COUNTRY'S GROSS RESERVES SOARED TO RECORD LEVEL OF $36 B AS OF FEB
MANILA, MARCH 8, 2008 (STAR) By Des Ferriols - The country’s gross international reserves (GIR) soared past the $36-billion mark at the end of February, hitting the highest level in history and within the projected full-year total of $37 billion.
The Bangko Sentral ng Pilipinas (BSP) reported yesterday that the GIR rose to a new record high of $36.1 billion at the end of February.
The record-high reserves would boost the country’s balance of payments (BOP) position which in turn would provide even stronger support for a robust peso for the rest of the year.
BSP Governor Amando M. Tetangco Jr. said the end-February level was $1.3 billion more than the January level of $34.8 billion which was the previous historical high.
Tetangco said the February jump in the GIR resulted from deposits made by the National Government which was able to raise $500 million from its global bond float in January.
Tetangco said the GIR also picked up from the BSP’s net income from its foreign exchange operations as well as income from its investments abroad.
According to Tetangco, this level of reserves was good enough to cover 6.3 months of imports of goods and payments of services and income. It was also equivalent to 5.2 times the country’s short-term external debt based on original maturity.
Tetangco said he expected the country’s international reserves to hit a record high of $35 billion to $37 billion in 2008 but the balance of payments surplus would drop to $3.5 billion.
“We will be coming off a high base,” Tetangco explained. “Also, the assumption
is that a large part of foreign exchange inflows will remain with banks to service the needs of their clients.”
Tetangco admitted that the capital accounts under the BOP was relatively harder to project especially since it was unclear how the US economy would fare under the pressure of the credit market crunch and the balancing impact of the US Federal Reserve Board.
In 2008, the BSP is expecting total remittances from overseas Filipinos to reach $16.2 billion with labor deployment increasing despite the slowdown in the US economy.
The overall BOP position is critical in determining the position of the BSP as it performs currency stabilization function by swaying the market to smoothen foreign exchange volatility.
The bigger the surplus, the better the BSP would be able to stabilize the exchange rate whether it is appreciating or depreciating against other currencies, particularly the US dollar.
According to Tetangco, he was also expecting some developments in the debt payments of the National Government after the International Monetary Fund (IMF) said there was some space for a much more aggressive effort to reduce foreign debt.
“It’s a matter of cost-benefit,” Tetangco said. “The NG has to decide whether it could still prepay more of its foreign debt without incurring penalties.”
Chief News Editor: Sol Jose Vanzi
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