Thursday, 8 January 2009

Philippine GIR hits record $ 37 B in 2008

By LEE C. CHIPONGIAN
The Manila Bulletin
http://www.mb.com.ph/BSNS20090108145123.html

The country’s gross international reserves (GIR) as of end-December totaled a record high of $ 37.059 billion, a level fairly within expectations despite slower foreign exchange inflows and capital flight in reaction to the financial crisis.

The Bangko Sentral ng Pilipinas (BSP) reported yesterday that GIR was $ 3.3 billion or 9.9 percent higher compared to the end-2007 closing of $ 33.75 billion. It is the highest dollar reserves ever reported.

Of the GIR, $ 31.599 billion are BSP’s foreign investments while $ 4.537 billion are gold reserves. The rest are foreign exchange and short-term reserves.

BSP said the annual increase in the GIR level in 2008 was attributed mainly to inflows from the BSP net foreign exchange operations and income from its investments abroad, as well as the National Government’s deposit of proceeds from its reopening of global bonds and other foreign borrowings during the year.

In the meantime the BSP explained that the revaluation gains in its gold holdings on account of the increase in the price of gold in the international market during the year also contributed to the higher year-end GIR level. "These receipts were offset by outflows arising mainly from payments of maturing foreign currency-denominated obligations of the NG and the BSP," officials said.

The GIR level is rising every month except in October when the foreign exchange hoard lost $ 1 billion due to exchange rate losses and payment of maturing obligations.

The BSP has been tapping short-term financing to prop-up the GIR. It has since borrowed $ 1.5 billion worth of gold-backed and security-backed loans.

The first loan was taken out in June in the amount of $ 500 million from Bank for International Settlements.

At the moment, the GIR level can cover up to 5.6 months of imports of goods and payments of services and income. It was also equivalent to 4.5 times the country’s short-term external debt based on original maturity and 2.8 times based on residual maturity.

In the meantime BSP’s foreign exchange swap positions further dropped to $ 1.59 billion as of November, which was the lowest since the January 2006 of $ 1.19 billion. Swaps totaled almost $ 10 billion at the beginning of 2008.

GIR is fueled mainly by remittances as well as foreign direct investments and exports. NG dollar deposits from multilateral loans also add to GIR.

For 2008 the BSP expects total overseas Filipinos remittances to grow by 13 percent to $ 16.9 billion, more than forecast of 10 percent. Of this full-year assumed amount, $ 16.3 billion are expected to be remitted through the banking system while about $ 600 million are through the non-formal channels.

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