Imee Marcos hits BSP decision to sell gold reserves

Senator Imee Marcos on Wednesday grilled the administration's economic managers over the Bangko Sentral ng Pilipinas' (BSP) decision to sell 24.95 tonnes of gold in the first half of 2024.

Marcos said this is contrary to what other countries doing, which is to stock more gold reserves.

"Abala ang marami po sa atin, sa ating mamamayan pati ang ating mga bangkero pagkat ang ibang bansa bumibili ng ginto, bakit daw tayo biglang nagbabagsak at nagbebenta ng ginto e samantalang sinabi po ninyo, sapat naman ang ating pera bakit pa tayo nagbebenta ng katakot-takot?" Marcos said during the first day of Senate's plenary deliberations on the 2025 proposed national budget.

(Many of us are worried because other countries buy gold, so why did we suddenly sell gold when, as you said, we have enough funds. So why did we sell such a huge amount?)

Senator Grace Poe, speaking on behalf of the economic managers as the sponsor of the 2025 General Appropriations Bill, explained that it is part of the BSP's reserves strategy.

“The BSP took advantage of the higher prices of gold in the market and generated additional income without compromising the primary objectives for holding gold, which are insurance and safety,” the BSP said at the time.

Poe said that while the central bank sold almost 25 tonnes of gold, it also purchased P16.733 billion worth of gold.

The economic managers, however, failed to provide the weight equivalent of the over P16 billion worth of gold when Marcos was comparing how much gold was sold and purchased by the Philippine government.

Marcos continued criticizing the BSP's decision, saying their "strategy" runs contrary to the usual reserve policy.

"That would appear to be the opposite. 'Di ba baliktad yon? Pag nagre-reserve ka, nag-iipon ka. Hindi ka nagbebenta [When you reserve, you are saving, not selling]. Can we be enlightened on the rationale of the BSP?" Marcos said.

"The question also arises and it has been asked not only here in the Philippines but elsewhere, what is the overall effect of the sale of gold in our gross international reserves? Sa BSP, 'yung GIR natin syempre babagsak din yan [Our GIR will of course drop]," she went on.

The GIR is the measure of the government's ability to settle import payments and service foreign debt. The economic managers, through Poe, explained that the gold was sold to "get cash reserves" which increased the Philippines' GIR.

"Tumaas [It rose], actually. Our dollar reserves increased...Our dollar reserves is 112 billion US dollars which is the highest ever," she said.

Poe added that nine percent of the country's GIR is still in gold.

On Marcos' question on why such a huge amount of gold was sold in the first half of 2024, Poe said it was because of the "high demand and price of gold."

"Instead of holding on to it when you also forecast or when you analyze that it is a high number or it is in demand, that is the time actually you also sell but you keep a certain percentage for reserve," Poe said.

Still, Marcos demanded BSP's explanation, arguing that the gold could have been sold at a higher price had the Central Bank waited for the current price of $2,754.27 per troy ounce which she believes is a "record amount."

"I doubt that in fact we sold an exceedingly high amount. Our GIR could've arguably been higher if we held on to the gold instead of selling it from the beginning of the year onwards," she said.

Poe then joined Marcos in urging the economic managers to provide a written explanation on the rationale of this move, as well as the data on how much the BSP sells per ounce of gold compared to the market prices.

"So many countries are in fact in a mad rush to acquire gold and here we are unloading our own gold. So it's a little peculiar, the timing seems to be different. I will admit in fact that everyone has a different investment strategy but having said that why are we so much against the crowd. In any case, we will await your information," Marcos ended. 

In September, BestBrokers, an online aggregator, found that the Bangko Sentral sold the most gold among countries that reported activities to the World Gold Council (WGC) in the first half of the year.

BestBrokers said the Philippines sold 24.95 tonnes in January to June, cutting down the country’s reserves by 15.69% to 134.06 tonnes. This compares to the 1.33 tonnes added to the reserves in the previous year.

Latest data available from the WGC show that the Philippines was listed as the 31st country in terms of gold holdings with 132.7 tonnes as of June 2024, equivalent to 9.8% of reserves.

Gold reserves are part of the country’s gross international reserves (GIR), or the measure of the ability to settle import payments and service foreign debt.

The central bank reported the end-August GIR level at $106.9 billion, up from $106.73 billion in July, and $99.567 billion as of end-August 2023.

This is equivalent to about 6.0 times the country’s short-term external debt based on original maturity, and 3.8 times based on residual maturity. — BM, GMA Integrated News