BSP: Foreign reserves up to $107.25B as of end-April

The Philippines’ foreign reserves rose to $107.25 billion as of end-April this year on the back of the national government’s issuance of foreign currency-denominated bonds, data released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed.

Based on central bank data, the country’s gross international reserves (GIR) level —a measure of a country's ability to settle import payments and service foreign debt— at end-April this year is higher compared to end-March’s $104.48 billion.

“The month-on-month increase in the GIR level reflected inflows that were mainly from the proceeds of the national government’s (NG) ROP Global and Samurai Bond issuances, which were deposited with the BSP,” the central bank said.

The BSP also noted that an upward adjustment in the value of its gold holdings due to the increase in the price of gold in the international market contributed to the higher GIR level.

“These were partly offset, however, by the outflows from the national government’s payments of its foreign currency debt obligations,” it said.

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

The buffer is equivalent to 12.3 months’ worth of imports of goods and payments of services and primary income.

By convention, 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, according to the BSP.

Moreover, the GIR level is also about 7.5 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity.

Short-term debt based on residual maturity refers to outstanding external debt with an 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, 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, the central bank noted.

Likewise, the net international reserves (NIR), which refers to the difference between the BSP’s GIR and total short-term liabilities, increased by $2.77 billion to US$107.24 billion as of end-April 2021 from the end-March level of $104.47 billion. — DVM, GMA News