MANILA, October 8, 2004 (STAR) By Des Ferriols - The country’s gross international reserves (GIR) dipped below the $16-billion mark, reaching $15.908 billion in September from $16.001 billion a month earlier due mainly to withdrawals made by the National Government (NG) to service its maturing debts.

BSP Deputy Governor and Officer-in-Charge Armando Suratos said the decline was only partly mitigated by a deposit made by the NG amounting to P1.037 billion, representing the proceeds from the reopening of its Global Bond issue.

Without the deposit, the GIR would have taken a sharper plunge as the NG scrambled to meet its maturing obligations at the end of the third quarter where maturities bunched up significantly.

According to the BSP, the end-September GIR 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 2.4 times the country’s short-term debt based on original maturity and 1.4 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 has been able to keep the GIR level hovering close to $16 billion mainly from foreign borrowings by the NG but its projection for 2004 pegged the GIR to dip to as low as $14 billion by the end of the year.

The NG had laid out a plan to source only 20 percent of its funding requirements from the foreign market but it has been forced to borrow beyond the 20 percent mark because the National Power Corp. (Napocor) has been unable to raise funds on its own.

The dollar proceeds from government’s foreign borrowing as well as remittances from overseas Filipino workers (OFWs) 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-September 2004, inclusive of revaluation of reserve assets and reserve-related liabilities, edged up by 0.4 percent to $14.017 billion from the end-August level of $13.792 billion.

However, the BSP said it expected the overall balance of payments to be better than expected as exports expand in the wake of the global expansion of consumer markets.

Reported by: Sol Jose Vanzi

All rights reserved