GIR down to $106.8B

The country’s gross international reserves (GIR) continued to decline as of end-December to $106.84 billion from $108.49 billion in the prior month as the national government increased foreign borrowings while the central bank’s value of gold holdings fell.

However, based on its preliminary data, the Bangko Sentral ng Pilipinas (BSP) reported Tuesday the latest GIR level remained more than adequate, covering 7.5 months’ worth of imports of goods.

GIR includes foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund, and special drawing rights.

BSP mainly attributed the lower GIR to the national government’s higher withdrawals for payments of foreign loans and lower prices of gold in the global market.

Growth in external debt

According to the Bureau of the Treasury, the national government’s external debt already grew by 0.8 percent as of November to P5.17 trillion.

Meanwhile, BSP’s value of gold reserves continued to decrease to $11.03 billion from $11 billion for the sixth time last year, as prices in the global market fell.

According to the London Stock Exchange Group, global prices of gold fell by more than 2 percent below $2,600 per ounce last month, while the US dollar strengthened after signals of a slower easing cycle of the policy rate by the Federal Reserve.

Apart from these, BSP said its net foreign exchange operations also drove down the GIR level. Foreign exchange holdings dropped by 20.6 percent to $1.373 billion.

Foreign investments were also down by 1.4 percent to $90.022 billion.

Investors’ uncertainties

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the GIR level reflected investors’ uncertainties from the incoming Trump administration.

“Possible Trump protectionist measures could lead to higher US inflation, wider US budget deficits, trade wars, and a slower global economic growth,” he said.

Moving forward, he said the country might attract more foreign investments and income from tourism, business process outsourcing and remittances from overseas Filipino workers.