The country’s dollar reserves shot up to a 10-month high in November, now enough to cover a year’s worth of imports and pay for the economy’s short-term external debt many times over.
The Bangko Sentral ng Pilipinas (BSP) on Friday said its gross international reserves (GIR) shot up to their highest point since January due to dollar deposits of the Treasury, as well as income from the central bank’s investments and foreign exchange operations.
At the end of November, the BSP’s GIR stood at $84.02 billion, higher than the $83.6 billion the month before.
With one month left in the year, the BSP’s reserves are still $3 billion short of the projected level by the end of the year of $87 billion.
“The increase in reserves was due mainly to foreign exchange operations and income from investments of the BSP, as well as foreign currency deposits by the Treasury of the Philippines,” BSP Governor Amando M. Tetangco Jr. said.
These inflows were partially offset by the national government’s foreign debt payments and the lower price of gold.
The BSP’s reserves, which serve as a buffer for possible external shocks that can result in a shortage of foreign exchange the country needs, are denominated in foreign currencies, gold and debt paper of highly-rated foreign governments.
These reserves can be released into the economy through the country’s banks to help households and businesses pay for imported goods and services, as well as pay for maturing foreign loans.
The central bank said its reserves were enough to cover 12 months-worth of needed imports, and nine times the country’s external debt based on original maturity.
Net international reserves, which refer to the difference between the GIR and total short-term liabilities, also increased by $400 million to $84 billion at the end of November from $83.6 billion the month before.
The level of reserves for November was the second highest figure in the country’s history.
The highest level reached by the BSP’s reserves was $85.27 billion, which was reached in January of this year.
The country’s current account surplus, which is projected to reach the equivalent of 4 percent of gross domestic product this year, provides the country with enough foreign exchange income, allowing the country to build up its reserves.
The current account is the summary of what the country earns from its exports, remittances from overseas Filipino workers (OFW), and revenue from the tourism and business process outsourcing sectors.
The central bank expects remittances from over 10 million OFWs, which account for 10 percent of domestic output, to grow by over 5 percent this year to a record high of at least $22.5 billion.