PH reserves down to $104.6B in April 2025

The country’s foreign reserves continued to decline for the second straight month in April amid US President Donald Trump’s reciprocal tariff-fueled global uncertainty tempered foreign investments and the national government’s settlement of some of its external debt, according to the Bangko Sentral ng Pilipinas (BSP).

Preliminary data released by the BSP showed the gross international reserves (GIR) —a measure of the country’s ability to settle import payments and service foreign debt— amounted to $104.6 billion as of end-April, down from $106.7 billion as of end-March.

“The month-on-month decrease in the GIR level reflected mainly the national government’s drawdowns on its foreign currency deposits with the Bangko Sentral ng Pilipinas to meet its external debt obligations and pay for its various expenditures, and BSP’s net foreign exchange operations,” the central bank said.

The Philippine central bank’s reserve assets include foreign investments, gold, foreign exchange, IMF reserve positions, and special drawing rights.

In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the decrease in foreign reserves was “largely due to the monthly decline in foreign investments after Trump's reciprocal tariffs/Liberation Day on April 2, 2025 that led to increased volatility in the US/global financial markets during the month.”

Trump, last month, announced a sweeping reciprocal tariff policy on its trading partners, including the Philippines which would be facing a 17% tariff on its imports to the US.

Although it is lowest among its Southeast Asian peers, still the Philippine government was prompted to send a delegation to Washington to seek dialogue with US officials while a 90-day pause in implementing the trade policy was ongoing.

Ricafort said the GIR slump was also driven by “some payment of matured foreign currency debts and other foreign obligations.”

Nevertheless, the economist said that the foreign reserves level was still above the $100-billion mark for the 19th consecutive month or since October 2023.

The BSP, meanwhile, said the latest GIR print represented a “robust” external liquidity buffer, equivalent to 7.2 months' worth of imports of goods and payments of services and primary income —earnings of overseas Filipino workers and profits from Philippine investments abroad.

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 end-April reserves would also cover about 3.6 times the country's short-term external debt 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 12-month period.

Likewise, the net international reserves —the difference between GIR and the BSP’s reserve liabilities— fell by $2 billion to $104.6 billion as of end-April from the end-March  level of $106.6 billion.—AOL, GMA Integrated News