GROSS INTERNATIONAL RESERVES HIT $98B

The country’s gross international reserves (GIR) level, based on preliminary data, rose by US$4.53 billion to US$98 billion as of end-July 2020 from the end-June 2020 level of US$93.47 billion. 

Bangko Sentral ng Pilipinas said the month-on-month increase in the GIR level reflected inflows mainly from the revaluation gains from the BSP’s gold holdings, National Government’s foreign currency deposits with the BSP as well as BSP’s income from its investments abroad. 

These inflows were partly offset, however, by the foreign currency withdrawals made by the National Government to pay its foreign currency debt obligations.

The end-July 2020 GIR level represents an ample external liquidity buffer which can cushion the domestic economy against external shocks. It is equivalent to 8.9 months’ worth of imports of goods and payments of services and primary income.

Moreover, it is also about 7.5 times the country’s short-term external debt based on original maturity and 4.9 times based on residual maturity.

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.

Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.

The level of GIR, as of a particular period, is considered adequate, if it provides at least 100 percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate twelve-month period.

Similarly, the net international reserves (NIR), which refers to the difference between the BSP’s GIR and total short-term liabilities, increased by US$4.52 billion to US$97.99 billion as of end-July 2020 from the end-June 2020 level of US$93.47 billion.