Gross International Reserves in the Philippines hits $93.3 billion, highest ever on record

Gross International Reserves in the Philippines hits $93.3 billion, highest ever on record

PHL’S end-May G.I.R. hits $93.3 billion, highest ever on record

THE Bangko Sentral ng Pilipinas (BSP) reported on Wednesday that the Philippines’ dollar reserves climbed to its all-time high in end-May despite economic disruptions caused by the pandemic.

In a statement, BSP Governor Benjamin Diokno said the country’s gross international reserves (GIR) hit $93.3 billion as of end-May this year, the highest GIR on record for the country.

The country’s GIR is the level of foreign-exchange holdings the Central Bank has 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 and an important line of defense against an economic rundown.

At its current level, the country’s GIR represents an “ample external liquidity buffer,” which is now equivalent to 8.4 months’ worth of the Philippines’ imports of goods and payments of services and primary income, the BSP said. It is also about 7 times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity.

The country’s GIR managed to hit a strong run in May due to the billions in surplus in the country’s Balance of Payments (BoP).

The BoP represents the total transactions of the country’s residents with the rest of the world for a given period. A surplus means the country earned more dollars compared to what it has spent, while a deficit means spending overtook dollar earnings during the period.

In May, the Philippines’ BoP hit a surplus of $2.63 billion, about 2.6 times higher than the $928-million BOP surplus recorded in the same month last year.

According to the Central Bank, the BOP surplus in May 2020 reflected mainly the inflows arising from the national government’s foreign currency deposits with the BSP as well as the BSP’s foreign-exchange operations and income from its investments abroad.

The BoP surplus could have been higher, the BSP noted, if not partially offset by the foreign currency withdrawals made by the national government to pay its foreign currency debt obligations during the month.

The May surplus brought the total five-month BoP surplus of the country to $4.03 billion in May, lower than the $5.19-billion surplus seen a year ago. - Business Mirror
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