The Philippines’ gross international reserves (GIR) fell to $103 billion as of end-January 2025 from $106.3 billion as of end-December 2024, the Bangko Sentral ng Pilipinas (BSP) said over the weekend.
The BSP said, however, the latest GIR level still represented a more than adequate external liquidity buffer equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income.
It was also about 3.6 times the country’s short-term external debt based on residual maturity.
The BSP’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the IMF and special drawing rights.
The month-on-month decrease in the GIR level reflected mainly the BSP net foreign exchange operations and drawdown on the national government’s (NG) deposits with the BSP to pay off its foreign currency debt obligations.
Similarly, the net international reserves (NIR) declined by $3.2 billion to $103.0 billion as of end-January 2025 from the December 2024 level of $106.2 billion, the BSP said.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said that for the coming months, GIR could increase due to the $3.3 billion additional foreign commercial borrowings made by the national government in the latter part of January 2025.
This could be reflected in February 2025 that could be added to the country’s balance of payments (BOP) and GIR data.
“GIR equivalent to 7.3 months worth of imports in recent months, the lowest in more than 2 years or since 2022 and down from an immediate high of 8.1 months in September 2024; but still more than twice the international standard of 3 to 4 months and sustained well above the $100 billion mark, thereby could strengthen the country’s external position that is positive for sustaining the country’s favorable credit ratings of 1-3 notches above investment grade as consistently seen since the pandemic or over the past 4 years,” Ricafort said.
“More importantly, relatively higher GIR to provide greater cushion/buffer/support/ for the peso exchange rate vs. the U.S. dollar, as fundamentally supported by the continued growth in the country’s structural U.S. dollar inflows especially from OFW remittances, BPO revenues, tourism receipts, foreign investments, among others,’” he said.