The sustained BOP surplus resulted in the continued build-up of the country’s gross international reserves (GIR), which stood at $ billion as of end-August 2008. At this level, the GIR is equivalent to 6.0 months’ worth of import cover, 2.9 times the country’s short-term external debt based on residual maturity.
I therefore agree with my colleague Mark Carney from the Bank of England who has said, in this context, that it is sometimes good to wear a belt and suspenders to prevent your trousers from falling down. That being said, the flaws of the risk-based approach need to be addressed.