The Philippines’ gross international reserves as of end-June declined to a four-month low of $99.8 billion from the end-May level of $100.6 billion as the government settled some of its foreign debts, the Bangko Sentral ng Pilipinas said over the weekend.
Data showed this was the lowest since the $98.216 billion recorded in February this year.
“The month-on-month decrease in the GIR level reflected mainly the national government’s 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,” BSP said.
The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.
It 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.
The BSP’s gold holdings declined to $10.011 billion as of end-June from the end-May level of $10.208 billion.
The net international reserves, which refers to the difference between the BSP’s reserve assets (GIR) and reserve liabilities (short-term foreign debt and credit and loans from the International Monetary Fund), decreased by $0.8 billion to $99.8 billion as of end-June from the end-May level of $100.6 billion.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the reserves level could be supported in the coming months by the continued growth in the country’s structural inflows from OFW remittances, BPO revenues, exports (though offset by imports), relatively fast recovery in foreign tourism revenues as well as continued foreign investment inflows coming from pre-pandemic highs.
“… [The] still relatively high GIR at $99.8 billion could still strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings for the third straight year, mostly at 1-3 notches above the minimum investment grade…,” he said.
Ricafort said it is a sign of the country’s resilience despite the COVID-19 pandemic that caused downgrades in other countries around the world.
Bangko Sentral earlier retained its GIR forecast for this year and 2024 at $100 billion and $102 billion, respectively.