RP’s May GIR widens to a record $47.65B, says BSP

The country's gross international reserves (GIR) expanded to a record $47.65 billion in May, driven by loan proceeds from the French government as well as central bank's gold holdings, income from investments abroad and foreign exchange operations, the Bangko Sentral ng Pilipinas (BSP) said Monday. Central bank Gov. Amando Tetangco Jr. said the international reserves were $707 million higher than the revised $46.94 billion at the end of April and $8.06 billion more than the $39.59 billion recorded in May last year. "Foreign exchange inflows in May that contributed largely to the sustained increase in the preliminary GIR level included the deposits by the National Government of loan proceeds from the government of France, foreign exchange operations of the BSP and income from its investments abroad, and revaluation gains on the BSP’s gold holdings on account of the continued increase in gold prices in the international market," Tetangco said. The Philippines tapped a 150-million euro loan from Agence Francaise de Development to finance the Local Government Finance and Budget Reform Program Subprogram 2 - aimed at improving the delivery of basic social services to residents by increasing fiscal resources - and financing option for local government units (LGUs). The loan carries an interest equal to the six-month Europe interbank offered rate (Euribor), plus a 110-basis-point spread, and is payable in 20 years. The central bank the money would help enhance LGUs' capacities to plan and budget for the general welfare of their constituents in a transparent and accountable way. The BSP reported said its foreign investments went up by $380 million to $39.438 billion in May, from the revised $39.058 billion in April, while its income from exchange operations plunged by $33.2 million to $312.98 million from $346.18 million. Its gold holdings went up by $335 million to $6.674 billion from $6.312 billion in April while the country’s special drawing rights from International Monetary Fund was steady at $1.095 billion. Tetangco said the inflows were partly offset by payments for maturing foreign exchange debts of the national government and the BSP. The GIR - the sum of all foreign exchange flows into the country - could cover 9.4 months of imports of goods and payments of services and income. The BSP chief said that the GIR was also equal to 11.9 times the country’s short-term external debt, based on original maturity, and 5.3 times based on residual maturity falling due in the next 12 months. The GIR widened by 17.8 percent to a record $44.24 billion in 2009, from $37.55 billion in 2008, due to strong inflows, government deposits, and the increasing value of the central bank’s gold holdings. The GIR would likely widen a range of $48 billion to $49 billion, from an earlier forecast of $47 billion to $48 billion, the BSP said. It expects the balance of payments (BOP) position - the difference between the amount of foreign exchange coming in and going out of the country in a given period - posting a $3.7-billion surplus instead of $3.2 billion. The central bank also projected that the money sent home by overseas Filipino workers (OFW) would grow by 8 percent this year, from a record $17.348 billion last year. OFW remittances went up by 7 percent to $4.339 billion in the first quarter, from $4.057 billion a year earlier. The Cabinet-level Development Budget Coordination Committee now sees the country's economic output, as measured by the gross domestic product (GDP), expanding within a range of 2.6 percent and 3.6 percent this year after a 0.9-percent slack last year. The GDP grew by 3.8 percent in 2008. The GDP registered its fastest pace in almost three years in the first quarter, expanding by 7.3 percent from 0.5 percent a year earlier. —VS, GMANews.TV