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Friday, April 19, 2024

Debt, forex operations slash end-November GIR to $93.95b

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THE country’s Gross International Reserves (GIR) stood at $93.95 billion as of the end of November 2022, according to the Bangko Sentral ng Pilipinas (BSP).

The BSP said this is slightly lower than the end-October 2022 GIR level of $94.03 billion. The decline of $73.9 million was the lowest decline in the GIR for the year.

The largest decline in the GIR this year occurred between August and September, when it went down by $4.44 billion. This was followed by the GIR decline of $2.79 billion between May and June; and $2.396 billion between July and August.

“The month-on-month decrease in the GIR level reflected mainly the National Government’s [NG] payments of its foreign currency debt obligations and the Bangko Sentral ng Pilipinas’s net foreign exchange operations,” BSP said.

BSP noted that the country’s GIR consists of foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund (IMF), and special drawing rights (SDRs).

Foreign investments amounted to $79.29 billion; gold, $8.96 billion; foreign exchange, $1.32 billion; reserve position in the fund, $754.7 million; and SDRs, $3.62 billion in November.

“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 12-month period,” the BSP said.

The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income.

By convention, BSP said 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.

The latest GIR level is also about 6.9 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.

Forex intervention

Earlier, Monetary Board Member Bruce Tolentino said the BSP has recently been intervening in the foreign exchange market to address volatilities in the exchange rates.

The US dollar peaked at P58.994 on October 11 but gradually declined to P56.02 on Monday and closed P55.45 on Wednesday.

“We’ve expended some ammunition and we’d like to try our best to preserve that ammunition for future battles,” Tolentino said.

It may be noted that the GIR is one of the sources of funds eyed for the proposed Philippine sovereign wealth fund, or the Maharlika Wealth Fund (MWF).

Tolentino said, however that the SWF may have an impact on BSP’s role in terms of the use of GIR. (Full story: https://businessmirror.com.ph/2022/12/06/creation-of-sovereign-wealth-fund-backed/)

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