GIR level drops anew to $76.89 B end-July

The country’s gross international reserves (GIR) continue to decline as of end-July to $76.89 billion from the previous month’s $77.53 billion because of payments of maturing government loans, the Bangko Sentral ng Pilipinas (BSP) reported.

BSP Governor Nestor A. Espenilla Jr. said in a statement that GIR declined due to National Government withdrawals to pay for its maturing foreign exchange obligations. Other factors that contributed to the lower GIR are BSP’s foreign exchange operations and “revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market.”

In the meantime, the government’s net foreign currency deposits and the BSP income from its overseas investments offset these payment withdrawals.

“Nonetheless, the end-July 2018 level of GIR remains as an adequate external liquidity buffer and is equivalent to 7.4 months’ worth of imports of goods, and payments of services and primary income,” the BSP said, quoting Espenilla. The current level is also equivalent to 6.1 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity, he added.

Compared to same time last year, the GIR has decreased by $4.2 billion from $81.065 billion. Since the start of 2018, the GIR has fallen by $4.3 billion or from $81.224 billion. The end-July level is the lowest for the year, so far.

During the period, BSP’s foreign investments amounted to $60.831 billion from the previous month’s $62.335 billion. Gold reserves totaled $7.787 billion versus June’s $7.913 billion.

Espenilla, during the Development Budget Coordination Committee briefing at the Senate on Tuesday, reassured lawmakers that the Philippines continue to have strong domestic liquidity and “healthy growth in bank lending” supportive of economic growth requirements.

“The expansion of our economy has likewise been evident in our external payments position. In particular, the current account deficit is indicative of the rising investment and infrastructure spending. Nevertheless, the stable flow of dollars from overseas Filipinos, the manageable external debt, and healthy foreign exchange reserves remain sufficient to help shield the economy and financial markets against global market volatilities,” said Espenilla.