The Bangko Sentral ng Pilipinas (BSP) said the GIR would go further down to $15 billion, especially if the government decides to borrow from domestic sources to refinance its obligations instead of tapping the foreign credit market.
Comprised mostly of US dollars, the GIR is the total foreign currency holding of the central bank including gold and special drawing rights (SDRs), the currency used by the International Monetary Fund (IMF).
The GIR has been rising steadily due mostly to the large dollar inflows from overseas Filipino workers (OFWs) which was expected to hit a record $8 billion this year as the number of deployed workers increased by 4.5 percent.
According to BSP Governor Rafael Buenaventura, the GIR was trending down to the projected $15-billion level by yearend after peaking at $17 billion in March.
The October GIR was lower than the end-September level of $16.025 billion due mostly to interest payments.
Buenaventura said the October GIR level was equivalent to 5.1 months worht of imports and payment for services and income.
He said the end-October GIR could alternatively cover the country’s short term debt by at least three-fold, based on original maturity or by 130 percent based on residual maturity.
According to the BSP chief, the minimal decline was due to debt service payments for maturing onbligations of the BSP and the National Government, including the heavy debt burden of the National Power Corp.
Meanwhile, Buenaventura said the BSP’s net international reserves as of end October 2002 reached $12.283 billion from $12.606 billion in September.
He said the strength of the government’s reserve position would help keep the foreign exchange on an even keel. He added domestic liquidity already reflected an improvement in the preference for peso-denominated deposits relative to foreign currency deposits.
This indicated growing confidence on the stability of the Philippine currency despite the external factors such as the weakness in regional currencies and the dollar itself.
The country’s reserves peaked in March at $17.359 billion after the government booked the proceeds from the flotation of some $1-billion worth of bonds, with the Hongkong and Shanghai Banking Corp (HSBC) as global coordinator. The issue had J.P. Morgan and Deutsche Bank as lead arrangers.
The government issued $500 million worth of bonds which was used to pre-pay a $750-million loan that the government borrowed last year. – Des Ferriols