The country’s gross international reserves declined to a six-year low of $77.68 billion at the end of June, mainly due to the government’s payments of maturing foreign exchange obligations, Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said Friday.
The end-June reserves were lower by $1.52 billion from $79.202 billion a month ago. The reserves were the lowest in six years since $76.129 billion in June 2012.
Espenilla in a statement also cited the outflows arising from the foreign exchange operations of the Bangko Sentral as well as the revaluations adjustments on gold holdings resulting from the decrease in the price of the precious metal in the world market.
“At this level, the GIR nonetheless continues to serve as an ample external liquidity buffer and is equivalent to 7.5 months’ worth of imports of goods and payments of services and primary income,” Espenilla said.
“It is also equivalent to six times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity,” he said.
He said the decline in reserves was partially tempered by the government’s net foreign currency deposits as well as the income from investments abroad of the Bangko Sentral.
Data showed the value of the Bangko Sentral’s gold holdings as of end-June declined to $7.913 billion from $8.196 billion a month ago.
Net international reserves, which refer to the difference between the central bank’s GIR and total short-term liabilities, also decreased $1.53 billion to $77.65 billion at end-June from the end-May 2018 level of $79.18 billion.
The Bangko Sentral in May kept the reserves target this year of $80 billion, lower than $81.5 billion in 2017.
The Bangko Sentral said the reserves level by yearend would be consistent with the revised balance of payments projection of a $1.5-billion deficit from the earlier projection of a $1-billion surplus.
It said the updated BoP projection incorporated the latest available data and reflected recent and prospective economic developments, both domestic and global. The current account is seen to post a higher deficit of $3.1 billion, equivalent to 0.9 percent of the gross domestic product.
“This mainly reflects the projected wider trade deficit as growth in goods imports largely outpaces exports growth,” the Bangko Sentral said.
Gross international reserves ended 2017 at $81.5 billion, surpassing the target of $80.7 billion for the year, due mainly to inflows arising from the Bangko Sentral foreign exchange operations and revaluation adjustments on its gold holdings. The full-year GIR was also higher than $80.69 billion in 2016.
Reserves hit an all-time high of $86.139 billion in end-September 2016.