BusinessMirror GIR FALLS BELOW AGAIN AS OF END-JUNE

THE country’s Gross International Reserves (GIR) dipped to below $100 billion for the second time this year, according to data released by the Bangko Sentral ng Pilipinas (BSP).

T he BSP said the country’s GIR reached $99.77 billion by the end of June, the second lowest this year. The country’s GIR declined 1.07 percent from the $100.85 billion posted in the same period last year.

Compared to the end of May, the GIR contracted 0.81 percent. The GIR value in June also represented the third consecutive month that the GIR fell this year. “ The month-on-month decrease in the GIR level reflected mainly the National Government’s [NG] net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures, and downward adjustments in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market,” the BSP said.

H owever, BSP said the latest GIR level represents a more-thanadequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.

I t is also about 5.7 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.

T he BSP said the net international reserves refers to the difference between the GIR and reserve liabilities or short-term foreign debt and credit and loans from the International Monetary Fund (IMF).

T he central bank noted that in principle, GIR is viewed to be adequate if it can finance at least three-months’ worth of the country’s imports of goods and payments of services and primary income.

DOF: DBP-LBP MERGER DONE IN

THE Department of Finance (DOF) sees the merger of Land Bank of the Philippines (LandBank) and the Development Bank of the Philippines (DBP) being completed within the first half of next year as the Executive branch is now doing due process for the merger.

Finance Secretary Benjamin E. Diokno said the DOF has already submitted the draft executive order (EO) for the merger to the Office of the President (OP).

T he draft EO will now undergo complete staff work, which Diokno said would be “completed soon.”

D iokno added that the merger of the two state-run banks would also require approval by the Bangko Sentral ng Pilipinas (BSP).

We feel around the fourth quarter it would be on the BSP’s [table already]. It will be approved by the BSP by the end of the year,” he told reporters in a recent press briefing.

And it will not end there. It has to go through the process. Around the middle of next year would be the full completion—that is a reasonable timeline,” he added.

D iokno said he did not want to speculate on what caused the delays of the merger, since the timeline has been moved. He just noted that the government is “very active” and it has a lot on its plate right now, which includes the reforms on the military and uniformed personnel pension as well as the creation of the Maharlika Investment Fund (MIF).

D iokno earlier announced that the EO could be issued before the end of May, with the merger being done by November.

Legal challenge

A FEW months ago, a DBP official warned that the proposed merger might be challenged before the Supreme Court by possibly affected

Debt to GDP still metric to watch, says Diokno

By Jasper Emmanuel Y. Arcalas @jearcalas

THE public should not worry about the country’s ballooning debt since it remains manageable, according to Finance Secretary Benjamin E. Diokno, who maintained that it is the debt’s proportion to the economy that should be monitored.

D iokno said the country’s outstanding obligations would remain “sustainable” as long as the national government achieves its goal of keeping the country’s debt-to-GDP ratio between 60 percent and 61 percent by end of the year.

“ We are not really thinking of [the debt] in terms of nominal. It should be quarterly based on the debt-to-GDP ratio,” Diokno said in a recent press briefing.

“And the best way to cut that ratio is to expand your denominator which is the nominal GDP,” he added.

E arlier this month, the Bureau of the Treasury (BTr) reported that the national government’s outstanding debt as of end-May reached P14.096 trillion, a new record high, due to weakening of the peso and fresh borrowings both from local and foreign markets. (Related story: https:// businessmirror .com.ph/2023/07/05/endmay-phl-debt-hits-%e2percent 82percenta714t/) stakeholders like farmers if the proposal pushes through.

D BP Chairman Dante O. Tiñga warned that the merger would be most likely “questioned” by “affected” stakeholders before the High Court if the merger between the two state-owned banks materializes through an EO.

T iñga maintained that the only way the merger could happen is through legislation, since the two banks were created by laws. (Related story: https:// businessmirror .com.ph/2023/05/26/ lbp-dbp-merger-must-be-covered-by-a-law/)

Jasper Emmanuel Y. Arcalas

Diokno explained that the country’s debt-to-GDP rose because of the Covid-19 pandemic that forced the national government to borrow more money to bankroll health and social services programs to mitigate the socioeconomic implications of the health crisis.

D iokno had earlier argued that the country’s debt-to-GDP is way better compared to other countries like the United States and Japan, which have a debt-to-GDP ratio in the vicinity of 100 percent and 300 percent, respectively. (Related story: https:// businessmirror com.ph/2023/06/30/1-year-onmarcos-administration-bravelyfaces-debt-challenges/)