October forex reserves hit record $43.2 billion

MANILA, Philippines – The country’s gross international reserves (GIR) hit a new record high of $43.2 billion in October due to additional borrowings by the government from foreign creditors and international lenders as well as the continued rise in the price of gold, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando M. Tetangco Jr. said the country’s forex reserves went up by $700 million in October from the revised $42.5 billion in end-September.

“The increase in the preliminary GIR level was due mainly to inflows from foreign currency deposits by the government of the proceeds of the third bond issuance for 2009 and a loan from the Asian Development Bank,” Tetangco stressed.

The government tapped the international capital market for the third time last month, successfully raising $1 billion. This brought the country’s total foreign commercial borrowings to $3.25 billion this year.

The ADB also disbursed the $250 million Development Policy Support Program Subprogram 3 for the Philippine government to help increase investment inflows through improved macroeconomic and fiscal management as well as strengthened public financial management.

Tetangco also attributed the increase in international reserves to the revaluation gains on the central bank’s gold holdings arising from the higher price of gold in the international market as well as the BSP’s rising income from its overseas investments.

Data showed that the central bank’s foreign investments inched up by 1.1 percent to $36.19 billion in October from $35.79 billion in September while its gold holdings jumped by 5.3 percent to $5.27 billion from $5.01 billion.

On the other hand, the general allocation of Special Drawing Rights (SDRs) which was made available by the International Monetary Fund (IMF) to its members including the Philippines was unchanged at $1.153 billion as of end October.

The BSP chief said 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 GIR is the sum of all foreign exchange flowing into the country and the balance of payment position is the remaining balance net of all external payments for debt servicing and imports.

According to Tetangco, the current GIR level could cover eight months worth of imports of goods and payments of services and income.

He added that the reserves were also equivalent to 9.1 times the country’s short-term external debt based on original maturity and four times based on residual maturity falling due in the next 12 months.

The BSP expects the GIR to range between $42 billion and $43 billion instead of $37.5 billion and $38.5 billion this year.

Philstar

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