The Bangko Sentral ng Pilipinas expects the gross international reserves to rise to $77 billion in 2019 from the projected $76 billion this year, as the balance of payments is seen to incur a lower deficit next year.
The revised projections of economic data showed that the BoP would post a lower deficit of $3.5 billion next year, compared to the projected $5.5-billion shortfall this year.
BoP summarizes the country’s economic transactions with the rest of the world. A BoP deficit means that foreign exchange payments exceed receipts, while a surplus indicates that outflows surpass inflows.
Persistent surpluses help build up the GIR, an ample supply of which supports the value of the peso against the US dollar and keeps domestic inflation at bay.
Reserves hit $81.6 billion at the end of 2017 but fell to $74.71 billion in October, before slightly recovering to $75.49 billion in November.
BSP Governor Nestor Espenilla Jr. said the increase in November reserves was due mainly to inflows arising from the BSP’s foreign exchange operations and its income from its investments abroad.
However, the increase in the GIR level was partially tempered by the payments made by the government for its foreign exchange obligations and its net foreign currency withdrawals as well as the revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market.
He said the end-November 2018 level of GIR continued to serve as an ample external liquidity buffer and was equivalent to 6.9 months’ worth of imports of goods and payments of services and primary income.
It was also equivalent to 5.8 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.
Net international reserves, which refer to the difference between the GIR and total short-term liabilities, reached $75.47 billion as of end-November 2018.
Reserves hit an all-time high of $86.139 billion in September 2016.