15 October 2020
GIR CLIMBS TO US$100 BILLION AS OF END-SEPTEMBER 2020
The country’s gross international reserves (GIR) level, based on preliminary
data, rose by US$1.54 billion to US$100.49 billion as of end-September 2020 from the end-August 2020 level of US$98.95 billion. The month-on-month increase in the GIR level reflected inflows mainly from the BSP’s foreign exchange operations and National Government’s foreign currency deposits with the BSP. These inflows were partly offset, however, by the revaluation losses from the BSP’s gold holdings resulting from the decrease in the price of gold in the international market and foreign currency withdrawals made by the National Government to
pay its foreign currency debt obligations.
The end-September 2020 GIR level represents a more than adequate external liquidity buffer, which can cushion the domestic economy against external shocks. This buffer is equivalent to 10 months’ worth of imports of goods and payments of services and primary income.[1] Moreover, it is also about 9.2 times the country’s short-term external debt based on original maturity and 5.4 times based on residual maturity.[2], [3]
Similarly, the
net international reserves (NIR), which refers to the difference between the BSP’s GIR and total short-term liabilities, increased by US$1.53 billion to US$100.48 billion as of end-September 2020 from the end-August 2020 level of US$98.95 billion.
[1] By convention, 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.
[2] Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
[3] 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 twelve-month period.
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