The country’s gross international reserves (GIR) level, based on preliminary data, rose by US$2.77 billion to US$107.25 billion as of end-April 2021 from the end-March 2021 level of US$104.48 billion.
The latest GIR level represents a more than adequate external liquidity buffer, which can help cushion the domestic economy against external shocks. This buffer is equivalent to 12.3 months’ worth of imports of goods and payments of services and primary income.1
Moreover, it is also about 7.5 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity.2,3
The month-on-month increase in the GIR level reflected inflows that were mainly from the proceeds of the National Government’s (NG) ROP Global and Samurai Bond issuances, which were deposited with the Bangko Sentral ng Pilipinas (BSP).
Further, an upward adjustment in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market contributed to the higher GIR level. These were partly offset, however, by the outflows from the NG’s payments of its foreign currency debt obligations.
Similarly, the net international reserves (NIR), which refers to the difference between the BSP’s GIR and total short-term liabilities, increased by US$2.77 billion to US$107.24 billion as of end-April 2021 from the end-March 2021 level of US$104.47 billion.
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1 By convention, GIR is viewed to be adequate if it can finance at least three-months’ worth of the country’s imports of goods and payments of services and primary income.
2 Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
3 The level of GIR, as of a particular period, is considered adequate, if it provides at least 100 percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate twelve-month period.
