RP forex reserves up slightly to $15.964B

The country’s gross international reserves (GIR) went up slightly to $15.964 billion as of end-August this year, buoyed by dollar proceeds from government borrowing that offset dollar outflow for debt servicing, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The latest figure was slightly higher than the end-July level of $15.953 billion.

The National Government made heavy withdrawals to service its maturing debt obligations but the BSP said they were offset by the dollar proceeds from the reopening of the $451-million Global Bond issue.

According to the BSP, the end-August level was adequate to cover about 4.3 months’ worth of imports of goods and payments of services and income.

The amount was also equivalent to 2.2 times the country’s short-term debt based on original maturity and 1.3 times based on residual maturity.

Short-term debt based on residual maturity refers to outstanding short-term external debt on original maturity plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.

The BSP expects the GIR to dip to as low as $14 billion this year but government foreign borrowing has been strong early in the year due mostly to the funding requirements of the National Power Corp. (Napocor).

The NG is expected to return to the debt market before the end of the year to fill in Napocor’s remaining funding requirement. Because the power company has not been able to access the market on its own, the NG has to borrow for itself and then re-lend to Napocor.

The dollar proceeds from government’s foreign borrowing as well as remittances from overseas Filipino workers are expected to buoy the GIR in the succeeding months but the BSP is still projecting the GIR to go below $16 billion by the end of the year.

The BSP’s net international reserves (BSP-NIR) as of end-August 2004, inclusive of revaluation of reserve assets and reserve-related liabilities, edged up by 0.4 percent to $13.792 billion as of end-August from the end-July level of $13.740 billion.

The BSP said it expects the overall balance of payments to be better than expected by yearend but only because of an anticipated slowdown in imports which means that there would be less need for dollar.