June 24, 2020 at 10:15 pm
Julito G. Rada
The country’s gross international reserves climbed by $2.35 billion to a record $93.29 billion as of end-May from $90.94 billion in April, increasing the economy’s capacity to handle external shocks, the Bangko Sentral ng Pilipinas said Wednesday.
Data showed that the month-on-month increase in the GIR level reflected inflows mainly from the national government’s foreign currency deposits with the BSP representing proceeds from its issuance of global bonds and BSP’s foreign exchange operations.
The inflows, however, were partly offset by the foreign currency withdrawals made by the national government to pay foreign currency debt obligations.
The May figure was the highest level of reserves ever recorded. It was also 9.2 percent higher than $85.4 billion registered in the same month last year.
It consisted of $80.7-billion investments of the BSP, mostly in US treasuries, $8 billion in gold reserves, $2.7 billion in foreign exchange, $1.17 billion in special drawing rights and $677-million position in the International Monetary Fund.
“The hefty level of GIR represents an external liquidity buffer which can cushion the domestic economy against external shocks. Specifically, it ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” the BSP said.
It said that as of end-May, the GIR level was equivalent to 8.4 months worth of imports of goods and payments of services and primary income. It can also cover seven times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity.
Net international reserves, which refers to the difference between the BSP’s GIR and total short-term liabilities, also increased $2.34 billion to $93.27 billion as of end-May from $90.93 billion in April.
The GIR settled at $87.84 billion as of December 2019 and surpassed the $85-billion forecast by the BSP. It was also higher than the end-2018 reserves of $79.2 billion.
The BSP was originally expecting the reserves to settle at $90 billion by end-2020 and $91 billion by end-2021, which were both exceeded in May.