PH dollar stash rises again in April, ends 3-month slide

MANILA, Philippines—The Philippines’ dollar inflow entered positive territory in April, rising with the help of the national government’s borrowings and an increase in gold prices, according to the Bangko Sentral ng Pilipinas (BSP).

In a statement, the BSP said its gross international reserve level, based on preliminary data, rose by $2.77 billion to $107.25 billion at the end of April from the end-March 2021 level of $104.48 billion.

“The latest gross international reserve level represents a more than adequate external liquidity buffer, which can help cushion the domestic economy against external shocks,” it said, adding that this buffer is equivalent to 12.3 months’ worth of imports of goods and payments of services and primary income.

The reserve is also about 7.5 times the country’s short-term external debt based on original maturity and 5.2 times based on residual maturity.

By convention, a country’s dollar reserves are 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 month-on-month increase in the [dollar reserve] level reflected inflows that were mainly from the proceeds of the national government’s global and samurai bond issuances, which were deposited with the BSP,” the BSP explained.

Further, an upward adjustment in the value of the BSP’s gold holdings due to the increase in the price of gold in the international market contributed to the higher gross international reserve level, it said.

These were partly offset, however, by outflows from the national government’s payments of its foreign currency debt obligations.

Similarly, net international reserves—the difference between the BSP’s gross reserves and total short-term liabilities—increased by $2.77 billion to $107.24 billion as of end-April 2021 from the end-March 2021 level of $104.47 billion.

Short-term debt based on residual maturity refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.

The level of GIR, as of a particular period, is considered adequate if it provides at least 100 percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate twelve-month period.

TSB