Philippine gross reserves hit record $75.5B

MANILA, Philippines—The Philippines’ gross international reserves (GIR) climbed to yet another record high of $75.56 billion as of end-August, the Bangko Sentral ng Pilipinas (BSP) said Wednesday.

BSP Governor Amando M. Tetangco Jr. said the GIR increased by $3.68 billion from $71.88 billion in the previous month.

Tetangco said the sustained increase in the reserves level was mainly because of substantial inflows from a program loan from the World Bank, as well as from the BSP’s foreign exchange operations and income from investments abroad.

Tetangco said increased valuation of the BSP’s gold holdings amid the continued rise in the price of gold further boosted the central bank’s stock of foreign currency.

Foreign exchange reserves as of the end of August could cover 11.3 months’ worth of imports of goods and payments of services, Tetangco said.

“It was also equivalent to 11.1 times the country’s short-term external debt based on original maturity and six times based on residual maturity,” Tetangco added.

The GIR was slightly reduced as the government and the BSP paid maturing obligations. It was trimmed further with the foreign currency withdrawals made by Power Sector Assets and Liabilities Management Corp. and by banks that were authorized to do so.

Tetangco earlier said the GIR could reach $75 billion this year, more than the initial projection of $68 billion to $70 billion, because of the higher-than-expected surplus in the balance of payments (BOP).

He said the central bank was expecting a better BOP surplus this year, noting that it was already very high in the first semester.

Tetangco said that in the first six months of 2011, the country posted a BOP surplus of about $5 billion, which was “substantially more than half the whole-year target.”

The latest BSP data show that the BOP surplus as of July reached $6.2 billion, or 82.8 percent higher than the $3.4 billion attained in the same period last year.

The BOP is a closely watched economic indicator because it shows a country’s level of foreign-exchange liquidity.

Factors that help boost the country’s BOP include foreign investments, income from exports, remittances sent by overseas Filipinos, foreign currency-denominated loans extended to the government and income from the BSP’s investments abroad.