The country’s gross international reserves (GIR) level, based on preliminary data, rose by US$350 million to US$98.95 billion as of end-August 2020 from the end-July 2020 level of US$98.6 billion. The month-on-month increase in the GIR level reflected inflows mainly from the BSP’s foreign exchange operations and income from its investments abroad. These inflows were partly offset, however, by the foreign currency withdrawals made by the National Government to pay its foreign currency debt obligations and revaluation losses from the BSP’s gold holdings resulting from the decrease in the price of gold in the international market.
The end-August 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 9 months’ worth of imports of goods and payments of services and primary income.1 Moreover, it is also about 7.6 times the country’s short-term external debt based on original maturity and 4.8 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$354 million to US$98.95 billion as of end-August 2020 from the end-July 2020 level of US$98.59 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.
Source: Bangko Sentral ng Pilipinas (BSP)