GIR drops as of March on gov’t debt payments

THE COUNTRY’S dollar reserves decreased to $104.82 billion as of March as the government serviced its maturing debt obligations, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.

Gross international reserves (GIR) inched down by 0.32% as of March from the $105.161 billion seen at end-February, based on preliminary data released by the central bank on Friday. However, the end-March level was bigger by 18% than the $88.861 billion seen a year earlier.

“The month-on-month decrease in the GIR level reflected outflows mainly from the net withdrawal in the national government’s foreign currency deposits with the BSP, which were largely used for debt servicing, and a downward adjustment in the value of BSP’s gold holdings due to the decrease in the price of gold in the international market,” the BSP said in a statement.

Ample foreign exchange buffers protect the country from market volatility and ensure the country is capable of paying its debts in the event of an economic downturn. The country’s GIR reached a record $110.117 billion at end-2020.

“The March downward movement is not a cause of worry and the March GIR level is robust and healthy. The current print supports a strong peso, but still describes weak domestic demand compared to pre-pandemic levels,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.

The end-March GIR level was enough to cover the 12 months’ worth of the country’s imports of goods and payments of services and primary income. It was also equivalent to about 7.5 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity.

The value of gold reserves dipped 0.6% to $9.113 billion as of March from $9.17 billion as of February, but was higher by 13.7% from the $8.015-billion level a year earlier.

Meanwhile, the country’s reserve position in the International Monetary Fund (IMF) also slipped 2.26% to $794.1 million from $812.5 million a month earlier. It however increased 37% from the $578.5 million a year ago.

Special drawing rights — or the amount the country can tap from the IMF — was maintained at $1.232 billion for the second straight month. It inched up by 5.57% from the $1.167 billion as of end-March 2020.

On the other hand, gains from the BSP’s investments abroad dipped 0.75% to $89.994 billion from $90.679 billion a month earlier, but was higher by 17.6% from $76.48 billion a year ago.

Foreign currency deposits meanwhile increased 12.8% to $3.685 billion from $3.266 billion as of February and by 40.7% from $2.619 billion a year ago.

The BSP expects the country’s GIR level to reach $114 billion this year and to hit $117 billion by 2022. — L.W.T. Noble