Gross international reserves (GIR) rose to $104.48 billion by end of May from $102.65 billion in April as a result of higher proceeds from government-issued securities.

Based on preliminary data, the Bangko Sentral ng Pilipinas (BSP) said the level is more than enough to cover 7.7 months’ worth of importation and payments of services and primary income.

BSP attributed the higher GIR to proceeds from $2-billion global bonds the national government issued in May.

The Bureau of the Treasury said the bonds consisted of $1 billion securities with a 10-year tenor and a coupon rate of 5.25 percent. The other half were sustainability bonds with 25-year tenor and an average rate of 5.6 percent.

BSP said income from its own investments added to the new GIR level.

BSP’s data showed total foreign investments grew to $89.02 billion from $87.13 billion month-on-month.

GIR also consists of gold, foreign exchange, reserve position in the International Monetary Fund (IMF), and special drawing rights.

Only gold posted a decline month-on-month.

Effect of lower oil prices

Net international reserves increased to $104.46 billion from $102.59 billion as GIR exceeded liabilities from short-term foreign debt and credit and loans from the IMF.

Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said GIR might improve due to possibly lower oil prices and strategic importation of select goods.

“There has been a narrowing trend of the country’s trade deficit in recent months, while global oil prices were still among two-year lows compared with other imported commodities in recent months that somewhat reduced the country’s import bill,” he said.

Ricafort added the country’s high credit rating could help it secure lower interest rates for funds toward various public services.

“Going forward, any improvement in GIR data for the coming months could still help provide a buffer for the peso exchange rate versus the US dollar,” he said.

“The better GIR will also help strengthen the country’s external position that, in turn, also supports the relatively favorable credit ratings of 1-3 notches above the minimum investment grade that have been so far sustained post-pandemic,” Ricafort continued.