GIR dips slightly to $16.038B

The Bangko Sentral ng Pilipinas (BSP) reported yesterday that the country’s gross international reserves (GIR) dipped slightly from $16.18 billion in end-April 2003 to $16.038 billion in May as the government serviced its debt obligations.

GIR represents the country’s total holdings of foreign currencies including special drawing rights (SDRs) in the International Monetary Fund.

Preliminary data from the BSP also indicated that the balance of payments – the net flow of dollars from trade and services – based on net international reserves in May stood at a surplus of $154 million but this does not factor in the revaluation of the BSP’s gold reserves which fluctuates drastically from month to month.

This indicate that the actual May BOP could still be in deficit as the latest available data in April indicated a deficit of $17 million while the Jan. to April deficit was at $519 million.

According to BSP Governor Rafael Buenaventura, the GIR’s decline was attributable mainly to the repayment of debt service requirements of the National Government and the BSP, although he said the revaluation of gold holdings moderated the decline in reserves.

Buenaventura said the current GIR level is comfortable and enough to cover 4.5 months worth of imported goods and payment of services and income.

At $16.038 billion, Buenaventura said the GIR is also equivalent to over 2.6 times the country’s short-term debt based on original maturity or over 1.3 times based on residual maturity.

Short-term debt based on residual maturity refers to principal payments of public and private sectors debts that fall due within the next 12 months. This means the current GIR level is enough to meet these short-term obligations, indicating no shortage of dollars.

The government spends considerable amounts of foreign currency on debt servicing but in May, but Buenaventura said this was offset by forex inflows, interest income and gold revaluation.

The BSP’s net international reserves (BSP-NIR) level as of end May, according to Buenaventura, which included the revaluation of reserve assets and reserve-related liabilities, was higher at $12.451 billion compared to $12.297 billion a month ago.

The BSP paid some of its maturing obligations falling due in April out of the proceeds of the $585 million term loan facility which was scheduled for disbursement in March.

The term-loan was arranged for the BSP by a group of banks led by HSBC as coordinating arranger. The other arrangers were Citibank NA/Salomon Smith Barney Hongkong Ltd. for $35 million; Credit Lyonnais for $32 million; the International Commercial Bank of China for $70 million, Sumitomo Mitsui Banking Corp. for $33 million; Tokyo Mitsubishi International Ltd for $33 million and Mizuho Corporate Asia for $30 million.

The facility has a five-year tenor with an average life of three years and carries an interest margin of 2.33 percent per anum over $ LIBOR. The loan also has an option to allow lenders to convert their participation into floating rate notes after the first six months from the drawdown date.