The country’s gross international reserves (GIR) rose further to US$25.8 billion as of end-May 2007, or US$700 million higher than the end-April 2007 level of US$25.1 billion. The increase in reserves was due mainly to inflows from the BSP’s foreign exchange operations, receipts from investment income abroad, as well as proceeds of the BSP’s share from the release of collateral on the Brady Bonds which were prepaid by the National Government in April 2007. 1 These inflows were partly offset, however, by the debt service payments of the BSP and the NG on their foreign obligations.
In terms of reserve adequacy, the current GIR level can cover about 4.8 months of imports of goods and payments of services and income. This level is also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 2.7 times based on residual maturity.2
Net international reserves (NIR), including revaluation of reserve assets and reserve-related liabilities, likewise rose to US$25.7 billion from the end-April 2007 level of US$25.1 billion. NIR refers to the difference between the BSP’s GIR and total short-term liabilities.
1 It may be recalled that the Philippine Brady Bonds were collateralized loans. Thus, prepayment of the bonds freed up these collateral. Of the US$103 million amount of freed collateral, including interest earned, US$85 million was credited to the BSP and the balance to the NG.
2 Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.