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Thursday, February 22, 2024

Philippines’ GIR rises to seven-month high

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The Philippines’ gross international reserves (GIR) climbed to a seven-month high of $101.3 billion as of November 2023 from $101.0 billion in October. The increase was driven by the higher valuation of the Bangko Sentral ng Pilipinas’ (BSP) gold holdings.

The latest GIR level was the highest since April 2023 when it reached $101.7 billion.

The BSP said in a statement Friday the November GIR level provides a more than adequate external liquidity buffer, equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.

It said the reserves were roughly 5.8 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity.

The BSP’s gold holdings increased from $10.57 billion in October to $10.81 billion in November, contributing to the overall GIR rise. The BSP’s net income from its foreign investments also contributed to the month-on-month increase.

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The net international reserves, which represent the difference between the BSP’s reserve assets and reserve liabilities, grew by $200 million to $100.5 billion in November from $100.3 billion in October.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the reserves could be supported in the coming months by the continued growth in the country’s structural inflows from OFW remittances, BPO revenues, exports and relatively fast recovery in foreign tourism.

Also seen boosting the GIR are the proceeds of fund-raising/investment banking activities especially those from abroad, the US dollar bond issuance/foreign borrowings by the national government in October 2023 that reached $1.26 billion and the $1-billion debut Islamic bond/Sukuk bond issuance in December 2023.

“But these could be offset by plans by the government to reduce foreign borrowings relative to domestic borrowings in the coming months/years to better manage foreign exchange risks entailed/associated whenever there are foreign borrowings,” Ricafort said.

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