GIR hits all-time high of $45 billion in 2009

MANILA, Philippines - The country’s gross international reserves (GIR) jumped by nearly 20 percent to a new record high of $45.033 billion as of December last year due to strong inflows, government deposits, and the increasing value of the central bank’s gold holdings.

Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. reported yesterday that the country’s GIR increased by $7.4 billion from the 2008 level of $37.55 billion.

The actual reserves slightly exceeded the latest forecast set by the BSP of between $44.5 billion and $45 billion for 2009.

Last month’s GIR was also $800 million higher than the level of $44.167 billion booked as of end-November last year. The GIR is the sum of all foreign exchange flowing into the country.

Tetangco said the increase was brought about by the inflows from the net foreign exchange operations of the central bank and income from its investments abroad.

“The substantial accumulation of reserves over the 12-month period was due mainly to inflows from the net foreign exchange operations of the BSP and income from its investments abroad,” he added.

Data showed that the central bank’s foreign investments grew by 16.6 percent to $37.394 billion in 2009 from $32.065 billion in 2008. The amount was also 1.6 percent higher than the end-November level of $36.801 billion.

Likewise, the BSP chief said the increase in GIR could also be attributed to the 25.3 percent rise in the value of the central bank’s gold holdings to $5.459 billion in 2009 from $4.357 billion in 2008.

He also traced the increasing GIR to the deposits by the government and the state-run Power Sector Assets and Liabilities Management Corp. (PSALM) of proceeds from their bond issues and other borrowings.

The Philippine government borrowed $3.25 billion from foreign commercial sources last year. It also availed of official development assistance (ODA) loans from lending agencies led by the World Bank, Asian Development Bank, Japan Bank for International Cooperation, and others.

According to Tetangco, the rise was also due to the general allocation of Special Drawing Rights (SDRs) which was made available by the International Monetary Fund (IMF) to its members including the Philippines amounting to $1.172 billion.

“Also contributing to the higher year-end GIR level were the allocations of SDRs which were made available by the IMF to its member countries, including the Philippines, in August and September 2009 to boost reserves and provide liquidity to the global financial system,” he explained.

He added that the increase in GIR was partially offset by outflows arising from the payment of maturing foreign exchange obligations by the government and the central bank.

He added that outflows also included foreign currency withdrawals by authorized agent banks.

The current GIR level, he said, could cover 9.1 months of imports of goods and payments of services and income. It is also equivalent to 9.5 times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity falling due in the next 12 months.

This year, the BSP sees the county’s GIR hitting a new record high of between $47 billion and $48 billion on the back of the government’s strong external liquidity position.