The Philippines’ gross international reserves (GIR) dropped to $106.081 billion as of end-June from the previous month’s $107.250 billion, mainly because of the decline in the prices of gold, according to the Bangko Sentral ng Pilipinas (BSP).

The end-June GIR is 13.49 percent higher compared to end-June 2020’s $93.469 billion.

“The month-on-month decrease in the GIR level was mainly attributed to the downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market,” said the BSP in a statement.

The drop in the GIR is also due to government’s foreign currency withdrawals from the BSP to pay for its foreign currency debts and “various expenditures” as well as the central bank foreign exchange operations. “These were partly offset, however, by the inflows from the BSP’s income from its investments abroad,” said the BSP.

The GIR is composed of foreign assets of the BSP invested in foreign-issued securities, monetary gold, and foreign exchange.

As of end-June, gold reserves totaled $8.875 billion, down from end-May’s $9.907 billion. The BSP’s foreign investments also declined during the period, it amounted to $92.551 billion versus $92.835 billion previously.

At the current GIR level, the BSP said $106.081 billion is “more than adequate external liquidity buffer”. It is equivalent to 12.1 months’ worth of imports of goods and payments of services and primary income. “It is also about 7.8 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity,” said the BSP.

A GIR is considered adequate if it can finance at least three months’ worth of imports of goods and payments of services and primary income. It is also deemed sufficient if it provides at least 100 percent cover for the payment of the country’s foreign liabilities, public and private, falling due within 12 months.

BSP Governor Benjamin E. Diokno said in a forum in April that the GIR could reach as high as $120 billion by end-2021. The official forecast is $114 billion for this year.

Source: Manila Bulletin (