THE Philippines started the new year with its reserves exceeding $100 billion. This is the second consecutive year in a row that it breached that threshold, based on data from the Bangko Sentral ng Pilipinas (BSP).
The country’s gross international reserves (GIR) level, based on preliminary data, settled at $103.4 billion as of the end of January 2024. In January 2023, the country’s GIR level was at $100.67 billion.
The data also showed the GIR level has been above $100 billion for four consecutive months (October, November, December and January) and is gradually increasing.
“The month-on-month decline in the GIR level reflected mainly the National Government’s [NG] payments of its foreign currency debt obligations and downward valuation adjustments in the BSP gold holdings due to the decrease in the price of gold in the international market,” BSP said.
At the end of October 2023, the GIR was at $101.04 billion and increased to $102.72 billion at the end of November 2023 and $103.75 billion at the end of December 2023.
However, Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort noted that the January GIR level was $347 million or 0.3 percent lower than the end-December 2023 level.
“[This] is largely reflected by the month-on-month declines in foreign investments [$462 million or 0.5 percent]; also the monthly decline in gold holdings [$258 million or 2.4 percent, amid the increase of 1.1 percent month-on-month increase in global world gold prices, which reached new record highs in the latter part of December 2023],” Ricafort said.
However, Ricafort noted that the GIR was higher year-on-year by $2.7 billion or 2.7 percent. This was mainly due to remittance inflows and Business Process Outsourcing (BPO) revenues.
He also noted a decline in global crude oil and other global commodity prices from the highs posted in 2022. This could have also helped narrow the country’s trade deficit/net imports.
The BSP also noted that the latest GIR level represented a more than adequate external liquidity buffer equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.
By convention, the 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.
The central bank also showed that the GIR in January is six times the country’s short-term external debt based on original maturity and 3.9 times based on residual maturity.
The BSP explained that short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.
The level of GIR as of a particular period, BSP said, is considered adequate if it provides at least 100 percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate 12-month period.
The data also showed that the net international reserves, which refers to the difference between the BSP’s reserve assets (GIR) and reserve liabilities, decreased by $0.9 billion to $102.8 billion as of end-January 2024 from the end-December 2023 level of $103.7 billion.
The BSP said these reserve liabilities include short-term foreign debt and credit and loans from the International Monetary Fund (IMF).
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