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The Philippines’ foreign currency reserves declined in March as the national government settled some of its external debt during the period, the Bangko Sentral ng Pilipinas (BSP) reported Tuesday. Preliminary data from the BSP showed the gross international reserves (GIR) —a measure of the country’s ability to settle import payments and service foreign debt— stood at $106.2 billion as of end-March, down from $107.
4 billion in February. “The month-on-month decrease in the GIR level reflected mainly the drawdowns by the national government on its foreign currency deposits with the Bangko Sentral ng Pilipinas to meet its external debt obligations 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.
The BSP said the latest GIR level represented a robust external liquidity buffer, equivalent to 7.3 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-March reserves would also cover about 3.7 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. Meanwhile, net international reserves —the difference between GIR and the BSP’s reserve liabilities— decreased by $1.2 billion to $106.
2 billion as of end-March from the end-February level of $107.4 billion. —VAL, GMA Integrated News.
