THE Philippines added another $900 million to its arsenal, as the Bangko Sentral ng Pilipinas (BSP) reported an increase in the country’s gross international reserves (GIR) as of end-August this year.
BSP Governor Benjamin Diokno told reporters on Monday that the country’s GIR hit $108.5 billion in August this year. This is $900 million higher than the previous month’s GIR and $9 billion higher than the August GIR in the previous year.
The country’s GIR is the level of foreign exchange holdings being managed by the Central Bank during a given period. The GIR is a crucial component of the economy as it is often used to manage the country’s foreign exchange rate against excess volatility.
The BSP attributed the increase in the country’s GIR to the additional allocation of Special Drawing Rights (SDR) to the Philippines given the IMF’s efforts to increase global liquidity amid the pandemic.
It could have been higher, but was partially offset by the national government’s (NG) foreign currency withdrawals from its deposits with the BSP as the NG settled its foreign currency debt obligations and paid for various expenditures, and the BSP’s net foreign exchange operations.
At this level, the BSP said the GIR represents a “more than adequate external liquidity buffer” for the country, as it is equivalent to 12.3 months’ worth of imports of goods and payments of services and primary income.
It is also about 7.8 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.
International analysts have lauded the country’s ability to shore up its dollar defenses during the pandemic.
In its recent affirmation of the country’s credit rating, Japan Credit Rating Agency said the strong GIR of the country “demonstrate the robustness of the country’s foreign currency liquidity position.”
Recently, Fitch Solutions also said the country’s substantial GIR level is expected to limit the country’s risks from running a current-account deficit through the medium term.