The country’s gross international reserves fell to a two-year low of $99.0 billion in August from $99.8 billion in July as the government settled some of its foreign debt, the Bangko Sentral ng Pilipinas said Thursday.
It said in a statement the latest reserves level still represented a more than adequate external liquidity buffer equivalent to 8.3 months’ worth of imports of goods and payments of services and primary income.
The reserves were also about 7.1 times the country’s short-term external debt based on original maturity and 4.6 times based on residual maturity.
“The month-on-month decrease in the GIR level reflected mainly the national government’s foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures, and the downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market,” the BSP said.
The net international reserves, or the difference between the BSP’s reserve assets and reserve liabilities, also went down by $800 million to $99 billion as of end-August from $99.8 billion a month earlier.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the August GIR was the lowest since August 2020.
“Since the start of 2022, GIR has already declined by $9.8 billion or -9 percent vs. $108.8 billion as of end-2021. The decline in the GIR somewhat correlated with the weaker peso in recent months,” Ricafort said.
Ricafort said despite the decline in reserves, the August level was still above the minimum international threshold of three to four months, “thereby could still provide greater buffer/support/cushion on the peso exchange rate vs. any speculative attacks.”
“For the coming months, the country’s GIR could still increase, amid the continued growth in the country’s structural inflows from OFW remittances, BPO revenues, foreign tourism revenues [which resumed since February 2022], as well as foreign investment inflows,” he said. Julito G. Rada
The GIR reached $108.8 billion in 2021, lower than the record $110.1 billion in 2020.
The BSP expects GIR to settle at $105 billion by end-2022.