GIR hits record high in 2020

Published January 15, 2021, 3:46 PM

by Lee C. Chipongian

The Philippines’ gross international reserves (GIR) climbed to record-high $109.797 billion as of end-December 2020, about $22 billion higher from end-2019’s $87.839 billion, based on Bangko Sentral ng Pilipinas (BSP) data.

The National Government’s (NG) sale of sovereign bonds to raise anti-pandemic funds and the gold revaluation gains registered by the BSP last year propped up the GIR level. The GIR also exceeded the BSP’s $105 billion projection for 2020. The GIR level is up by almost $5 billion from November 2020’s $104.815 billion.

Photographer: Paul Yeung/Bloomberg file

According to the BSP, the month-on-month increase in the GIR level “reflected inflows mainly from the BSP’s foreign exchange operations, NG foreign currency deposits with the BSP of proceeds from its issuance of ROP Global Bonds, and revaluation gains from the BSP’s gold holdings due to the increase in the price of gold in the international market.”

“These inflows were partly offset, however, by the NG’s payments of its foreign currency debt obligations,” it added.

 The BSP said that the GIR at $109.797 billion level is adequate external liquidity buffer that will “help cushion the domestic economy against external shocks.”

 “This buffer is equivalent to 11.7 months’ worth of imports of goods and payments of services and primary income. Moreover, it is also about 9.6 times the country’s short-term external debt based on original maturity and 5.5 times based on residual maturity,” the central bank noted.

 The GIR is composed of foreign assets of the BSP invested in foreign-issued securities, monetary gold, and foreign exchange.

In 2020, the BSP’s foreign investments amounted to $93.428 billion. This is higher than November’s $83.275 billion and end-2019’s $73.303 billion

Gold reserves reached $11.605 billion end-2020 from the previous year’s $8.015 billion, and from the previous month’s (November) $10.747 billion. BSP’s gold holdings were adjusted in July last year following its decision to revert from a passive to an active strategy in the management of gold reserves.

 At end-2020, the BSP has $812.9 million reserve position in the International Monetary Fund (IMF) and SDR 1.224 billion (special drawing rights) which is IMF’s currency. Both are higher compared to end-2019’s IMF reserves of $590.4 million and SDR 1.181 billion.

For this year, the BSP has a conservative GIR projection of $106 billion.