By Luz Wendy T. Noble

THE country’s gross international reserves (GIR) rose to a record $88.99 billion as of end-March, providing support to the economy amid the coronavirus disease 2019 (COVID-19) crisis.

The dollar reserves were 0.91% up from the $88.187 billion as of end-February, and 6% higher than the $83.61 billion logged as of end-March 2019, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP) released on Thursday.

The GIR level as of end-March was higher than the $86-billion target set by the central bank for the whole year.

“We confirm that the preliminary GIR level of $89 billion as of end-March is an all-time high. However, please note that the level cited is preliminary only,” the BSP Department of Economic Statistics said in a statement on Thursday.

The month-on-month increase in reserves reflects the National Government’s net foreign currency deposits and the central bank’s foreign exchange operations and income from investments abroad.

However, the inflows were partially offset by payments for foreign debt.

The end-March GIR, which serves as a buffer for liquidity shocks, is equivalent to “7.9 months’ worth of imports of goods and services and payments or primary income.”

This is also equivalent to 5.3 times the country’s short-term external debt based on original maturity, and 3.8 times based on residual maturity.

Based on preliminary data, the BSP’s gold reserves, which forms part of the country’s reserve buffer, stood at $8.015 billion as of end-March. However, it was lower than the $8.214 billion logged a year ago.

Special drawing rights — which refer to the amount that the country can tap from the International Monetary Fund (IMF), was also maintained for the second month at $1.174 billion, though lower than the $1.182 billion seen a year ago.

Meanwhile, gains from foreign investments increased to $76.684 billion from the $75.861 billion seen as of end-February and the $71.409-billion level from a year ago.

On the other hand, reserve position stored with the IMF settled at $578.7 million as of end-March, slightly down from the $586.3 million in the previous month but higher than the $524.6 million seen as of end-March 2019.

Foreign currency deposits were at $2.541 billion, marginally down from the $2.548 billion as of end-February but higher than the $2.282 billion as of end-March 2019.

“The decline in the reserve position in the Fund may have come from transactions that the government may have had and resulted in the government essentially drawing from the said reserve, and the foreign exchange decline may have come from the government’s debt payment obligations during the previous month,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said, noting that the GIR levels remained strong despite this.

Net international reserves (NIR), which refer to the difference between the BSP’s GIR and total short-term liabilities, also increased by $810 million to $88.99 billion as of end-March.

Security Bank Corp. Chief Economist Robert Dan J. Roces said the ample reserves have continued to support the economy during the pandemic, as shown by the peso’s resilience.

“Our strong macroeconomic fundamentals have put the country in a good position to respond to this pandemic; primarily the strength and stability of the peso can be attributed to the hefty reserves the BSP has built prior to the outbreak,” he said in an e-mailed response.

For his part, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said that the healthy buffer kept by the central bank will do well to “address temporary bouts of surge-demand for foreign exchange.”

The GIR may continue to reach record levels in the near term given the current transactions of the government with various sources in an effort to cushion the impact of COVID-19, according to Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

“For the coming months, the GIR could still post new record highs in view of proceeds from the government’s foreign borrowings from multilateral and commercial sources, continued investment gains of residents from US/global bonds and from gold,” he said in an e-mail.