End-May GIR down to $103.52 billion

June 12 ------ ON account of national government debt payments and decreased gold prices, the country's gross international reserves (GIR) plummeted to a 20-month low of $103.52 billion at the end of May. The GIR was 1.77 percent lower than the $105.40 billion reported at the end of April and 3.47 percent lower than the $107.25 billion reported a year earlier, according to preliminary numbers issued by the Bangko Sentral ng Pilipinas (BSP). It was the lowest since September 2020, at $100.44 billion.

The country's gold reserves were $9.02 billion at the end of May, down from $9.27 billion a month earlier, according to the report. The current dollar reserves figure, however, "represents a more than adequate external liquidity buffer," as it covers 9.1 months of imports, 6.6 times the country's short-term foreign debt based on original maturity and 4.5 times the country's short-term foreign debt based on residual maturity. Based on current trends, the projected 2022 GIR will be $108 billion, or 8.4 months of import cover, the BSP projected, which is lower than the prior estimate of $112 billion, or 9.2 months of import cover. "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 noted.

Because of the country's steady structural inflows, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., believes the country's dollar reserves would likely reach new highs in the coming months. Structured inflows include remittances from overseas Filipino workers, business process outsourcing income, foreign tourism revenues, foreign investment inflows and the results of fund-raising efforts, particularly those from abroad, he said. "Thus, still near record-high GIR and still possibly 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 1-3 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.

Source: manilatimes.net