Bangko Sentral ng Pilipinas expects the gross international reserves to settle at around $80 billion by the end of the year, lower than the $81.5-billion level posted in 2017.
The Bangko Sentral said in a statement Friday the reserves level by yearend would be consistent with the revised balance of payments projection of a $1.5-billion deficit from the earlier projection of a $1-billion surplus.
It said the updated BoP projection incorporated the latest available data and reflected recent and prospective economic developments, both domestic and global. The current account is seen to post a higher deficit of $3.1 billion, equivalent to 0.9 percent of the gross domestic product.
“This mainly reflects the projected wider trade deficit as growth in goods imports largely outpaces exports growth,” the Bangko Sentral said.
“… The GIR level remains ample, covering more than seven months’ worth of imports of goods and payments of services and income,” the regulator said.
The reserves at the end of May declined to a more than three-year low of $78.97 billion from the end-April level of $79.61 billion, pulled down in part by the government’s payments of its maturing foreign exchange obligations. This was the reserves’ lowest level since the $78. 679 billion in November 2014.
“The marginal decline in the GIR level recorded in May 2018 was due mainly to outflows arising from the foreign exchange operations of the BSP, payments made by the government for its maturing foreign exchange obligations, and revaluation adjustments on the BSP’s gold holdings, resulting from the decrease in the price of gold in the international market,” the Bangko Sentral said.
“These were partially tempered by the NG’s net foreign currency deposits and the BSP’s income from its investments abroad,” he said.
The end-May 2018 level of GIR served as an ample external liquidity buffer and was equivalent to 7.7 months’ worth of imports of goods, and payments of services and primary income. It was also equivalent to 5.4 times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.
Net international reserves, which refer to the difference between the Bangko’s GIR and total short-term liabilities, also decreased by $0.64 billion to $78.95 billion as of end-May 2018 from the end-April 2018 level of $79.59 billion.
Gross international reserves ended 2017 at $81.5 billion, surpassing the target of $80.7 billion for the year, due mainly to inflows barising from the Bangko Sentral foreign exchange operations and revaluation adjustments on its gold holdings.
The end-December reserves were higher than the $80.3 billion recorded a month ago. The full-year GIR was also higher than the $80.69 billion in 2016.