Philippines opens 2023 with $99.7B foreign reserves —BSP

The Philippines opened 2023 with almost a hundred billion dollars in foreign currency reserves — enough to cover the country’s import requirements for over half-a-year — as the national government increased its foreign currency deposits with the central bank resulting from its fund raising efforts in the offshore debt market, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Preliminary BSP data showed the gross international reserves (GIR) level —a measure of a country's ability to settle import payments and service foreign debt — as of end-January 2023 stood at $99.7 billion, higher than the end-December 2022 level of $96.1 billion.

The central bank’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the International Monetary Fund (IMF), and special drawing rights.

“The month-on-month increase in the GIR level reflected mainly the national government’s (NG) net foreign currency deposits with the BSP, which include proceeds from its issuance of ROP Global Bonds…,” the BSP said.

To recall, in January, the Marcos administration raised a total of $3 billion or about P164 billion from its sale of triple-tranche dollar-denominated bonds, marking its second fund raising effort in the offshore debt market. 

The “blockbuster” fund raising initiative of the government is intended to finance “general purposes of the Republic, including budgetary support” as well as “budgetary support and to finance or refinance assets under the government’s Sustainable Finance Framework.”

The central bank also cited the upward valuation adjustments in the value of its gold holdings due to the increase in the price of gold in the international market, and net income from its investments abroad for the higher month-on-month GIR level last month.

“The latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income,” the BSP said.

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.

Moreover, the end-January GIR is also about 6.0 times the country’s short-term external debt based on original maturity and 4.0 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 12-month period, according to the BSP.

Likewise, the net international reserves, which refers to the difference between the BSP’s reserve assets (GIR) and reserve liabilities —  short-term foreign debt and credit and loans from the International Monetary Fund (IMF) — increased by $3.6 billion to $99.7 billion as of end-January 2023 from the end-December 2022 level of $96.1 billion. —KG, GMA Integrated News