Philippines’ foreign reserves rises to $101.3 billion as of end-November —BSP

The Philippines’ foreign currency reserves grew further as of end-November 2023 amid the increase in the prices of gold and the central bank’s net income from investments abroad.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the gross international reserves (GIR) —a measure of the country’s ability to settle import payments and service foreign debt— as of the first nine months of 2023 stood at $101.3 billion.

This was higher than the end-October 2023 level of $101.1 billion.

The BSP’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 upward valuation adjustments in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market, and the BSP’s net income from its investments abroad,” the central bank said.

The end-November 2023 GIR level was described by the BSP as a “more than adequate” external liquidity buffer as it can finance at least 7.5 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.

The latest GIR level was also about 5.8 times the country’s short-term external debt based on original maturity and 3.6 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,” the BSP said.

In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the higher foreign reserves level as of end-November this year was supported by “the continued increase of the country's structural US dollar/foreign currency inflows such as OFW remittances and BPO revenues.”

“The still relatively high GIR at US$101.3 billion could still strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings for the second straight year, mostly at one to three notches above the minimum investment grade, a sign of resilience despite the COVID-19 pandemic that caused downgrades in other countries around the world,” Ricafort said.

Similarly, the net international reserves —the difference between the BSP’s reserve assets (GIR) and reserve liabilities (short-term foreign debt, credit, and loans from the IMF) — increased by $200 million to $100.5 billion as of end-November 2023 from the end-October 2023 level of $100.3 billion.—AOL, GMA Integrated News