Foreign reserves decline further as of end-June —BSP

The Philippines’ foreign reserves continued to decline as of end-June this year as the national government withdrew its deposits in the central bank to pay for its external obligations among other reasons, the Bangko Sentral ng Pilipinas (BSP) said Tuesday.

Central bank data showed the country’s gross international reserves (GIR) —a measure of a country’s ability to settle import payments and service foreign debt— stood at $106.08 billion, lower than the $107.25 billion as of end-May.

“The month-on-month decrease in the GIR level was mainly attributed to the downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market, foreign currency withdrawals of the national government from its deposits with the BSP to pay its foreign currency debt obligations and various expenditures, and BSP’s foreign exchange operations,” the BSP said.

“These were partly offset, however, by the inflows from the BSP’s income from its investments abroad,” it said.

The central bank said the latest GIR level represents a more than adequate external liquidity buffer equivalent to 12.1 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 7.8 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 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.

Likewise, the net international reserves (NIR), which refers to the difference between the BSP’s GIR and total short-term liabilities, decreased by $1.15 billion to $106.08 billion as of end-June from the end-May level of $107.23 billion. — BM, GMA News