign assets of the BSP invested in foreign-issued securities, monetary gold, and foreign exchange.

The BSP’s gold holdings got a boost in July when it increased from $8 billion to $12.59 billion after the BSP reverted from a passive to an active strategy in the management of gold reserves.  As of end-September, gold reserves stood at $11.59 billion, lower than the previous month’s $12.04 billion.

The GIR includes $84.40 billion investments in foreign-issued securities, up from $82.37 billion end-August.

The reserves also include foreign exchange assets of $2.53 billion, down from $2.58 billion in the last tally. Claims to the International Monetary Fund as reserve position was at $747 million and Special Drawing Rights of $1.21 billion.

The BSP on Wednesday announced that it has recast its GIR estimates for 2020 to $100 billion from its May forecast of $90 billion. The new forecast is based on the NG’s higher foreign borrowings for this year to finance COVID-19 expenses, and also take into account the revaluation adjustments from the BSP’s gold holdings.

The GIR surpassed $90 billion in April. For 2021, the BSP expects a conservative GIR level of $102 billion.

Last year, the GIR level ended with $87.84 billion, up from $79.19 billion in 2018.