An economist said the gross international reserves will remain strong amid the sustained remittances inflows, revenues from the business process outsourcing industry and the recovery of the tourism sector.
Rizal Commercial Banking Corp. chief economist Michael Ricafort made the forecast despite the slight dip in GIR from $101.55 billion in March to $101.51 billion in April.
The latest GIR level represented a more than adequate external liquidity buffer equivalent to 7.6 months’ worth of imports of goods and payments of services and primary income. It was also about 5.9 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
The BSP said the lower GIR level in April “reflected mainly the national government’s payments of its foreign currency debt obligations.”
“For the coming months, the country’s GIR could still be supported by the continued growth in the country’s structural inflows from OFW remittances, BPO revenues, exports [though offset by imports], relatively fast recovery in foreign tourism revenues… as well as continued foreign investment inflows among pre-pandemic highs [and] net foreign portfolio investments/hot money inflows in recent months,” Ricafort said in a report.
Ricafort said the still relatively high GIR at $101.5 billion could still strengthen the country’s external position, which is a key pillar for the country’s continued favorable credit ratings.
The reserves level as of end-December 2022 fell by 11.8 percent or $12.8 billion to $96 billion from $108.8 billion as of end-December 2021, pulled down by the weaker peso against the US dollar.
Global uncertainties that impacted financial markets, most notable of which was the aggressive moves of the US Federal Reserve in raising interest rates, strengthened the greenback against other currencies. The peso depreciated by 9.3 percent against the US dollar in 2022.
The GIR posted an all-time high of $110.1 billion in December 2020.
