BSP: Philippine foreign reserves settled at $104.82B as of end-March, lower than end-February’s

The Philippines’ foreign currency reserves continue to build up, albeit lower as of end-March 2021 on the back of the national government’s withdrawals to pay its foreign debts, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data released by the central bank on Friday showed the country’s gross international reserves (GIR) level — a measure of the ability to settle import payments and service foreign debt — stood at $104.82 billion as of end-March this year from $105.16 billion as of end-February.

“The month-on-month decrease in the GIR level reflected outflows mainly from the net withdrawal in the national government’s foreign currency deposits with the BSP, which were largely used for debt servicing, and a downward adjustment in the value of BSP’s gold holdings due to the decrease in the price of gold in the international market,” the BSP said.

The central bank noted the outflows were partly offset by the its income from its investments abroad.

“The latest GIR level represents a more than adequate external liquidity buffer, which can help cushion the domestic economy against external shocks,” the BSP said.

“This buffer is equivalent to 12 months’ worth of imports of goods and payments of services and primary income,” it added.

By convention, a GIR level 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.

“Moreover, it is also about 7.5 times the country’s short-term external debt based on original maturity and 5.3 times based on residual maturity,” the central bank said.

The level of GIR, as of a particular period, is considered adequate, if it provides at least 100% cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate twelve-month period, according to the BSP.

Net international reserves (NIR), which refers to the difference between the BSP’s GIR and total short-term liabilities, decreased by S$340 million to $104.81 billion as of end-March 2021 from the end-February 2021 level of $105.15 billion. — RSJ, GMA News