The Philippines’ international reserves soared to a three-month high in July to stay above the $105-billion level, thanks to gains from the gold holdings and overseas investments of the Bangko Sentral ng Pilipinas’ (BSP) as well as new deposits from the national government.
Preliminary data released by the BSP on Wednesday showed the country’s gross international reserves (GIR) rose to $105.65 billion as of end-July from the preceding month’s level of $105.19 billion.
Also, this marked the third month that the GIR was above the $105-billion mark. It has also been 10 months above the $100-billion level since hitting $101 billion last October.
Similarly, the net international reserves—which refers to the difference between GIR and reserve liabilities like short-term foreign debt and loans from the International Monetary Fund (IMF), went up to $105.62 billion from $105.16 billion previously.
More than enough
The GIR serves as the country’s buffer against external shocks. The BSP’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the IMF and special drawing rights.
By convention, GIR is viewed to be adequate if it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income.
The reserves are also considered adequate if they provide at least 100-percent cover for the payment of the country’s foreign liabilities—both from the public and private sectors—falling due within the immediate twelve-month period.
“The month-on-month increase in the GIR level reflected mainly the upward valuation adjustments in BSP’s gold holdings due to the increase in the price of gold in the international market, net income from the BSP’s investments abroad, and the national government’s net foreign currency deposits with the BSP,” the central bank said.
According to the BSP, the GIR level in July represented a more than adequate buffer to meet 7.8 months’ worth of imports of goods and payments of services and primary income.
The funds were also about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
The BSP forecasts the Philippines to end the year with a GIR of $104 billion, slightly up from the 2023 level of $103.8 billion.