Bangko Sentral ng Pilipinas reduced the gross international reserves target this year to $80.7 billion from the earlier estimate of $81.6 billion on lower current account surplus.
“The current account balance is projected to remain in surplus [at $8.9 billion], albeit at lower levels. At the same time, the outflow in the financial account is seen to be lower,” Bangko Sentral said in a statement, announcing the revision of the target for 2015.
Bangko Sentral said despite the target reduction, the 2015 reserves would still be higher than $79.5 billion posted in 2014. At this level, the reserves remained sufficient, covering nearly 10 months worth of imports of goods and payments of services and income.
“The downward revision [in current account surplus] is due to the expected widening of trade deficit as exports growth is seen to be slower than previously projected,” Bangko Sentral said.
Data showed that as of end-November, gross international reserves declined to $80.572
billion from $81.097 billion in October.
The value of Bangko Sentral’s gold holdings in November declined to $6.7 billion from $7.178 billion a month ago. Foreign investments also declined to $71.081 billion from $71.362 billion a month ago.
Reserves were projected to increase to $82.7 billion in 2016, or equivalent to nine months of import cover, from $80.7 billion (nearly 10 months import cover) in 2015.
The increase would be triggered by the expected improvement in the overall balance of payments position next year to $2.2 billion from $2 billion in 2015.
The current account in 2016 is expected to remain in surplus at $5.7 billion but lower compared to $8.9 billion in 2015 due mainly to the expected large increase in the imports of goods.
“Overall, the BSP forecasts the external position of the Philippines improving in 2015 and 2016 from a deficit in 2014. The BoP outlook for 2015 is supported by a resilient current account surplus backed by robust receipts from overseas Filipinos remittances, tourism earnings and business process outsourcing revenues,” Bangko Sentral said.
“While the global economic outlook in 2016 is expected to improve slightly, uncertainty and caution still remain. Nevertheless, the Philippine economy is expected to exhibit continued resilience on the back of strong domestic economic activities,” it said.