GIR falls to $106.75 billion as of April for ten-month low

THE country’s gross international reserves (GIR) fell to a 10-month low of $106.75 billion at the end of April due to national government debt payments and lower gold prices.

According to preliminary figures released by the Bangko Sentral ng Pilipinas (BSP) over the weekend, the amount was 0.51 percent smaller than the $107.39 billion recorded at the end of March and 0.88 percent lower than the $107.70 billion reported a year ago.

It was the smallest since June 2021, when it reached $105.76 billion.

“The month-on-month decrease in the GIR level reflected mainly 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 as well as the downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market,” the central bank explained.

According to the report, the country’s gold reserves were $9.27 billion at the end of April, down from $9.40 billion a month earlier.

It went on to say that the current dollar reserves figure “represents a more than adequate external liquidity buffer,” as it covers 9.4 months of imports, seven times the country’s short-term foreign debt based on original maturity, and 5.5 times the country’s short-term foreign debt based on residual maturity.

At the end of April, the difference between GIR and total short-term liabilities, or net foreign reserves, dropped to $106.74 billion from $107.3 billion the previous month.

The BSP said the emerging 2022 GIR will be $108 billion, or 8.4 months of import cover, which is lower than the previous projection of $112 billion, or 9.2 months of import cover, based on current trends.

“The 2022 GIR will be supported by foreign borrowings by the government as well as the potential augmentation in the volume of gold purchases,” it added.

Because of the country’s sustained structural inflows,

Rizal Commercial Banking Corp. chief economist Michael Ricafort maintained that the country’s dollar reserves could likely hit new highs in the coming months.

Remittances from overseas Filipino workers, business process outsourcing revenues, international tourism revenues, foreign investment inflows and results from fund-raising operations, particularly those from abroad, are all examples of structural inflows, he said.

“Thus, near record-high GIR and prospects of reaching new record highs in the coming months could further strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings for the second straight year, mostly at one to three notches above the minimum investment grade, a sign of resilience despite the Covid-19 pandemic that caused downgrades in other countries around the world,” Ricafort continued.