Philippine reserves down in November

The Philippine gross international reserves (GIR) slipped in November due to outflows from payments of the government for its debt obligations, the Bangko Sentral ng Pilipinas (BSP) reported.

Data released by the central bank showed that the GIR stood at $93.954 billion last month, down from $94.027 billion in October and $107.723 billion in November 2021.

The BSP said the latest level is equivalent to 7.5 months' worth of imports of goods and payments of services and primary income, 6.9 times the country's short-term external debt based on original maturity, and 4.2 times based on residual maturity.

“The month-on-month decrease in the GIR level reflected mainly the national government’s payments of its foreign currency debt obligations and the Bangko Sentral ng Pilipinas’ net foreign exchange operations,” the BSP said.

Latest data available from the Bureau of the Treasury (BTr) indicate that the government’s running debt soared to a new all-time high of P13.64 trillion as of end-October, up from P13.517 trillion the previous month.

Net international reserves — the difference between the GIR and reserve liabilities such as short-term foreign debt and credit and loans — also fell to $93.93 billion from $93.99 billion in October.

Reserves are expected to increase in the last two months of the year, in line with remittance inflows amid the holiday season, according to Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort.

“For the coming months, especially for the remaining months of the year, GIR could still increase due to the seasonal increase, especially towards the holiday season towards the end of 2022,” he said in a separate commentary.

Growth drivers could also include revenues from business process outsourcing (BPO) firms, foreign tourism, and proceeds from the proposed dollar-denominated bond issuance.

He noted, however, that these could be offset by foreign debt payments, intervention activities on the foreign exchange, and other measures to help stabilize the peso and manage inflation.

Finance Secretary Benjamin Diokno earlier this week said that at 7.5 months’ worth of imports and goods and payments, the reserves are “too much” and some could be used for the proposed sovereign wealth fund.

Lawmakers in the House of Representatives have filed House Bill 6398 which seeks to establish the Maharlika Wealth Fund that targets to allow the government to invest surplus reserves in real estate and financial assets.

Among the authors of the proposed measure are Speaker Ferdinand Martin Romualdez and Senior Deputy Majority Leader Sandro Marcos, cousin and son of President Ferdinand “Bongbong” Marcos Jr., respectively.

BSP Governor Felipe Medalla earlier expressed concern over the proposed measure, citing its impact on the country’s reserves and the lack of transparency.

Also among those that have expressed concern over the measure are business groups such as the Makati Business Club (MBC), the Management Association of the Philippines (MAP), the Philippine Chamber of Commerce and Industry (PCCI), and Senator Imee Marcos, the President's sister.

For his part, Finance Secretary Benjamin Diokno said criticisms on the measure come from those who have yet to read the measure, as safeguards will be put in place to ensure transparency. —KBK, GMA Integrated News